THE HOPE

OF MILLIONS

GSK has a proud tradition – Devoted to innovation

and access, we offer cures, solutions and hope. We
strive, on a daily basis, to fight suffering and to provide
health and comfort to millions. As long as there are
people in the world who are in need, we will find a
way to help them. It is with great pride that GSK leaves
this mark on people’s lives, enabling them to
CONTENTS

Corporate Information 1

Vision & Mission 3

Strategic Priorities 4

Ethical Conduct 5 42 Key Operating & Financial Data

Values and Behaviours 6 44 Balance Sheet Analysis

History of GlaxoSmithKline 8 45 Profit and Loss Account Analysis

The World of GlaxoSmithKline 9 47 Financial Statements 2009

Building Pathways of Hope Statement of Compliance with the

11 48
CSR at GlaxoSmithKline Code of Corporate Governance

GSK Pakistan Success Stories 15 50 Review Report to the Members on Statement

of Compliance with Best Practices of Code
Product Launches 16 of Corporate Governance

Highlights of the Year 17 51 Auditors’ Report to the Members

Environment, Health & Safety 19 52 Balance Sheet

Global Manufacturing & Supply (GMS) 20 54 Profit and Loss Account

Human Resource Development 22 55 Cash Flow Statement

Our Flagship Products 24 56 Statement of Changes in Equity

Awards for Excellence 27 57 Notes to and forming part of the

Financial Statements
Directors’ Profiles 30
83 Pattern of Shareholding
Board & Management Committees 32
84 Categories of Shareholders
Directors’ Report to Shareholders 33
85 Shareholding Information
Chairman / Chief Executive’s Review 37
86 Notice of Annual General Meeting
Financial Performance at a Glance 40
88 Contact Details
Statement of Value Added 41
89 Proxy Form
CORPORATE
INFORMATION

Board of Directors Management Committee Bankers

Mr. M. Salman Burney Mr. M. Salman Burney The Royal Bank of Scotland
Chairman / Chief Executive Chairman / Chief Executive Citibank NA
Mr. Tariq Iqbal Khan Dr. Muzaffar Iqbal Habib Bank Limited
Non-Executive Director Technical Director Standard Chartered Bank
(Pakistan) Limited
Mr. Rafique Dawood Mr. Shahid Mustafa Qureshi HSBC Bank Middle East
Non-Executive Director Legal and Regulatory Affairs Director
Limited
Mr. Shahid Mustafa Qureshi Mr. Javed Ahmedjee
Legal and Regulatory Affairs Director Finance and Logistics Auditors
Director
Ms. Erum S. Rahim A. F. Ferguson & Co.
Dr. Muzaffar Iqbal Director Marketing and Business
Technical Director Development Chartered Accountants
Mr. Javed Ahmedjee Mr. Pervaiz Iqbal Awan Legal Advisors
Director Finance and Logistics Sales Director Rizvi, Isa, Afridi & Angell
Dr. Iffat Yazdani Mr. Maqbool ur Rehman Mandviwalla & Zafar
Area Director Asia Pacific Clinical Sales Director Orr, Dignam & Co.
Operations. Surridge & Beecheno
Mr. Sohail Matin
Country Manager – Consumer Vellani & Vellani
Audit Committee Healthcare Registered Office
Mr. Rafique Dawood Dr. Atif Mirza
Chairman Director Medical Services
35 - Dockyard Road,
West Wharf,
Mr. Tariq Iqbal Khan Dr. Z. U. Khan Karachi - 74000.
Member Head of Quality Tel: 92 21 111-475-725
Mr. M. Salman Burney Haji Muhammad Hanif (111-GSK-PAK)
Member Head of Procurement Fax: 92 21 2314898, 2311122
Website: www.gsk.com.pk
Ms. Fariha Salahuddin
Head of HR & OD
Company Secretary
Mr. Shahid Mustafa Qureshi
Chief Financial Officer
Mr. Javed Ahmedjee

01
 DO
SHARE
HOPE
WIN
CARE
GROW
FEEL
LEARN
LIVE
THINK
WISH
DREAM

The only pharmaceutical company tackling the three WHO

priority diseases: HIV/AIDS, tuberculosis and malaria

02
VISION &
MISSION

VISION GlaxoSmithKline’ s vision is exciting:

the opportunity to make a

difference to the lives of
billions of people
Our value system and operating principles provide
t h e n e c e s s a r y g u i d a n c e o n h ow we wo r k a t
GlaxoSmithKline.The key to our success is our desire
and passion to pursue GlaxoSmithKline’s vision. We
take pride in our commitment to produce products
that benefit patients and improves the quality of
people’s lives.

MISSION GlaxoSmithKline has a challenging and inspir ing

mission:to advance the quality of human lives by enabling
p e o p l e t o

This mission drives us in our purpose to develop

innovative medicines and products that help millions
of people.We have a legacy of great science,and what
we do helps people live healthier,happier lives around
the world, every single day.

03
 STRATEGIC
PRIORITIES By focusing our business around our five
strategic priorities, we’re confident that we can
fulfill our promises to the world.

Grow a diversified global business

We are reducing risk by broadening and balancing our
portfolio, diversifying new product areas, while also fully
capturing opportunities for our products across all geo-
graphic boundaries.

Deliver more products of value

Transforming R&D to ensure that we not only deliver
the current pipeline of new pharmaceuticals, vaccines
and Consumer Healthcare products, but that we are
also able to sustain this flow of new products for years
to come.

Simplify the operating model

We are simplifying our operating model to ensure that it
is fit for purpose and able to support our business in the
most efficient and effective way.

Create a culture of
individual empowerment
Empowerment is key to achieving our goals and we
ensure that our employees receive the tools and
inspiration they need to make decisions with confidence
and accountability.
Building trust
We see building trust as a fundamental platform.
Essentially, without trust, we don’t have a business.

04
 ETHICAL
CONDUCT

Our Ethical Compass Always Points to Fair Practice

We are committed to creating a strong ethical culture at GSK.
Putting patients first is the core principle of being an ethical
pharmaceutical company. Profit without principle is short lived.
Our Code of Conduct sets out the fundamental standards to be
followed by staff in their everyday actions on behalf of GSK, and
seeks to promote honest and ethical conduct. Our employees are
committed to:

Conducting business with honesty, integrity, and in a professional manner.

Building relationship with customers and fellow employees which are based on trust.

Treating individuals with respect and dignity.

Becoming familiar and complying with legal requirements, Company policies and procedures.

Avoiding any activity that could involve or lead to involvement in any unlawful practices.
Avoiding actual or potential conflicts of interest with the Company or the appearance
thereof, in all transactions.

Providing accurate and reliable information in records submitted and to respect the
confidential information of other parties.

Where permitted by local laws, promptly repor t to the Company any breach of laws or
regulations, ethical principles or company policies that come to attention. Cooperate fully in
any audit, enquiry, review or investigations by the Company.

Facilitate External Auditors in audits and provide required information in a timely manner.

Managers to ensure that all their employees receive guidance, trainings and communication on
ethical behavior and legal compliance relevant to their duties for the Company.

The Company maintains policies regarding preventing Corrupt Practices & Maintaining
Standards of Documentation.

05
 VALUES &
BEHAVIOURS

We undertake our
quest with...
Flexible Thinking
Continuous Improvement
Customer Driven
OUR VALUES Developing People
Our values keep Enable & Drive Change
us focused, and we hold Building Relationships
OUR BEHAVIOURS
steadfast to them.
Respect for People
Patient Focused
Transparency
Integrity

06
 BEST
PEOPLE
BEST
PLACE
BEST
WORK
GSK is the best place
to work due to its
professional and friendly
work environment
with equal growth
opportunities for every
employee.

By empowering individuals
and holding them accountable
for delivery of departmental
objectives, GSK has built a
performance based culture.

07
 HISTORY
OF GSK

In 2001, Glaxo Wellcome and SmithKline Beecham merged to form GlaxoSmithKline,

one of the largest pharmaceutical companies in the world.

The advent of today’s leading research-based pharmaceutical company started with

individual entrepreneurs of the 1800s. Their pioneering efforts laid the groundwork
for growth in the different companies that, over the years, were to lead to today’s
GlaxoSmithKline.

We are exceptionally proud of how far we have come, and in a world where the only
constant is change,we are always thinking, adapting and growing.

1830
John K. Smith opens a
drugstore in Philadelphia

1842
Thomas Beecham
launches Beecham’s pills in England

1880
Burroughs Wellcome &
Company was founded

1891
SmithKline & Co.
acquires French,
Richards & Company

1906
Glaxo is registered by
Joseph Nathan & Company
as a trademark for dried milk

1929
SmithKline & French
becomes research
focused

1989
SmithKline & Beecham
merge

1995
Glaxo & Wellcome
merge

2001
GlaxoSmithKline

08
THE WORLD
OF GSK

GSK employs over We manufacture over

99,000 people in 4 billion packs per
114 countries year in 28,000 different
presentations, which
are then supplied to
over 160 markets

We currently make GSK is the Global

more than 100 Leader in
prescription respiratory,
medicines and anti-virals and
vaccines vaccines

Over 150 projects in Every second, GSK

clinical development distributes more than
- one of the largest 32 doses of vaccines
pipelines in the
industry

Our global HIV/AIDS Over 14,500

education and employees work
prevention initiative within R&D in many
supports programs in countries around the
21 countries world

09
 DO
SHARE
HOPE
WIN
CARE
GROW
FEEL
LEARN
LIVE
THINK
WISH
DREAM

GSK believes in mending lives and healing hearts

10
BUILDING
PATHWAYS
OF HOPE

Corporate Social Responsibility (CSR) at GSK

Community interests are at the hear t of the GSK
business model. GSK provides donations, medicines,
time and equipment, to non-profit organizations to help
improve health and education. We support programs
that are innovative, sustainable, and bring real benefits
to those most in need.

Every member of the GSK family strives to contribute

their time , talents, and ideas to make a real and
meaningful contribution towards improving the quality
of human life. We cross borders and boundaries, share
with, and learn from one another. We contribute to
the health and well being of people with enthusiasm
and vigour.

11
 GSK PAKISTAN
CSR
INITIATIVES

SERVING FROM THE HEART

GSK Pakistan’s vision and mission subscribe to improving the quality of human
life by enabling people to do more, feel better and live longer. Today, it is the
largest pharmaceutical company in the country and is proactively responding to
the changing operating environment, creating a balanced business model to
deliver sustainable growth.

To implement its CSR program, GSK Pakistan maintains strong partnerships with
non-government organizations such as Pakistan National Forum on Women’s
Health (PNF), Concern for Children Trust, and The Trust for Health and Medical
Sciences. The Company has been one of the largest corporate donors for the
National Commission for Human Development (NCHD).

The Islamabad-based Pakistan Centre for Philanthropy (PCP) awarded a

Corporate Philanthropy Award Cer tificate to GSK Pakistan in 2008, in
recognition of its support for social development causes. According to the PCP
repor t, GSK is among the top 15 companies, and the only pharmaceutical
company leading corporate donations in Pakistan.

GSK suppor ts various health, women and social development, education and
relief programs at the grassroot level. Some of the key initiatives include:

HEALTH & SOCIAL DEVELOPMENT

Center of Nursing Excellence
GSK approved a gr ant of £250,000 to suppor t the
development of a Center of Nursing Excellence in Karachi in
2008. This three-year project, in collaboration with the Pakistan
National Forum on Women’s Health (PNF) and the Pakistan
Nur sing Council (PNC), aims at improving the quality of
nursing training to develop teaching capabilities of the nursing
faculty across Pakistan.

The Centre was formally inaugurated on 18 November 2008.

The first batch of 31 students graduated in April 2009 and the
second batch graduated in November 2009. It is estimated that
a single well-trained nursing teacher could eventually impact
the care of approximately 40,000 patients each year by
teaching an average of 100 new nur ses. GSK will provide
funding and support for the project for three years after which
it will become self-sustained.

12
The Trust for Health and Medical Sciences
GSK supports the Trust for Health and Medical Sciences which has been
running a charitable clinic in the Landhi area of Karachi since the early
1980s and charges a nominal fee for treating patients. Since 1983, around
two million patients have been treated and the clinic has matured into a
large set up with multiple medical facilities. More than 90,000 patients
receive medical attention annually, and the clinic has recently star ted
treatment and counseling for heroin addicts.

Concern for Children Trust

The Concern For Children (CFC) has been promoting preventive and
primary healthcare and education for children in Pakistan since 1997. With
GSK’s suppor t, CFC has set up three computer liter acy projects
for low-income schools across Karachi. Approximately 8,000 children have
benefited from these facilities so far. CFC is developing a project in
Mohammadi – Machhar – Colony, a shanty settlement along the Karachi port.

A mother and child healthcare centre is also being set up to provide

primary, pre-natal, anti-natal services and health information and education
to 8,000-10,000 mothers and children each year. GSK has donated PKR 4
million for this project, and also provides medicines for the free healthcare
camps organised by CFC in different parts of the country.

RELIEF
Internally Displaced Persons
The military operation against extremists in the Swat, Buner and Lower
Dir districts of the Malakand region of Nor th West Frontier Province
(NWFP) forced more than 2.5 million people to flee their homes — the
second biggest internal displacement in the world after Rwanda, according
to the UN. GSK Pakistan has donated bulk stocks of necessary antibiotics,
analgesic, painkillers, anti-diarrhoeal and skin ointments for primary and
ter tiary medical relief to the IDPs. Medicines wor th PKR 8 million were
donated to the National Disaster Management Authority (NDMA), the
National Commission for Human Development (NCHD), Sarhad Rural
Support Programme (SRSP), and the Holy Family Hospital in Rawalpindi.

13
 GSK GLOBAL
CSR
INITIATIVES

Improving Healthcare Worldwide

GSK globally considers itself responsible for upholding values and ethical principles by
contributing to the environment, investing in the society at large, and engaging
stakeholders at each step, while also being involved in various community programs.
The company provides donations, medicines, time and equipment to non-profit
organizations to help improve health and education for under-ser ved people-
supporting programs that are innovative, sustainable, and bring real benefits to those
most in need.

As part of our commitment to the Global Alliance
to eliminate Lymphatic Filariasis, we have donated
over one billion albendazole treatments to stop the
transmission of this disease. Our aim is to donate
as much albendazole as required to treat the one
billion people in 83 countries, who are at risk from
this disease.
Ever y year three million people globally die of
diarrhoeal disease, most of them being children. It’s
one of the world’s biggest killers, yet also one of the
m o s t e a s i ly p r e ve n t a bl e . To a d d r e s s t h i s , we
developed PHASE; a simple hand-washing program
which teaches children how to reduce the spread of
infection.

Taking on the biggest killer: GSK is at the forefront
of the battle against malaria. Malaria kills over one
million people a year worldwide, and we have been
working on a malaria vaccine for over two decades.
In par tner ship with the PATH Malaria Vaccine
Initiative, a non-profit research organization, we are
now close to creating the world’s first vaccine for
the disease. The Phase III trial of the RTS,S malaria
vaccine candidate started in Bagamoyo, Tanzania, in
May 2009.
In July 2009, we announced the creation of a new
Positive Action for Children Fund. The Fund will
make £50 million ($80 million) available over ten
years to help prevent mother-to-child transmission
of HIV and to suppor t orphans and vulnerable
children.

14
 GSK PAKISTAN
SUCCESS
STORIES

We’re making our mark on Pakistan

GSK leads the industry in value, volume and prescription market

shares. We are proud of our consistent performance.

VALUE
WE LEAD THE WAY IN PAKISTAN
GSK maintains the largest value share of the Pakistani Pharmaceutical Industry.
We are proud to have 3 of our brands in the top 10 products list by value share.
Our leading product by value is

VOLUME
OUR BRANDS STAND OUT FROM THE CROWD
Greatest percentage of industry volume share.
7 out of top 10 products by volume share,belong to the GSK family.
Leading Product by volume

PRESCRIPTION
GSK REIGNS OVER THE MARKET
Leaders in prescription share.
Panadol maintains its position as our leading prescription product.
4 of GSK’s brands make the top 10 list of prescribed products.

Source: Q4, 2009 - IMS - PKPI

S2, 2009 - IMS - MIP

15
 PRODUCT
LAUNCHES
2009

GSK Successfully Launches The First Value Health

Franchise Brand: Cipval
GSK crossed yet another milestone with the launch of CipVal (ciprofloxacin), its
first Value Health Portfolio Brand.

Augmentin Infant Drops: Another Welcome Addition to

the Augmentin Family
The launch of Augmentin Infant Drops gives GSK the unique advantage of introducing
the first and only co-amoxiclav drops formulation in Pakistan.

Axitra “All Star!”

This year welcomed another addition in the GlaxoSmithKline Cardiovascular Portfolio
with the launch of Arixtra 7.5 mg.

Launch of Bactroban 5gm Cream & Ointment

Power of an oral… Convenience of a topical
The Dermatology portfolio continues to expand with the launch of Bactroban 5 gm
cream and ointment.

16
 HIGHLIGHTS
OF THE
YEAR

FINANCE AND LOGISTICS

“Simplify the Operating Model” is one of the GSK’s strategic priorities. The intent of
this strategy is to simplify work. It helps remove structures and processes that slow us
down and distract us from focusing on the work which truly matters. Simplification in
finance and logistics is achieved by increase in speed to access to information,
eliminating duplication of activities across the business, standardization of process and
systems, and simplifying the complex systems and processes currently utilized.

In 2009, a number of initiatives have been implemented for Process Improvement,

some of these include:

• Streamlined distributor ordering and payment timings

• Simplification and harmonization of the distribution transport network
• Implementation of goods warehousing practices at distribution
• Automation of customer claims

F u r t h e r, we h ave i m p l e m e n t e d t h e J D E d w a r d s s y s t e m a t G l a x o S m i t h K l i n e
Pharmaceuticals (Private) Ltd. (Former ly BMS Pakistan (Pvt.) Ltd. This included
pre-implementation, information gathering of existing systems, user training of JDE
across the company and Prototype/User Acceptance Testing, for the cutover to JDE.

17
 RESEARCH AND DEVELOPMENT

Clinical Operations of Pakistan recruited the highest number of subjects to date.

We had a successful CMD audit this year and were rated well.

Pakistan completed the country targets in all clinical trials well ahead of timelines.

Clinical Operations - Pakistan team were ranked 1st in Research and development
systems competition, which was held in Europe.

We have played a leading role by providing exper tise, sharing best practices and
delivered systems training to the other countries of the region. We were also invited
to share best recruitment practices in clinical trials.

Various members of clinical research team received numerous awards by performing

extraordinarily, while competing with other countries involved in similar R&D
projects. Excellent performance was highlighted in various forums and meetings.

CONSUMER HEALTHCARE

Macleans Freshmint was re-launched to revitalize the brand image with a new
formulation and modern packaging.

This year Consumer Healthcare unveiled an aggressive outdoor campaign 'Project

Smart Outdoor' on Iodex, Eno, Macleans & Horlicks. This activity involved billboards,
shop fascias, floats, van branding and merchandising drive.

Horlicks experienced a line extension in its current por tfolio with an addition of a
new variant. The launch involved interactive and fun activities in collaboration with
many schools. This has contributed immensely to the growth of the brand.

Macleans won Consumer Choice Award for Best Toothpaste of the year 2009.

18
 ENVIRONMENT
HEALTH &
SAFETY (EHS)

2009 has been a successful year for GSK Pakistan in the areas of Environment,
Health, Safety & Sustainability, as we continue to march towards the aim of
Zero Accidents, Zero Injuries and Zero Waste.

GSK ensures that all our operations are safe, the environment that we
work in is protected and remains sustainable, and that the health of our
employees is never compromised.

We have developed a ‘Behaviour based safety program’ called “Living

Safety”. The program provides a framework for assessing safe behaviours
and the tools needed to improve the safety culture. The program has
been launched across all GSK manufacturing sites.

Emergency evacuation drills are conducted on a regular basis to ensure

the safety of our employees. GSK has also made a substantial investment
in firefighting equipment, with the purchase and installation fire water
engine pumps. In 2009, EHS conducted detailed Fire Risk Assessment
of its sites and employed the services of FM Global, to conduct
reviews of our fire safety standards. As a result of their
recommendation, all GSK sites have installed seismically
activated gas shut-off valves.

GSK sites have Effluent Treatment Plant (ETP) and the treated effluent complies with National Environmental
Quality Standards (NEQS) for Liquid Industrial Effluents. The air emissions from GSK sites are regularly monitored,
and all emission sources are found to be far below the concentration of air pollutants as prescribed by the
National Environmental Quality Standards (NEQS) for Industrial Gaseous Emissions.

Controlling Occupational Exposures to hazardous dust remained one of

the priorities for the year 2009. Exposure monitoring is being conducted
for hazardous dust at all sites. Engineering controls are put in place to
eliminate or reduce the exposure to acceptable levels.

Noise monitoring has been completed at the GSKP manufacturing sites,

and based on the results; action plans are being developed to fur ther
reduce the noise level through Engineering and Administrative control.

GSK has launched an ambitious program on Machinery Safety called as

“Zero Access Guarding”. The purpose is to protect employees working on
machiner y from intentional or inadver tent access to the moving and
hazardous parts of the equipments as access to the moving parts has been
the largest cause of accidents in GMS. GSK selected 5 sites for the pilot
study and F-268 was one of them. 23 facilitators were trained worldwide
and 3 of them are from GSK Pakistan.

19
 GLOBAL
MANUFACTURING
& SUPPLY (GMS)

GlaxoSmithKline’s Global Manufacturing and Supply capabilities in Pakistan comprises of the best quality
processes and procedures associated with the production and supply of full-scale commercial
manufacturing. The GMS mission is to ensure a secure source of supply of high quality products, to
comply with customer expectations and regulatory requirements and to have cutting edge practices and
performance.

Our penicillin factory at F268 Site, is a state of the art facility. The focus is always in producing the best
products, which meet the highest quality standards. Strict rules and guidelines provide us with a system
of processes, procedures and documentation to ensure safety and quality within the factory.

20
QUALITY MANAGEMENT SYSTEM (QMS)

Quality is at the heart of all activities that support discovery,

supply and marketing of our products to our patients and
customers. Quality is critical to building trust with society
and, therefore, to our future business success.
Andrew Witty (CEO GSK)

QUALITY BLITZ - an initiative to enhance the learnings of Quality Management

Systems, with a focus on its better understanding and implementation of
critical policies was conducted at all sites over a period of 6 weeks.

Work on Lab Efficiency Project continued at all sites - transforming the

laborator y operations to improve the Ways of Working, efficiency and
productivity in the laboratories.

Simplification & Standardization

Pharma Operations Bench Mar king of Solids(POBOS)
workshop - a global initiative was conducted at F-268 site by
RPS OE Consultants to identify opportunities for productivity
and efficiency through simplification and standardization.

Low cost automation initiatives progressed at all the sites to

improve product quality, productivity and process efficiency.

21
 HUMAN
RESOURCE
DEVELOPMENT

The Spirit of GSK

At GSK, we believe that our employees are our most powerful asset. They lead GSK
with their strengths and are empowered to ensure GSK’s success.

Our employees embody characteristics that create a culture of respect, trust and
integrity. We come together in a shared mission, with true passion and a sense of
purpose. They have confidence in themselves, and a belief in each other. We believe in
performance with integrity, coupled with entrepreneurial spirit, a focus on innovation,
a sense of urgency, and a passion for achievement.

We are proud to promote an open culture, encouraging employees to be themselves

and giving their ideas a chance to flourish. We strive to provide our employees the
freedom and suppor t they need to achieve their full potential and do great things
everyday.

LEARN
GROW
BE INSPIRED

22
Best Place, Best People & Best Work
In 2009, GlaxoSmithKline’s HR Team excelled even further at building and promoting a
culture that supports employee initiatives, productivity, emphasizes empowerment and
the on-going development of an advanced workforce.

Recruitment Drive
Talent Review and Succession Planning discussions
Leadership Development Program
Proactive Total Reward Management
Change Management Programs
We are proud to be the recipient of the following prestigious awards:
Employers’ Federation of Pakistan - Human Resource Management
Excellence Award - Multinational Category 2009
Employers’ Federation of Pakistan - Award in Industrial Relations 2009
Pakistan Society of Human Resource Management (PSHRM) “Best Place
to Work Award 2008”

Key Learning Statistics 2009

Total Participants for both internal / external courses 751
Total Number of Courses conducted 32
Total Training Days 51
Total Training Hours 256
Learning Hours per employee 9.95

23
 OUR
FLAGSHIP
PRODUCTS

Our products make a real difference to global

healthcare. GSK is on the cutting edge of
discovering and developing new and
innovative medicines.

We are one of the world’s leading producers of

prescription medicines, vaccines, and consumer
healthcare products.

24
 Pharmaceutical Products
Our pharmaceutical products include treatment for
asthma, chronic hepatitis B, depression, heart failure,
GI disorders and cancers.

Vaccines
More than 1 billion doses of GSK vaccines were
distributed worldwide in 2008,
protecting against illnesses such as
hepatitis A and B, typhoid, influenza,
chickenpox, whooping cough, and tetanus.

Consumer Health Products

We bring dental health care products, over the
counter medicines, and nutritional drinks to millions
of people.

25
 DO
SHARE
HOPE
WIN
CARE
GROW
FEEL
LEARN
LIVE
THINK
WISH
DREAM

Our commitment is to develop innovative products rapidly and

to find new ways to help people receive the medicines they need
for a better life

26
 AWARDS FOR
EXCELLENCE

At GSK, we strive for excellence in everything that we

do, and we are thrilled that a number of our peers
have recognized our efforts. The Awards for Excellence
look behind the headlines for evidence of the impact of
a program.

They are a statement of the fact that the products and

ser vices GSK provides are valuable and stand up to
independent scrutiny. They are testament that GSK
Pakistan has shown innovation, creativity and sustained
commitment to its vision, and that we do so with
Respect for People , Tr ansparency and Integr ity.

We are proud to be a recipient of a number of these

awards.

27
 Best Corporate Report Award 2008
This year, GlaxoSmithKline Pakistan achieved third position in the Chemical
& Fer tilizer sector in the Best Corporate Repor t Award competition jointly
adjudicated by the Institute of Char tered Accountants of Pakistan (ICAP) and
Institute of Cost and Management Accountants of Pakistan (ICMAP). This
award recognizes the best annual repor ts of companies in terms of accuracy,
transparency, usefulness and speed of financial and other disclosures made for
all stakeholders along with its presentation and ability to convey corporate
objectives. The BCR award was presented by the Governor State Bank of
Pakistan, Mr. Salim Raza, and was received on behalf of GSK Pakistan by our
Finance Director, Mr. Javed Ahmedjee.

Corporate Social Responsibility (CSR)

GSK was awarded the “CSR National Excellence Award-2009” by
Help International Welfare Trust (HIWT), in recognition of our values,
effor ts and committed suppor t in the community.

28
Best Performance Award Environment
GSK received the “Environment Excellence Award” in 2009, a recognition by
an independent authority of GSK’s commitment to Environmental, Health,
Safety and Sustainability.

Human Resources
At a recent award ceremony held by the Employer s Federation of Pakistan,
GlaxoSmithKline Pakistan was awarded with the “HRM Excellence Award 2009”
in the multinational category. GSK Pakistan received the highest score on HR and
Industrial Relations practices out of the 30 companies that par ticipated. The
judges commented that they were impressed with GSK Pakistan’s approach of
ensuring that their employees are provided with the best of ser vice and having
achieved outstanding business results in designing and implementing innovative
HR initiatives.

Consumer
Macleans was awarded the “Consumer Choice Award for Best Toothpaste”
of the year.

29
 DIRECTORS’
PROFILES

Mr. M. Salman Burney

Mr. M. Salman Burney joined SmithKline Beecham as Director Marketing & Sales in
1992 and was appointed Managing Director of SmithKline Beecham in 1997. He has
been the CEO of GlaxoSmithKline Pakistan since the SmithKline Beecham’s merger
w i t h G l a x o We l l c o m e i n 2 0 0 1 . H e a l s o h a s R e g i o n a l m a n a g e m e n t
responsibility for Iran & Afghanistan.

Mr. Tariq Iqbal Khan

Mr.Tariq Iqbal Khan is the Chairman / Managing Director of National Investment Trust. He
has more than 40 years of rich and diversified experience in the areas of Finance,
Accounting, Capital Market, Corporate Sector, Company Law, Tax, etc. He is founder
Director of Islamabad Stock Exchange and has also been its President from 1995 to
1998. He has also served as member, Tax Policy and Co-ordination in Central Board
of Revenue and later joined Securities and Exchange Commission of Pakistan as a
Commissioner and officiated as acting Chairman in 2000. He has a vast and
diversified Board Room experience of Banks, Financial Sector, Fertilizer, Chemical and
Energy Sectors etc. Mr. Khan is a Fellow member of the Institute of Char tered
Accountants, Pakistan.

Mr. Rafique Dawood

Mr. Rafique Dawood is the Chairman and Director of Dawood Islamic Bank,
1st Dawood Investment Bank, Dawood Power (Private) Limited and B.R.R. (Private)
Limited, (the Manager of B.R.R. Guardian Modaraba). Apar t from the group
companies, he is also on the Board of GSK Pakistan Limited and Pioneer Cement
Limited.

30
 Mr. Shahid Mustafa Qureshi
Mr. Shahid Mustafa Qureshi is the Director and Company Secretary of
GlaxoSmithKline Pakistan Limited. He is also responsible for Legal, Corporate Affairs,
Industrial Relations, Administration and Regulatory functions of the Company.

Dr. Muzaffar Iqbal

Dr. Muzaffar Iqbal joined GSK in 1987. He was appointed Technical Director
GlaxoWellcome in 1998. He is currently Area Technical Director responsible for
manufacturing and supply functions in Pakistan and Bangladesh. He worked as a Senior
Research Associate at Washington University, St. Louis, Missouri, USA before joining
GSK. He has a PhD degree in Chemistr y and an MS degree in Manufacturing
Leaders Programme from Cambridge University, UK.

Dr. Iffat Yazdani

Dr. Iffat Yazdani joined SK&F Pakistan as Medical Director in 1986 and has worked in
diverse roles of increasing seniority in Medical Ser vices and R&D, gaining broad
experience and managing large teams. In 2004, Dr. Iffat was responsible for establishing
GSK Pakistan as a pioneer of Phase II / III clinical trials within the MENA region. In
2007, she became Area Director for Clinical Operations AP/CHINDIA and Regional
Specialist for Infectious disease. She has strong interpersonal, communication and
negotiation skills with constant interaction with Medicine Development Centre in the
US and interfaces with 100 personnel across AP/CHK / India.

Mr. Javed Ahmedjee

Mr. Javed Ahmedjee is the Chief Financial Officer of the Company and also responsible
for Distribution and Institutional Sales. A Fellow member of the Institute of Chartered
Accountants of Pakistan possessing over 15 years post qualification experience in
senior management positions in financial and manufacturing sectors. He believes in
performance as a business partner, to add shareholder value, with the highest degree
of integrity and consistency. With his proven capability of dealing with diverse and
adver se situations, he effectively manages teams, engaging per sonnel in a
constant and continuous endeavor of simplifying the operating model.

31
 BOARD &
MANAGEMENT
COMMITTEES

Audit Committee
The Audit Committee assists the Board in the effective discharge of its responsibilities
for corporate governance and financial reporting. The Audit Committee comprises of
three members of which two are non-executive directors. The committee meets at
least four times in a year. It reviews the internal control systems including financial and
operational controls, accounting systems and reporting structure are adequate and
effective.

Management Committee
The Management Committee comprises of the Functional Heads to ensure smooth
operations of the Company, strategic business planning, decision making and overall
management of the Company. It also ensures adequacy of operational, administrative
and financial controls.

Risk Management & Compliance Board

Risk management & Compliance Board comprises of the Functional Heads and a full
time compliance officer. It reviews significant risks affecting the business, including
financial, operational and legal compliance risks. It over sees and ensures the
identification and implementation of internal control to mitigate significant risks. The
Board monitors the various compliance initiatives and promotes risk management
and compliance culture in the Company.

Environment Health & Safety Committee

The Environment Health & Safety Committee is chaired by the respective Site
Heads. It ensures operations are fully compliant with the EHS practices as outlined by
regulatory control and corporate. It appraises the major EHS projects and monitors
their implementation and also identifies risk conditions, organizes training programs to
educate employees for EHS issues.

Vision Team
Vision team at GSK gives input for alignment of the GSK strategy and futuristic
objectives. It primarily reviews line capacities at the various sites over the long term
perspective focusing on capacity constraints, potential for export markets, product
initiatives and new packaging requirements.

32
DIRECTORS’
REPORT TO
SHAREHOLDERS

The Board of Directors of GlaxoSmithKline Pakistan December 31, 2009 and other related information are
Limited is pleased to present the annual report and the set out on pages 83 to 85.
Company's audited financial statements for the year
ended December 31, 2009. The Directors, CEO, Company Secretar y and CFO,
their spouses and minor children did not carry out any
The directors' report is prepared under section 236 of trade in the shares of the Company.
the Companies Ordinance, 1984 and clause xix of the
Code of Corporate Governance. This repor t is to be Chairman / Chief Executive’s review
submitted to the member s at Sixty Third Annual The Chairman / Chief Executive's review on pages 37
General Meeting of the Company to be held on to 39 deals with:
March 30, 2010. • The performance of the Company during the year in
Rs. in comparison to last year with reasons for variances
Operating results million • Effective cash management strategy
Profit for the year before taxation 1,567 • Significant plans and decisions
Taxation (633) • Future outlook, business risks and challenges
Profit after taxation 934
The directors of the Company endorse the contents
Un-appropriated profit brought forward 2,284
of the same.
Profit available for appropriation 3,218
Appropriations:
- Final dividend 2008 Rs. 7.0 per share (1,195)
Basic earnings per share
Basic earnings per share after taxation were Rs. 5.47
Un-appropriated profit carried forward 2,023 (2008: Rs.11.46).
The Board of Directors is pleased to propose a final
cash dividend of Rs. 5.0 per share amounting to Earnings Per Share & Price Earning Ratio
Rs. 853.4 million.
12 35

The Company achieved net sales of Rs. 14.7 billion,

30
grew by 9.8% in 2009. Profit after tax this year was 10
Rs. 933.9 million.
25
8
Number of Times

Holding company 20
Rupees

As at December 31, 2009, Setfirst Limited UK held 6

134,453,588 shares of Rs. 10 each. Subsequent to the 15
balance sheet date, the shares held by Setfirst Limited,
4
UK have been transferred to S.R. One International 10
B.V., Netherlands. The ultimate parent of the company
continues to be GlaxoSmithKline plc, UK. 2
5
20.9

10.6
17.5

16.2

19.6

11.5

20.0
8.6

9.8

9.8

6.6

5.5

Pattern of Shareholding 0 0
The Company shares are traded in Karachi and Lahore 2004 2005 2006 2007 2008 2009
stock exchanges. The shareholding information as at Earnings per share Price earning ratio

33
 Merger of GlaxoSmithKline
Pakistan Limited with
GlaxoSmithKline Pharmaceuticals
(Private) Limited (Formerly Bristol
Myers Squibb Pakistan (Private)
Limited)
The Board of Directors of the Company has approved
the merger plan with GlaxoSmithKline Pharmaceuticals
(Private) Limited (Former ly Bristol Myer s Squibb
Pakistan (Private) Limited). In an extraordinary general
meeting of the company held on March 3, 2010,
shareholder s of the company have approved the
s c h e m e o f a r r a n g e m e n t s fo r a m a l g a m a t i o n o f
GlaxoSmithKline Pharmaceuticals (Private) Limited
(Formerly Bristol Myers Squibb Pakistan (Private)
Limited) with the Company.
Corporate and social responsibility
Corporate responsibility is an integral and embedded
par t of the way GSK does business and we are
committed to connecting business decisions to ethical,
social and environmental concerns. We are committed
to playing a full par t in addressing the healthcare
challenges by taking an innovative, responsible and
above all, sustainable approach.
We work as partners with under-served communities
and are also significant donors to numerous NGOs.
The Company has set up and suppor ts two
community trusts/ NGOs i.e. Concern for Children
Tr u s t ( C F C ) a n d Tr u s t fo r H e a l t h a n d M e d i c a l
Sciences, which work in the underserved communities
of Landhi and Mohammadi (Machar) Colony in Karachi.
Various CSR initiatives of the year 2009 are fully
covered on page 12 to page 14.
Human Resource Development
As ever y year, in 2009, recr uiting, retaining and
developing our employees was critical to enhancing
and sustaining our performance and reputation. We
continued to provide a fulfilling, healthy environment
where our employees could learn, grow and develop.
This year, we followed the global framework of High
Performance Behaviours, that formed the basis for
performance management and development activity.
This enabled us to focus on developing the desired
behaviours critical to achieving our strategic goals.
The Company was awarded with the “HRM Excellence
Award 2009” in the Multinational Categor y by the
34
Sales per Employee 9
8
7
6
Rupees in million
5
4
3
2
1
4.8
5.1
5.5
5.8
7.7
8.4
0
2004 2005 2006 2007 2008 2009
Employer s Federation of Pakistan. Out of the 30
companies that participated, GSK Pakistan received the
highest score on HR and Industrial Relations practices.
This year, stakeholder feedback was included in the
performance management system which is the first
step towards a 360 degree appraisal system. GSK has a
fir m belief that empower ment is one of the key
ingredients to its success. It means to trust people to
do their job, by using good judgment, within a clearly
defined and understood framework of responsibility.
Our success based on this philosophy indicates that
our employees have the highest level of integrity, sense
of accountability and clarity regarding their role in the
organization.
Diversity
GSK regards itself as an equal oppor tunity employer
and firmly believes that treating people equally is
essential to being an effective organization. This is
achieved by creating a diver se culture , using our
recruitment and selection process and by effectively
promoting the impor tance of these values to all our
staff.
• Our flexible working policy enables employees to
maintain a positive work life balance.
• The Mentor ing progr am gives employees an
oppor tunity to learn from and be guided by a
seasoned and experienced colleague.
• The Recruitment of a diverse workforce ensures
that all people within society are well represented
and given equal oppor tunity to apply at all levels.
• High priority is placed on the development of our
key talents via the succession planning process.
Environment, Health and Safety
(EHS)
Our sense of responsibility for the Environment, Health
and Safety (EHS) is at the highest level. GSK is
committed to working towards designing a workplace
that minimizes work-related risks to occupational
health and safety.
The Company has a dedicated EHS depar tment to
oversee the implementation of EHS objectives and
repor ts to Executive management. As par t of our
governance responsibility, we conduct EHS audits of
our manufacturing sites, assessing the management of
key risks and impacts and performance against our
global EHS standards.
GSK Pakistan's environmental targets are monitored
on a continuous basis and its impacts are identified and
managed in line with required standards.
in the Listing Regulations and advised to the Committee
for compliance. The Committee held four meetings
during the year.
An independent Internal Audit function repor ting to
the Board's Audit Committee reviews the financial and
internal repor ting process, the system of internal
control, the management of risks and the external and
internal audit process. The Internal Audit function
utilizes the ser vices of independent audit firms for
continuous reviews of internal controls and
management of risks.
Management Committee
The Management Committee comprises of 12 senior
members who meet and discuss impor tant business
plans, issues and progress made in their functions.
Significant matters to be put for th in the Board are
d i s c u s s e d f o r o n w a r d a p p r ov a l b y t h e B o a r d .

Statement of Ethics and Business Risk Management and Compliance

practice
Performance with integrity is central to operating at Board (RMCB)
GSK. The Board of Director s of the Company has The Risk Management and Compliance Board (RMCB)
adopted a statement of ethics and business practices. have been established, which comprises of the business
All employees are informed and aware of this and are unit heads.The RMCBs oversee management of all risks
required to observe these rules of conduct, in relation that are considered important for the business and also
to business and regulations at all times. promote the culture of compliance in the company.The
company also has a full time Compliance officer.
Board of Directors meetings and
attendance Auditors
The Board of Directors met four times in 2009, with The present auditor s, Messr s A.F. Ferguson & Co.
each member attending as follows: Chartered Accountants, retire and being eligible, offer
themselves for re-appointment. The Board of Directors
Name Meetings attended endorses recommendation of the Audit Committee
Mr. M. Salman Burney 4 for their re-appointment as auditors of the Company
Mr. Tariq Iqbal Khan 1 for the financial year ending December 31,
Mr. Rafique Dawood 4 2010, at a fee to be mutually agreed.
Mr. Shahid Mustafa Qureshi 4
Mr. Javed Ahmedjee 4 Subsequent events
Dr. Muzaffar Iqbal 4 No material changes or commitments affecting the
Dr. Iffat Yazdani 3 financial position of the Company have occurred
between the end of the financial year of the Company
Leave of absence was granted to the Directors who and the date of this report.
could not attend some of the board meetings.

Audit Committee
An Audit Committee has been in existence since
May 2002. The committee consists of three members,
of whom two are non-executive directors including the
chairman of the committee. The terms of reference of
the Committee have been determined by the Board of
Directors in accordance with the guidelines provided

35
 Value of investments of provident d. The financial statements are prepared in accordance
with International Financial Reporting Standards, as
and gratuity funds applicable in Pakistan.
The Company maintains retirement benefits plans for
e. The Company maintains a sound internal control
our employees. Value of investments of provident and
system, which gives reasonable assurance against any
gratuity funds, based on their un-audited accounts as on
material misstatement or loss. The internal control
December 31, 2009 (audit in progress) is as follows:
s y s t e m i s r e g u l a r l y r e v i e we d . T h i s h a s b e e n
formalized by the Board's Audit Committee and is
Investment in funds updated as and when needed.
f. There are no significant doubts upon the Company's
ability to continue as a going concern.
g. There has been no material departure from the best
practices of Corporate Governance as detailed in the
listing regulations.
h. The key operating and financial data for the six years
32% is set out on pages 42 to 43.
68%

2009
Rupees ‘000
Provident fund 1,175,338
Gratuity fund 548,591

Corporate and financial reporting

framework
a. T h e f i n a n c i a l s t a t e m e n t s p r e p a r e d b y t h e
management of the Company present fairly, its state
of affairs, the result of its operations, cash flows and
changes in equity.
b. Proper books of account of the Company have been
maintained.
c. A p p r o p r i a t e a c c o u n t i n g p o l i c i e s h ave b e e n
consistently applied in preparation of financial
statements and accounting estimates are based on
reasonable and prudent judgment.
By order of the Board

M. Salman Burney Javed Ahmedjee

Chairman / Chief Executive Chief Financial Officer
Karachi
March 03, 2010

36
CHAIRMAN/
CHIEF EXECUTIVE’S
REVIEW
I am pleased to present the Annual report of the Company for the financial year ended December 31, 2009.

Overview of Economy & Market
Economic conditions in Pakistan remained challenging
during 2009. The Government has taken measures to
address the countr y's macro economic imbalances
and curtail inflation, to lay the foundations of sustainable
and broad based economic growth.
The Pharmaceutical industry in Pakistan is however
experiencing unprecedented challenges. The currency
devaluation and inflation, coupled with restrictive
pricing, has contributed to declining margins and
profitability. Though the Government has given some
price increases on certain products in the last quarter
of the previous year, however their impact is not
broad based and significant enough to improve the
situation.
In 2009, the market grew by approximately 15.5%.
GSK Pakistan continued to retain its position as the
largest research based pharmaceutical company in
terms of value, prescription, and volume shares. Out
of top 20 products, 9 are manufactured and sold by
GlaxoSmithKline.
Review of Operating Results
Total turnover for the year grew by 9.8% (Rs.1.3
billion) to Rs 14.7 billion. Excluding large government
tenders, underlying sales grew by 14.9%. Within the
core pharmaceutical por tfolio, there were strong
performances from Antibiotics, Cardiovascular,
Respirator y, Dermatology, Analgesics and Gastro
compared to last year. Margins have been adversely
affected due to the long-standing price freeze on
majority of the products since 2001, increases in raw
and packaging prices both locally and internationally,
the continuous weakening of the r upee against
foreign currencies particularly the US Dollar and also
escalation of fuel, power and utilities costs. The
company absorbed these negative impacts to an
extent through good sales growth, simplification and
rationalization initiatives undertaken in manufacturing
and commercial operations.
Selling, mar keting and distribution expenses at
Rs. 1673.8 million increased by 26.0%. The increase
over last year mainly reflected increased investment in
core and new brands and increased freight cost due
to rising oil prices and sales growth.
Administrative expenses at Rs. 588.8 million increased
by 13.2%. The increase was less than the general level
of inflation, which impacted employment cost,
traveling and accommodation. Increases in training
expenses for employee development and increased
legal costs also contributed to expense growth.
16000
Net Sales 14000
12000
Rupees in million

Intestinal brands, with all achieving double digit 10000

growth.
8000
The Consumer Health Care business grew by 28.2%
to Rs 298.6 million, with Eno and Iodex being the 6000
main growth drivers.
4000
Export sales maintained a positive trend and achieved
double digit sales growth to Rs. 390.4 million. 2000
10088

10611

13403

14719
8867

9417

Gross margins in this year at 24.1%, declined by 4.7% 0

2004 2005 2006 2007 2008 2009

37
 Other operating income was recorded at Rs. 436.6 Profit after tax
million, primarily comprising of investment income of 2000
Rs. 354.9 million. Overall, the increase in income
1800
stood at Rs. 0.3 million (excluding gain on sale of
Korangi land last year). The investment income has 1600
declined by 8.9% as surplus funds reduced due to 1400
dividend payout and increase in cost of doing

Rupees in million
1200
business. This was par tly offset by higher interest
rates earned on investments. 1000
800
Net profit after tax for the year was Rs. 933.9 million.
600
Excluding the impact of the land sale in 2008, the
decrease in profit is to the tune of 16%. 400

1471

1814

1665

1671

1955
200

934
The Company continues to use strong cash flows to
0
make the required levels of investments in business 2004 2005 2006 2007 2008 2009
necessar y, to sustain long term growth. During this
year, capital expenditure was Rs 494.2 million (2008:
Rs. 475.0 million) mainly spent on expansion of
warehouse, offices, plant upgradation and vehicles.
Capital Expenditure
The Company has surplus funds of Rs. 2,384.1 million 700
as at December 31, 2009 showing a decline of
Rs. 340.8 million as against last year mainly due to 600
dividend payment and decrease in profitability. These
funds are primarily invested in bank deposits, T-bills 500

Rupees in million
and PIBs. With efficient fund management strategies
in place, the Company does not face any liquidity 400
crisis as rigorous cash flow forecasting is done along
with active investment management to achieve 300
optimum returns by making efficient placements in
ter m deposits. A robust r isk-aver se str ategy is 200
followed, whereby investments are only made in
100
government securities and high credit-rated banks.
172

265

472

646

475

494

0
The Company has maintained its histor y of good 2004 2005 2006 2007 2008 2009
return and payout to shareholders. The Board of
Directors in its meeting held on March 03, 2010 affordable healthcare solutions to patients. A number
proposed a final cash dividend of Rs. 5.0 (2008: Rs. of new products in the area of oncology, respiratory
7.0) per share. and anti-bacterial are under registration and launch.

Over the last few year s, payout as well as
shareholder value has increased significantly as a
result of Company's sustained business success. The
Company's market capitalization has increased over
the last 5 year s from Rs. 15.8 billion in 2004 to
Rs. 18.6 billion as at December 31, 2009.
Future outlook and Challenges
We h a v e m a d e g o o d p r o g r e s s i n o u r s a l e s
performance, actively focusing on developing the
new product pipeline and at the same time
maintaining growth of mature brands to create value
for our shareholder s and to provide new and
Our operating results remain under pressure due to
volatility in the rupee currency and inflation. The
industry is heavily price controlled and the last across
the board price increase was given in 2001. This lack
of a general price increase poses a greater risk on
the future profitability of the business allowing no
room to counterbalance rising costs. We request the
Government to take immediate steps to improve the
pricing policy and to allow price increase across the
board to support the industry.
The Company's commitment towards improving
healthcare in Pakistan par ticularly, in the area of
preventive healthcare & vaccines remains integral and

38
explicit. GSK is the world's leading developer and
manufacturer of vaccines, and hopes to partner with
the Gover nment in protecting people against
preventable diseases.

The pharmaceutical industr y in Pakistan has great

potential for growth. However, its sustained success
depends on a regulatory environment which is able
to balance the interests of this research based
industry, with the need for affordable healthcare.

Intellectual property
Intellectual proper ty is a key business asset for our
Company and the effective legal protection of our
intellectual proper ty is critical in ensuring a
reasonable return on investment in researching and
commercializing new treatments.

Dur ing recent year s, Pakistan has made some

progress in this regard, by updating its IPR laws to the
levels required by global conventions. At a practical
level however, much more needs to be done to
discourage both piracy and counterfeiting. Effective
implementation will protect consumers, as well as
industry and will also lead to a quality and research-
oriented culture which is vital for the future progress
of this industry.

Acknowledgement
I would like to recognize the enormous contribution
o f o u r e m p l oye e s i n a c h i e v i n g t h e C o m p a ny
objectives. The GSK spirit continues to form par t of
our value system that drives our success. On behalf
of the Board. I would also appreciate the continuous
suppor t of our valued customers and shareholders
and we look forward to deliver successful results in
future to the best of our abilities

M. Salman Burney
Chairman / Chief Executive

Karachi
March 03, 2010

39
 FINANCIAL
PERFORMANCE
AT A GLANCE
2009 2008
Rupees in million

Net Sales 14,719.1 13,403.2

Gross Profit 3,545.7 3,855.6
Operating Profit 1,581.1 3,077.9
Profit before Taxation 1,566.7 3,001.0
Taxation 632.8 1,045.8
Profit after Taxation 933.9 1,955.2

Dividend - cash* 853.4 1,621.4

- per share - Rs. 5.0 9.5

Paid-up Capital 1,706.7 1,706.7

* Represents final dividend @ Rs. 5.0 per share amounting to Rs. 853.4 million proposed by the Board of Directors
subsequent to the year end.

Gross and Operationg Profit Payout to Shareholders

1750
4000

3500 1500

3000 1250
Rupees in million
Rupees in million

2500
1000
2000
750
1500
500
1000

500 250
1092

1280

1621
3506
2148

3846
2708

3867
2651

3952
2670

3856
3078

3546
1581

612

874

273

341

853
0

0
218
146

0 0
2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009
Gross Profit Operating Profit Cash Dividend Bonus Shares

40
 STATEMENT
OF VALUE
ADDED
The statement below shows the amount of revenue generated by the Company during the year and the way this revenue
has been distributed.

2009 2008
Rupees ‘000 % Rupees ‘000 %

Revenue Generated
Total revenue 15,186,134 100.0 14,703,021 100.0

Revenue Distributed

Bought-in-materials and Services 11,173,470 73.6 9,547,619 64.9

Selling, Marketing and Distribution Expenses 1,673,809 11.0 1,328,925 9.1
Administrative Expenses and Financial Charges 603,162 4.0 597,075 4.1

Income tax 632,791 4.2 1,045,853 7.1

Worker's funds and Central research fund 138,585 0.9 208,355 1.4
Sales tax 30,387 0.2 20,007 0.1

To Government 801,763 5.3 1,274,215 8.6

Cash dividend* 853,359 5.6 1,621,383 11.0

To Shareholders 853,359 5.6 1,621,383 11.0

Retained in the Business 80,571 0.5 333,804 2.3

15,186,134 100.0 14,703,021 100.0

* Represents final dividend @ Rs. 5.0 per share amounting to Rs. 853.4 million proposed by the Board of Directors
subsequent to the year end.

0.5%
5.6%

5.3%

4.0% Revenue and its Disposal

Bought-in-materials & Services 73.6%
Selling Marketing and Distribution Expenses 11.0%
11.0% Administrative Expenses and Financial Charges 4.0%
Government 5.3%
73.6% Shareholders 5.6%
Retained in the Business 0.5%

41
 KEY OPERATING
AND FINANCIAL
DATA
2004 2005 2006 2007 2008 2009
Rupees in million

Assets employed
Fixed assets - property, plant and equipment 1,434 1,503 1,774 2,237 2,415 2.601
Investments 407 192 96 347 172 169
Long-term loans and deposits 55 47 43 61 69 67
Net current assets 3,877 5,252 5,827 5,758 6,032 5,646
5,773 6,994 7,740 8,403 8,688 8,483
Less: Non-current liabilities
Staff retirement benefits - Staff gratuity 149 159 66 23 21 59
Deferred taxation 76 97 137 262 312 320
225 256 203 285 333 379
Net assets employed 5,548 6,738 7,537 8,118 8,355 8,104

Financed by
Issued, subscribed and paid-up capital 874 1,092 1,365 1,707 1,707 1,707
Reserves 4,674 5,646 6,172 6,411 6,648 6,397
Shareholders' equity 5,548 6,738 7,537 8,118 8,355 8,104

Turnover and profit

Net sales 8,867 9,417 10,088 10,611 13,403 14,719
Gross profit 3,506 3,846 3,867 3,952 3,856 3,546
Operating profit 2,148 2,708 2,651 2,670 3,078 1,581
Profit before taxation 2,119 2,695 2,632 2,659 3,001 1,567
Taxation 648 881 967 988 1,046 633
Profit after taxation 1,471 1,814 1,665 1,671 1,955 934
EBITDA 2,306 2,858 2,804 2,842 3,309 1,848
Dividend including bonus shares* 757 1,092 1,365 1621 1,621 853
Sales per employee (Rs. in '000) 4,765 5,087 5,549 5,850 7,659 8,420

Return on Equity Debtors Turnover & Inventory Turnover

28 70
30
24 60

25 20 50
Number of Days

Number of Days

20 16 40
Percentage

12 30
15

8 20
10
4 10
2.2

1.9

2.7

15.4

25.0

5
3.5
50

54

63

69

56

67

0
26.5

26.9

22.1

20.6

23.4

11.5

0
2004 2005 2006 2007 2008 2009
0
2004 2005 2006 2007 2008 2009 Debtors Turnover Inventory Turnover

42
 2004 2005 2006 2007 2008 2009
Rupees in million

Cashflows
Operating Activities 1,788 1,721 1,765 1,497 (402) 1,090
Investing Activities (469) (179) (220) (824) 572 (241)
Financing Activities (508) (609) (869) (1,086) (1,698) (1,190)
Changes in Cash equivalents 811 933 676 (413) (1,528) (341)
Cash & equivalents - Year end 3,057 3,990 4,666 4,253 2,725 2,384

Ratios
Earnings per share - Rs. 8.6 10.6 9.8 9.8 11.5 5.5
Cash dividend per share* - Rs. 7.0 8.0 8.0 7.5 9.5 5.0
Bonus shares (%) 20 25 25 25 - -
Price earning ratio (times) 20.9 17.5 16.2 19.6 6.6 20.0
Market value per share - year end - Rs. 181 186.3 157.9 192.4 75.9 109.3
Market value per share - high - Rs. 236.5 240.3 215.8 210.0 200.0 143.8
Market value per share - low - Rs. 176 162.1 148.0 151.1 75.9 75.0
Break-up value per share-without surplus on revaluation - Rs. 63.5 61.7 55.2 47.6 48.9 47.5
Break-up value per share-with surplus on revaluation - Rs. 63.5 61.7 55.2 47.6 48.9 47.5
Market price to Book value with surplus (times) 2.9 3.0 2.9 4.0 1.6 2.3
Market capitalization (Rs in million) 15,817 20,350 21,559 32,837 12,961 18,649
Dividend payout (%) 51.5 60.2 82.0 97.0 83.0 91.3
Dividend yield (%) 5.0 5.6 6.6 5.2 12.5 4.6
Dividend cover ratio (times) 1.9 1.7 1.2 1.0 1.2 1.1
Return on equity (%) 26.5 26.9 22.1 20.6 23.4 11.5
Total assets turnover (times) 1.3 1.1 1.1 1.0 1.3 1.3
Fixed assets turnover (times) 6.2 6.3 5.7 4.7 5.5 5.7
Debtors turnover (days) 2.2 1.9 2.7 3.5 15.4 25.0
Creditors turnover (days) 27 23 25 25 17 27
Inventory turnover (days) 50 54 63 69 56 67
Current ratio 4.6 5.1 4.4 4.3 4.1 3.2
Acid test ratio 3.1 3.6 3.1 3.0 2.3 1.6
Gross profit margin (%) 39.5 40.8 38.3 37.2 28.8 24.1
EBITDA Margin to Sales (%) 26.0 30.4 27.8 26.8 24.7 12.6
Net margin (%) 16.6 19.3 16.5 15.7 14.6 6.3

* Represents final dividend @ Rs. 5.0 per share amounting to Rs. 853.4 million proposed by the Board of Directors subsequent to
the year end.

6
Assets & Liabilities Current Ratio
7000
5
6000

5000 4
Number of times
Rupees in million

4000
3
3000
2
2000
1
1896
3877
1434

1742
5252
1503

1913
5827
1774

2645
5758
2237

2656
6032
2415

2837
5646
2601

1000
225

256

203

285

333

379

4.6

5.1

4.4

4.3

4.1

3.2

0 0
2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009
Non-current Liabilities Non- current Assets
Net Current Assets Property, plant and equipment

43
 BALANCE
SHEET
ANALYSIS
Vertical Analysis Balance Sheet (%)
2004 2005 2006 2007 2008 2009

Share Capital & Reserves 80.8 81.5 79.8 79.9 78.6 73.7
Non Current Liabilities 3.3 3.1 2.1 2.8 3.1 3.4
Current Liabilites 15.9 15.4 18.1 17.3 18.3 22.9
Total Equity and Liabilites 100.0 100.0 100.0 100.0 100.0 100.0

Non Current Assets 27.6 21.1 20.3 26.0 25.0 25.8

Current Assets 72.4 78.9 79.7 74.0 75.0 74.2
Total Assets 100.0 100.0 100.0 100.0 100.0 100.0

Horizontal Analysis Balance Sheet (%)

Change from preceding year

Share Capital & Reserves 21.0 21.4 11.9 7.7 2.9 (3.0)
Non Current Liabilities (11.8) 13.8 (20.7) 40.4 16.8 13.8
Current Liabilites 3.8 16.5 33.8 3.5 10.0 30.2
Total Equity and Liabilites 16.5 20.4 14.2 7.6 4.5 3.6

Non Current Assets 24.4 (8.1) 9.8 38.3 0.4 6.8

Current Assets 13.8 31.3 15.4 (0.1) 6.0 2.5
Total Assets 16.5 20.4 14.2 7.6 4.5 3.6

44
 PROFIT & LOSS
ACCOUNT
ANALYSIS
Vertical Analysis Profit & Loss Account (%)
2004 2005 2006 2007 2008 2009

Net sales 100.0 100.0 100.0 100.0 100.0 100.0

Cost of sales 60.5 59.2 61.7 62.8 71.2 75.9
Gross profit 39.5 40.8 38.3 37.2 28.8 24.1
Selling, marketing and distribution expenses 11.6 9.6 10.4 11.4 9.9 11.4
Administrative expenses 4.0 3.7 4.3 4.6 3.9 4.1
Other operating expenses 1.8 2.4 2.2 2.1 1.6 0.9
Other operating income 2.1 3.7 4.9 6.0 9.6 3.0
Operating profit 24.2 28.8 26.3 25.1 23.0 10.7
Financial charges 0.3 0.1 0.2 0.1 0.6 0.1
Profit before taxation 23.9 28.6 26.1 25.0 22.4 10.6
Taxation 7.3 9.4 9.6 9.3 7.8 4.3
Profit after taxation 16.6 19.3 16.5 15.7 14.6 6.3

Horizontal Analysis Profit & Loss Account (%)

Change from preceding year

Net sales 9.5 6.2 7.1 5.2 26.3 9.8

Cost of sales 8.3 3.9 11.7 7.0 43.4 17.0
Gross profit 11.2 9.7 0.5 2.2 (2.4) (8.0)
Selling, marketing and distribution expenses (3.8) (13.1) 16.7 15.0 9.7 26.0
Administrative expenses (28.4) 3.1 20.7 11.4 6.8 13.3
Other operating expenses 23.8 44.2 (1.3) 0.9 (7.1) (33.2)
Other operating income 86.1 86.2 41.7 28.8 100.3 (65.9)
Operating profit 38.0 26.1 (2.1) 0.7 15.3 (48.6)
Financial charges 222.2 (55.2) 46.2 (36.8) 541.7 (81.8)
Profit before taxation 36.9 27.1 (2.3) 1.0 12.9 (47.8)
Taxation 24.1 36.0 9.8 2.2 5.9 (39.5)
Profit after taxation 43.4 23.3 (8.2) 0.4 17.0 (52.2)

45
 We want to improve the quality of human life and contribute
towards a better future for all

46
FINANCIAL STATEMENTS 2009

47
 STATEMENT OF COMPLIANCE WITH THE CODE OF
CORPORATE GOVERNANCE
FOR THE YEAR ENDED DECEMBER 31, 2009

This statement is being presented to comply with the Code of Corporate Governance contained in the listing
regulations of Karachi and Lahore Stock Exchanges for the purpose of establishing a framework of good governance,
whereby a listed company is managed in compliance with the best practices of corporate governance. The Company
has applied the principles contained in the Code as follows:

1. The Company encourages representation of independent non-executive directors and representation of minority
interests on its Board of Directors. At present the Board includes two non-executive directors one of whom
represents minority shareholders' interests.

2. The directors have confirmed that none of them is serving as a director in more than ten listed companies
including this company, except for Mr. Tariq Iqbal Khan representing NIT, who has been specifically exempted
by the Securities and Exchange Commission of Pakistan for holding directorship in more than ten listed companies.

3. All the resident directors of the Company are registered as taxpayers and none of them has defaulted in payment
of any loan to a banking company, a DFI or a NBFI or, being a member of Stock Exchange, has been declared
as a defaulter by that Stock Exchange.

4. The Company has a vision/mission statement and overall corporate strategy. All Policies of the Company are
governed by the “Corporate Governance Charter” which has been approved by the Board.

5. The Company has prepared a “Statement of Ethics and Business Practices” which has been signed by the
directors and employees of the Company.

6. No casual vacancy occurred in the Board of Directors during the year ended December 31, 2009.

7. The powers of the Board have been duly exercised and decisions on material transactions, including appointment
and determination of remuneration and terms and conditions of employment of CEO and other executive
directors have been taken by the Board, and significant matters are documented by a resolution passed by the
Board.

8. The meetings of the Board were presided over by the Chairman and the Board met at least once in every
quarter. Written notices of the Board meetings, along with the agenda were circulated before the meetings.
The minutes of the meetings were appropriately recorded and circulated.

9. There was no new appointment of CFO or Company Secretary during the year.

10. All the directors on the Board are fully conversant with their duties and responsibilities as directors of corporate
bodies. The Board had previously arranged an orientation course of the Code of Corporate Governance for
its directors to apprise them of their role and responsibilities. Further, the Booklet on Code of Corporate
Governance as published by the Securities and Exchange Commission of Pakistan have been circulated amongst
the directors on the Board.

48
11. The directors' report for this year has been prepared in compliance with the requirements of the Code and
fully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by the CEO and CFO before the approval of
the Board.

13. The directors, CEO and executives do not hold any interest in the shares of the Company other than that
disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the Code.

15. The Audit Committee has been in existence since May 2002. It comprises three members, of whom two are
non-executive directors including the chairman of the committee.

16. There exists an effective internal audit function within the Company.

17. The meetings of the audit committee were held at least once in every quarter prior to approval of interim and
final results of the Company as required by the Code. The terms of reference of the committee have been
formed and advised to the committee for compliance.

18. The statutory auditors of the Company have confirmed that they have been given satisfactory rating under the
Quality Control Review Program of the Institute of Chartered Accountants of Pakistan, that they or any of the
partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm
and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code
of ethics as adopted by Institute of Chartered Accountants of Pakistan.

19. The statutory auditors or the persons associated with them have not been appointed to provide other services
except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC
guidelines in this regard.

20. The related party transactions have been placed before the audit committee and approved by the Board of
Directors alongwith pricing methods. The transactions were carried out on terms equivalent to those that prevail
in the arm's length transactions.

21. We confirm all other material principles contained in the Code have been complied with.

Karachi M. Salman Burney

March 03, 2010 Chairman / Chief Executive

49
 REVIEW REPORT TO THE MEMBERS ON STATEMENT OF
COMPLIANCE WITH BEST PRACTICES OF CODE OF
CORPORATE GOVERNANCE

We have reviewed the Statement of Compliance with the Best Practices contained in the Code of Corporate
Governance prepared by the Board of Directors of GlaxoSmithKline Pakistan Limited to comply with the Listing
Regulation No. 35 of the Karachi and Lahore Stock Exchanges where the company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the
company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether
the Statement of Compliance reflects the status of the company's compliance with the provisions of the Code of
Corporate Governance and report if it does not. A review is limited primarily to inquiries of the company personnel
and review of various documents prepared by the company to comply with the Code.

As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal
control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any
special review of the internal control system to enable us to express an opinion as to whether the Board's statement
on internal controls covers all controls and the effectiveness of such internal controls.

Further, Sub-Regulation (xiii a) of Listing Regulation 35 notified by Karachi and Lahore Stock Exchanges require the
company to place before the board of directors for their consideration and approval related party transactions
distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions
and transactions which are not executed at arm's length price recording proper justification for using such alternate
price mechanism. Further, all such transactions are also required to be separately placed before the audit committee.
We are only required and have ensured compliance of requirement to the extent of approval of related party
transactions by the Board of Directors and placement of such transactions before the audit committee. We have
not carried out any procedures to determine whether the related party transactions were undertaken at arm's length
price or not.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance
does not appropriately reflect the company's compliance, in all material respects, with the best practices contained
in the Code of Corporate Governance as applicable to the company for the year ended December 31, 2009.

A. F. Ferguson & Co.

Chartered Accountants

Karachi
March 03, 2010

50
AUDITORS’ REPORT TO THE MEMBERS

We have audited the annexed balance sheet of GlaxoSmithKline Pakistan Limited as at

December 31, 2009 and the related profit and loss account, cash flow statement and statement of changes in equity
together with the notes forming part thereof, for the year then ended and we state that we have obtained all the
information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of
our audit.

It is the responsibility of the company's management to establish and maintain a system of internal control, and
prepare and present the above said statements in conformity with the approved accounting standards and the
requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements
based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require
that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are
free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant
estimates made by management, as well as, evaluating the overall presentation of the above said statements. We
believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

(a) in our opinion, proper books of account have been kept by the company as required by the Companies
Ordinance, 1984;

(b) in our opinion:

(i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in
conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and
are further in accordance with accounting policies consistently applied except for the change as stated
in note 2.1.1 of these financial statements, with which we concur;

(ii) the expenditure incurred during the year was for the purpose of the company's business; and

(iii) the business conducted, investments made and the expenditure incurred during the year were in
accordance with the objects of the company;

(c) in our opinion and to the best of our information and according to the explanations given to us, the balance
sheet, profit and loss account, cash flow statement and statement of changes in equity together with the notes
forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the
information required by the Companies Ordinance, 1984, in the manner so required and respectively give a
true and fair view of the state of the company's affairs as at December 31, 2009 and of the profit, its cash
flows and changes in equity for the year then ended; and

(d) no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.

A. F. Ferguson & Co.

Chartered Accountants

Karachi
March 03, 2010

Name of Engagement Partner: Syed Fahim ul Hasan 51

 BALANCE SHEET
AS AT DECEMBER 31, 2009

2009 2008
Note Rupees ‘000

SHARE CAPITAL AND RESERVES

Share capital 3 1,706,718 1,706,718

Reserves 4 6,397,381 6,648,173

8,104,099 8,354,891
NON-CURRENT LIABILITIES

Staff retirement benefit - staff gratuity 5 58,894 20,802

Deferred taxation 6 320,435 312,270
379,329 333,072
CURRENT LIABILITIES

Trade and other payables 7 2,524,426 1,867,275

Taxation - provision less payments - 70,387
2,524,426 1,937,662
2,903,755 2,270,734
CONTINGENCIES AND COMMITMENTS 8

11,007,854 10,625,625

M. Salman Burney Javed Ahmedjee

Chairman / Chief Executive Chief Financial Officer

52
 2009 2008
Note Rupees ‘000

NON-CURRENT ASSETS

Fixed assets - property, plant

and equipment 9 2,600,814 2,415,255

Long-term loans to employees 10 61,299 61,666

Long-term deposits 7,027 6,788

Investments 11 168,687 171,855

2,837,827 2,655,564
CURRENT ASSETS

Stores and spares 12 129,239 116,084

Stock-in-trade 13 4,061,840 3,494,054
Trade debts 14 996,915 1,016,968
Loans and advances 15 91,315 119,242
Trade deposits and prepayments 16 87,754 93,377
Accrued return 21,503 80,596
Refunds due from government 17 15,436 15,468
Other receivables 18 129,156 153,864
Taxation - payments less provision 252,744 -
Investments 11 644,889 155,511
Cash and bank balances 19 1,739,236 2,724,897
8,170,027 7,970,061
11,007,854 10,625,625

The annexed notes 1 to 38 form an integral part of these financial statements.

M. Salman Burney Javed Ahmedjee

Chairman / Chief Executive Chief Financial Officer

53
 PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED DECEMBER 31, 2009

2009 2008
Note Rupees ‘000

Net sales 20 14,719,132 13,403,224

Cost of sales 21 (11,173,470) (9,547,619)

Gross profit 3,545,662 3,855,605

Selling, marketing and distribution expenses 22 (1,673,809) (1,328,925)

Administrative expenses 23 (588,814) (520,216)

Other operating expenses 24 (138,585) (208,355)

Other operating income 25 436,615 1,279,790

Operating profit 1,581,069 3,077,899

Financial charges 26 (14,348) (76,859)

Profit before taxation 1,566,721 3,001,040

Taxation 27 (632,791) (1,045,853)

Profit after taxation 933,930 1,955,187

Other comprehensive income

Fair value gain / (loss) on

available-for-sale investments 15,356 (17,259)

Deferred tax (5,375) 6,041

9,981 (11,218)

Total comprehensive income 943,911 1,943,969

Earnings per share 28 Rs. 5.47 Rs. 11.46

The annexed notes 1 to 38 form an integral part of these financial statements.

M. Salman Burney Javed Ahmedjee

Chairman / Chief Executive Chief Financial Officer

54
CASH FLOW STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2009

2009 2008
Note Rupees ‘000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 29 2,083,606 633,333

Staff gratuity paid (40,384) (44,827)
Taxes paid (953,131) (982,457)
Decrease / (increase) in long-term loans to employees 367 (7,911)
(Increase) / decrease in long-term deposits (239) 20
Net cash from / (used in) operating activities 1,090,219 (401,842)

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed capital expenditure (494,178) (475,032)

Proceeds from sale of operating assets 53,573 907,993
Investments encashed 175,000 100,000
Return on investments - PIBs 24,172 39,200
Net cash (used in) / from investing activities (241,433) 572,161

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid (1,189,558) (1,698,167)

Net decrease in cash and cash equivalents (340,772) (1,527,848)

Cash and cash equivalents at the beginning of the year 2,724,897 4,252,745

Cash and cash equivalents at the end of the year 30 2,384,125 2,724,897

The annexed notes 1 to 38 form an integral part of these financial statements.

M. Salman Burney Javed Ahmedjee

Chairman / Chief Executive Chief Financial Officer

55
 STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2009

Share C A P I T A L R E S E R V E Fair value General Unappr- Total

Capital reserve reserve opriated
Share Reserve profit
premium arising on
amalgamation

Rupees ‘000

Balance at January 1, 2008 1,706,718 1,409 375,572 (1,150) 3,999,970 2,035,122 8,117,641

Final dividend for the year

ended December 31, 2007
@ Rs 7.50 per share - - - - - (1,280,039) (1,280,039)

Interim dividend for the year

ended December 31, 2008
@ Rs 2.50 per share - - - - - (426,680) (426,680)

Profit after taxation for the year

ended December 31, 2008 - - - - - 1,955,187 1,955,187

Fair value loss on

available-for-sale investments - - - (11,218) - - (11,218)

Total compehensive income for the year

ended December 31, 2008 - - - (11,218) - 1,955,187 1,943,969

Balance at December 31, 2008 1,706,718 1,409 375,572 (12,368) 3,999,970 2,283,590 8,354,891

Final dividend for the year

ended December 31, 2008
@ Rs 7.00 per share - - - - - (1,194,703) (1,194,703)

Profit after taxation for the year

ended December 31, 2009 - - - - - 933,930 933,930

Fair value gain on

available-for-sale investments - - - 9,981 - - 9,981

Total compehensive income for the year

ended December 31, 2009 - - - 9,981 - 933,930 943,911

Balance at December 31, 2009 1,706,718 1,409 375,572 (2,387) 3,999,970 2,022,817 8,104,099

The annexed notes 1 to 38 form an integral part of these financial statements.

M. Salman Burney Javed Ahmedjee

Chairman / Chief Executive Chief Financial Officer

56
NOTES TO AND FORMING PART OF THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2009

1. THE COMPANY AND ITS OPERATIONS

The company is incorporated in Pakistan as a limited liability company and is listed on the Karachi and Lahore
Stock Exchanges. It is engaged in manufacturing and marketing of research based ethical specialities, other
pharmaceutical, animal health and consumer products.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.

2.1 Basis of preparation

Statement of compliance
These financial statements have been prepared in accordance with approved accounting standards as applicable
in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984,
provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the
provisions or directives of the Companies Ordinance, 1984 shall prevail.

Critical accounting estimates and judgements

The preparation of financial statements in conformity with the IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the company's
accounting policies. The matters involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant which have been disclosed in the relevant notes to the financial
statements are:

i) Provision for retirement benefits

ii) Impairment of property, plant and equipment
iii) Provision for obsolete and slow moving stock
iv) Provision for doubtful receivables
v) Taxation

Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.

There have been no critical judgments made by the company's management in applying the accounting policies
that would have effect on the amounts recognised in the financial statements.

2.1.1 Changes in accounting policies and disclosures

(a) New and amended standards adopted by the company

The company has adopted the following new and amended IFRSs as of January 1, 2009:

- IAS 1 (Revised), 'Presentation of financial statements', issued in September 2007 revises the existing
IAS 1 and requires presentation of transactions with owners in the statement of changes in equity and

57
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

with non-owners in the other comprehensive income statement. The revised standard requires an
entity to opt for presenting such transactions either in a single statement of comprehensive income
or in an income statement and a separate statement of comprehensive income. The company has
applied IAS 1 (Revised) from January 1, 2009 and elected to present one performance statement
(i.e. the profit and loss account). However, since there are no non-owner changes in equity there is
no impact of such revised standard on these financial statements. Comparative information has been
re-presented so that it also is in conformity with the revised standard. The change in accounting policy
has resulted in recognition of gains on revaluation of available-for-sale investments in other comprehensive
income. Otherwise the change only impacts presentation aspects and there is no impact on earnings
per share.

- IFRS 7 'Financial instruments: Disclosures', introduces new disclosures relating to financial instruments.
The new disclosures are included in Note 34 of these financial statements. As the change in accounting
policy only impacts presentation aspects, there is no impact on earnings per share.

- IFRS 8 'Operating segments' replaces IAS 14 and requires a 'management approach', under which
segment information is presented on the same basis as that used for internal reporting purposes. The
company has no reportable segments under IFRS 8. However, certain disclosures as required under
IFRS 8 have been included in note 20 of these financial statements. As the change in accounting policy
only impacts presentation aspects, there is no impact on earnings per share.

(b) Standards, amendments and interpretations to existing standards that are not yet effective and have not
been early adopted by the company.

The following standards and amendments to existing standards have been published and are mandatory
for the company's accounting periods beginning on or after January 1, 2010:

Effective date
for periods beginning

- IFRIC 17 - Distribution of non-cash assets to owners July 1, 2009

- IAS 27 (Revised) - Consolidated and separate financial statements July 1, 2009
- IFRS 3 (Revised) - Business combinations July 1, 2009
- IAS 38 (Amendment) - Intangible assets April 1, 2009
- IFRS 5 - Measurement of non-current assets
(or disposal groups) classified as held-for-sale April 1, 2009
- IAS 1 (Amendment) - Presentation of financial statements April 1, 2009
- IFRS 2 (Amendments) - Group cash-settled and share-
based payment transactions April 1, 2009

2.2 Overall valuation policy

These financial statements have been prepared under the historical cost convention except as otherwise
disclosed in the accounting policies below.

58
2.3 Staff retirement benefits

2.3.1 Defined benefit plan

The company operates approved funded gratuity schemes for all its permanent employees.

Contributions to the funded gratuity schemes are based on actuarial recommendations. The latest actuarial
valuations of the schemes were carried out as at December 31, 2009 using the Projected Unit Credit Method.

Cumulative net unrecognised actuarial gains and losses at the beginning of the year which exceed 10% of the
greater of the present value of the obligations and the fair value of respective fund’s assets are amortised over
the average remaining working life of the employees.

Retirement benefits are payable to employees on completion of prescribed qualifying period of service under
gratuity schemes.

2.3.2 Defined contribution plan

The company also operates approved contributory provident funds for all its permanent employees.

2.4 Compensated absences

The company provides for compensated absences of its employees on unavailed balance of leave in the period
in which the leave is earned.

2.5 Provisions
Provisions are recognised when the company has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate
of the amount can be made.

2.6 Taxation

2.6.1 Current
The charge for current taxation is based on taxable income at the current rates of taxation after taking into
account tax credits and rebates available, if any, and taxes paid under the final tax regime.

2.6.2 Deferred
Deferred tax is accounted for using the balance sheet liability method on all temporary differences arising
between tax bases of assets and liabilities and their carrying amounts. Deferred tax liability is generally recognised
for all taxable temporary differences and deferred tax asset is recognised to the extent that it is probable that
taxable profits will be available against which the deductible temporary differences, unused tax losses and tax
credits can be utilised. Deferred tax is charged or credited in the profit and loss account except for deferred
tax arising on revaluation of available for sale investments which is recognised in other comprehensive income.

2.7 Fixed assets - property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation / amortisation and impairment
losses except freehold land and capital work-in-progress which are stated at cost.

59
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

Depreciation is charged using the straight line method whereby the cost of an asset less estimated residual
value, if not insignificant, is written off over its estimated useful life. Depreciation / amortisation on assets is
charged at the normal rates from the month of addition to the month of disposal. Cost of leasehold land is
amortised equally over the period of the lease.

Maintenance and normal repairs are charged to income as and when incurred. Also assets costing up to
Rs. 25 thousand are charged to income. Major renewals and improvements are capitalised and the assets so
replaced, if any, are retired.

Gains and losses on disposal of fixed assets are included in income currently.

2.8 Impairment
The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate
that the carrying value may not be recoverable. If any such indication exists and where the carrying values
exceed the estimated recoverable amount, the assets or cash-generating units are written down to their
recoverable amount and the resulting impairment is charged to profit and loss account.

2.9 Investments
Available-for-sale
Securities intended to be held for an indefinite period of time, which may be sold in response to needs for
liquidity or changes in the interest rates, are classified as available-for-sale.

Available-for-sale investments are initially recognised at fair value plus transaction cost and subsequently
recognised at fair value.

Gains and losses arising from changes in fair value are recognised in other comprehensive income.

Held-to-maturity
These are investments with fixed or determinable payments and fixed maturity with the company having
positive intent and ability to hold to maturity. These are stated at amortised cost.

2.10 Stores and spares

These are valued at lower of cost using moving average method and estimated recoverable amount. Items in
transit are valued at cost comprising invoice value plus other charges incurred thereon. Provision is made for
items which are obsolete and slow moving.

2.11 Stock-in-trade
These are valued at the lower of cost and net realisable value except goods-in-transit which are stated at cost.
Cost is determined using first-in first-out method.

Cost of raw and packing materials comprise of purchase price including directly related expenses less trade
discounts. Cost of work-in-process and finished goods include cost of raw and packing materials, direct labour
and related production overheads.

60
 Net realisable value signifies the estimated selling price in the ordinary course of business less cost of completion
and cost necessarily to be incurred in order to make the sale.

2.12 Trade debts

Trade debts are valued at the invoice value. Provision is made against debts considered doubtful of recovery.
Bad debts are written off when considered irrecoverable.

2.13 Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement,
cash and cash equivalents comprise of cash and cheques in hand, balances with banks on current, savings and
deposit accounts and short-term investments maturing within three months of the balance sheet date.

2.14 Foreign currency translation

Foreign currency transactions are recorded into Pak Rupee using the exchange rates prevailing at the dates
of the transactions. Monetary assets and liabilities in foreign currency are translated into Pak Rupee at the rates
of exchange prevailing at the balance sheet date. Exchange gains and losses are included in income currently.

The financial statements are presented in Pak Rupee, which is the company's functional and presentation
currency.

2.15 Revenue recognition

Sales are recorded on despatch of goods to customers and in case of export when the goods are shipped.

Returns on deposits and investments are recognised on accrual basis.

2.16 Financial assets and liabilities

All financial assets and liabilities are initially measured at cost which is the fair value of the consideration given
or received respectively. These are subsequently measured at fair value, amortised cost or cost as the case
may be.

2.17 Dividend
Dividend is recognised as a liability in the period in which it is declared.

61
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

2009 2008
Rupees ‘000
3. SHARE CAPITAL

Authorised share capital

250,000,000 Ordinary shares of Rs. 10 each 2,500,000 2,500,000

Issued, subscribed and paid-up capital

Ordinary shares of Rs. 10 each

2009 2008

5,386,825 5,386,825 Shares allotted for

consideration paid in cash 53,868 53,868

26,951,523 26,951,523 Shares allotted for

consideration other than cash 269,515 269,515

138,333,496 138,333,496 Shares allotted as bonus

shares 1,383,335 1,383,335

170,671,844 170,671,844 1,706,718 1,706,718

3.1 As at December 31, 2009 and 2008 Setfirst Limited, UK and its nominees held 134,453,588 shares. Subsequent
to the balance sheet date, the shares held by Setfirst Limited, UK have been transferred to S.R. One International
B.V., Netherlands. The ultimate parent of the company is GlaxoSmithKline plc, UK.

2009 2008
Rupees ‘000
4. RESERVES

Capital reserves
Share premium 1,409 1,409
Reserve arising on amalgamation 375,572 375,572
376,981 376,981

Fair value reserve - note 4.1 (2,387) (12,368)

General reserve 3,999,970 3,999,970
Unappropriated profit 2,022,817 2,283,590
6,397,381 6,648,173

62
 2009 2008
Rupees ‘000

4.1 This represents deficit arising on revaluation of available-for-sale

investments as follows:

Deficit on revaluation (3,672) (19,028)

Deferred tax 1,285 6,660
(2,387) (12,368)
5. STAFF RETIREMENT BENEFIT - staff gratuity

5.1 Movement in liability

Opening balance 20,802 23,192

Charge for the year - note 5.5 78,476 42,437
Payments to the fund (40,384) (44,827)
Closing balance 58,894 20,802

5.2 Balance sheet reconciliation

Present value of defined benefit obligation 726,452 641,237

Fair value of plan assets (523,103) (446,759)
203,349 194,478

Unrecognised actuarial loss (144,455) (173,676)

58,894 20,802

5.3 Movement in the present value of defined benefit

obligation during the year is as follows:

Balance at January 1 641,237 574,654

Current service cost 41,892 37,842
Interest cost 95,570 57,511
Actuarial (gain) / loss (6,008) 23,432
Benefits paid (46,239) (52,202)
Balance at December 31 726,452 641,237

5.4 Movement in the present value of plan assets during

the year is as follows:

Balance at January 1 446,759 529,756

Expected return on plan assets 66,289 52,916
Actuarial gain / (loss) 15,910 (128,538)
Employer's contributions 40,384 44,827
Benefits paid (46,239) (52,202)
Balance at December 31 523,103 446,759

63
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

2009 2008
Rupees ‘000

5.5 Charge for the year

Current service cost 41,892 37,842

Interest cost 95,570 57,511
Expected return on plan assets (66,289) (52,916)
Recognition of actuarial loss 7,303 -
78,476 42,437

5.6 Actual return / (deficit) on plan assets 82,199 (75,622)

5.7 Principal actuarial assumptions

Expected return on plan assets (% per annum) 12.75 15

Expected rate of increase in salaries (% per annum) 12.75 15
Discount factor used (% per annum) 12.75 15
Retirement age (years) 60 60
Average remaining working life of employees (years) 10 15

As per actuarial recommendation, the expected return on plan assets was determined by considering the
expected risk adjusted returns available on the assets underlying the current investment policy.

5.8 Plan assets

2009 2008
Plan assets are comprised of the following: % %

- Equity and Mutual Funds 26.93 27.44

- Bonds 52.40 67.71
- Others 20.67 4.85
100.00 100.00

5.9 For the year ending December 31, 2010 expected contribution to funded gratuity schemes is Rs. 80.07 million.

5.10 Comparison for five years

2009 2008 2007 2006 2005
Rupees ‘000
Fair value of plan assets 523,103 446,759 529,756 372,849 240,920
Present value of defined benefit obligation (726,452) (641,237) (574,654) (482,634) (428,947)
Deficit (203,349) (194,478) (44,898) (109,785) (188,027)
Experience (gain) / loss on plan assets (15,910) 128,538 (47,104) (8,910) (11,846)
Experience (gain) / loss on plan liabilities (6,008) 23,432 25,082 23,080 11,884

64
 2009 2008
Rupees ‘000

6. DEFERRED TAXATION
Credit balance arising in respect of:
- Accelerated tax depreciation allowances 360,103 344,717

Debit balances arising in respect of:

- Provision for staff gratuity 17,339 6,347
- Provision for doubtful debts 4,640 1,405
- Provision for slow moving and obsolete stock 9,116 6,455
- Provision for slow moving and obsolete
stores and spares 1,852 5,945
- Provision for doubtful refunds due from government 5,436 5,635
- Loss on revaluation of available-for-sale investments 1,285 6,660
39,668 32,447
320,435 312,270

7. TRADE AND OTHER PAYABLES

Creditors
- Associated companies 878,641 -
- Others 149,870 84,473
Bills payable
- Associated companies 53,814 403,213
- Others 26,812 61,643
Royalty and technical fee payable
- Associated company 150,575 116,077
- Others 7,656 30,616
Accrued liabilities 910,891 858,467
Advances from customers 174,769 142,256
Contractors' earnest / retention money 5,009 6,597
Taxes deducted at source and payable to
statutory authorities 9,364 7,871
Workers' Profits Participation Fund - note 7.1 1,269 -
Workers’ Welfare Fund 53,292 68,052
Central Research Fund 15,825 30,315
Unclaimed dividend 38,554 33,409
Payable to Provident Fund 8,984 9,462
Others 39,101 14,824
2,524,426 1,867,275
7.1 Workers' Profits Participation Fund

Opening (asset) / liability (3,205) 7,801

Allocation for the year – note 24 84,474 116,795
81,269 124,596
Interest on funds utilised in company's business – note 26 - 282
81,269 124,878
Amounts paid to the Fund (80,000) (128,083)
Closing liability / (asset) 1,269 (3,205)

65
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

8. CONTINGENCIES AND COMMITMENTS

8.1 Contingencies

Claims against company not acknowledged as debt amounted to Rs. 316.52 million (2008: Rs. 306.48 million).

8.2 Commitments

Commitments for capital expenditure outstanding as at December 31, 2009 amounted to Rs. 452.42 million
(December 31, 2008: Rs. 103.31 million).

Note 2009 2008

9. FIXED ASSETS - property, plant and equipment Rupees ‘000

Operating assets 9.1 2,343,264 2,242,144

Capital work-in-progress 9.4 257,550 173,111
2,600,814 2,415,255
9.1 Operating assets
Cost as at Additions/ Cost as at Accumulated Depreciation/ Accumulated Impairment Net Book Annual rate of
January 1, (disposals)/ December 31, depreciation/ Amortisation depreciation/ loss as at value as at depreciation/
2009 (write offs)* 2009 Amortisation for the period Amortisation as December 31, December 31, Amortisation
as at January 1, (on disposals)/ at December 31, 2009 2009 %
2009 (on write offs)* 2009
Rupees 000
Freehold land 174 - 174 - - - - 174 -

Leasehold land 27,162 - 27,162 8,308 975 9,283 - 17,879 2.5 to 10

Buildings on
freehold land 68,855 - 66,494 30,421 951 30,383 16,669 19,442 2.5
(2,361) (989)
Buildings on
leasehold land 738,317 39,210 777,498 185,118 17,342 202,449 26,581 548,468 2.5
(29) (11)

Plant and
machinery 2,272,134 240,257 2,407,411 982,660 134,239 1,033,223 27,827 1,346,361 5 to 10
(104,980) (83,676)

Furniture and
fixtures 117,653 9,704 117,897 65,972 7,555 64,377 296 53,224 10
(9,410) (9,117)
(50) * (33) *

Vehicles 307,680 81,217 326,100 115,590 50,550 126,263 - 199,837 25

(61,271) (39,662)
(1,526) * (215) *

Office equipments 479,939 39,351 515,495 305,860 55,314 357,567 49 157,879 10 to 33.33
(2,435) (2,247)
(1,360) * (1,360) *

December 31, 2009 4,011,914 409,739 4,238,231 1,693,929 266,926 1,823,545 71,422 2,343,264
(180,486) (135,702)
(2,936) * (1,608) *

December 31, 2008 3,659,024 578,867 4,011,914 1,617,530 231,041 1,693,929 75,841 2,242,144
(148,714) (96,900)
(77,263) * (57,742) *

66
9.2 Reconciliation of opening and closing Net Book Value (NBV)

Cost Accumulated Impairment NBV Cost of Cost less Depreciation / (Charge) / NBV as at
depreciation / loss additions accumulated Amortisation Reversal December 31,
amortisation during depreciation for the year of impairment 2009
As at January 1, 2009 the year of disposals / loss on
write offs* disposals
during during
the year the year
Rupees 000

Freehold land 174 - - 174 - - - - 174

Leasehold land 27,162 8,308 - 18,854 - - (975) - 17,879

Buildings on
freehold land 68,855 30,421 18,042 20,392 - (1,372) (951) 1,373 19,442

Buildings on
leasehold land 738,317 185,118 23,645 529,554 39,210 (18) (17,342) (2,936) 548,468

Plant and
machinery 2,272,134 982,660 34,052 1,255,422 240,257 (21,304) (134,239) (14,698) 1,346,361
20,923
Furniture and
fixtures 117,653 65,972 102 51,579 9,704 (293) (7,555) (230) 53,224
(17) * 36

Vehicles 307,680 115,590 - 192,090 81,217 (21,609) (50,550) - 199,837

(1,311) *

Office equipments 479,939 305,860 - 174,079 39,351 (188) (55,314) (49) 157,879
- *

4,011,914 1,693,929 75,841 2,242,144 409,739 (44,784) (266,926) (17,913) 2,343,264

(1,328) * 22,332

67
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

9.3 Details of operating assets sold

The details of operating assets sold, having net book value in excess of Rs. 50,000 each are as follows:

Description Cost Accumulated Book Sale Mode of Particulars of purchaser

depreciation value proceeds disposal
Rupees ‘000
Plant & Machinery 3,099 2,307 792 318 Tender M/s. Ganatra Salvaging, B-37 SITE, Karachi
1,606 515 1,091 800 " "
1,198 957 241 193 " "
730 585 145 50 " "
558 484 74 57 " "
515 438 77 35 " "
402 308 94 41 " "
185 114 71 1 " "
170 46 124 17 " "
125 46 79 30 " "
Office Equipment 184 133 51 2 Tender M/s. Projector Point, 4th Floor,Tawakkal Centre
Saddar, Karachi
Furniture & Fixture 210 153 57 17 Tender Imran Ahmed, House # 219 Sector 35/B,
Korangi # 4, Karachi
Vehicles 1,389 174 1,215 1,259 Company policy Mr. Ghulam Sarwar - Ex - Executive
1,198 898 300 299 " Mr.Tariq Rasheed Dar - Executive
1,060 724 336 850 " Mr. Abdul Samad - Executive
995 746 249 246 " Mr. Pervaiz Iqbal Awan - Executive
849 637 212 212 " Dr. Gohar Nayab - Executive
849 637 212 212 " Mr. Zahid Ali Jafferi - Executive
647 211 436 300 " Mr. Qiaser Aziz - Ex- Employee
615 276 339 420 " Mr. Mushtaq Ali Ansari - Ex - Employee
464 348 116 160 " Mr. Badre Munir - Ex - Employee
1,725 404 1,321 1,035 " Ms. Fahim Sultana - Ex - Executive
1,123 482 641 360 " Mr. Ehtesham ul Haq - Ex - Executive
1,005 281 724 600 " Mr. Ahmed Jamal Qudsi - Ex - Executive
1,005 391 614 486 " Mr. Javed Akhtar - Ex - Executive
1,005 328 677 660 " Mr. Nasir Ali Khan - Ex - Executive
969 330 639 645 " Mr. Jamil Akhtar - Ex - Executive
969 359 610 576 " Mr. Jawed Hussain - Ex - Executive
849 637 212 212 " Mr. Anwer Mukhtar - Executive
849 637 212 212 " Mr. Ghulam Sarwar - Executive
652 163 489 480 " Mr. Muhammad Saeed - Ex - Executive
651 224 427 685 " Ms. Nida Zubair - Executive
620 276 344 551 " Mr. Jawad Gill - Executive
620 296 324 545 " Mr. Rizwan Ahmed Khokhar - Executive
619 464 155 155 " Mr. Najib Uddin - Executive
480 135 345 288 " Mr.Tariq Masood Alam - Ex - Employee
464 348 116 235 " Mr. Khalil Ahmed - Ex - Employee
464 274 190 400 " Mr. Nadir Magsi - Ex - Employee
4,200 1,313 2,887 4,650 Insurance Claim EFU General Insurance Limited
969 421 548 921 " "

68
Description Cost Accumulated Book Sale Mode of Particulars of purchaser
depreciation value proceeds disposal
Rupees ‘000
8,994 7,494 1,500 2,400 Tender M/s. Honda Quaideen, 233-A -
2 P.E.C.H.S, Karachi
3,510 3,090 420 825 " Muhammad Asghar - House
No.17, Floor No.5,
Camble Street, Burns Road, Karachi
1,172 879 293 892 " Mr. Nouman Baig - 89-J, Block II,
Khalid Bin Waleed Road, Karachi
1,059 215 844 977 " Mr. Faisal Abdul Aziz - C-30, Block 9,
Gulshan e Iqbal, Karachi
1,035 776 259 788 " Muhammad Yousuf - 9, Block 92, Sector 11/F,
New Karachi
983 737 246 769 " Mr. Zahid Qadri - R-536, Sector 15A/4,
Buffer Zone, Karachi
849 637 212 705 " Mr. Sajjad Ahmed - House No. 791,
Defence Phase 1, Malir Cantt., Karachi
639 394 245 402 " Muhammad Farooq - A-5, Al Suleman Arcade,
Jacob Lines , Karachi
609 385 224 552 " "
560 420 140 506 " "
560 420 140 531 " "
609 415 194 530 " Mr. Sajid Hasan Khan - B-1, Crecsent Arcade,
Sector 5K, North Karachi
609 385 224 536 " "
513 385 128 355 " "
509 382 127 374 " "
509 382 127 336 " "
464 348 116 387 " "
560 420 140 526 " Mr. Aftab Ahmed - House No. D/84, Cantt.
Bazaar Area, Malir Cantt., Karachi
509 382 127 362 " Mr. Adnan Hassan Khan - A-908, Block 12,
F.B.Area, Gulberg, Karachi
464 348 116 356 " "
509 382 127 358 " Mr. Rehan Mithani - D-87/1, Clifton 7, Karachi
509 382 127 360 " Mr. Zeeshan Ali Khan - 69-D,
P.E.C.H.S., Block 2, Karachi 509
509 382 127 375 " "
464 301 163 421 " Muhammad Yousuf - House no. 706 / 218,
Muhalla Fatima Jinnah Colony, New Town, Karachi
464 348 116 267 " Mr. Intikhab Ahmad - A/115, Block No. 1,
F.B.Area, Sharifabad, Karachi
464 348 116 402 " Mr. Mir Khatam Khan - C-30, III-N, Block II,
K.B.W. Road, P.E.C.H.S. Karachi
464 348 116 452 " Muhammad Javed - Babar Filling Station,
E-35/A, S.I.T.E., Karachi

69
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

2009 2008
Rupees ‘000
9.4 Capital work-in-progress

Civil work 103,453 33,031

Plant and machinery 106,491 124,238
Furniture and fixtures 7,337 937
Office equipments 24,701 7,081
Advances to suppliers 15,568 7,824
257,550 173,111

10. LONG-TERM LOANS TO EMPLOYEES

Reconciliation of the carrying amount of loans to executives and other employees:

2009 2008
Executives Other Employees Total Executives Other Employees Total
Non- Interest Non- Non- Interest Non-
interest bearing interest interest bearing interest
bearing bearing bearing bearing
Rupees ‘000
Balance at January 1 4,166 2,267 88,334 94,767 1,726 624 84,948 87,298
Disbursements 2,772 2,499 41,878 47,149 6,682 2,462 46,577 55,721
Repayments (4,271) (1,658) (39,474) (45,403) (4,242) (819) (43,191) (48,252)
Balance at December 31 2,667 3,108 90,738 96,513 4,166 2,267 88,334 94,767
Current portion included in note 15 (1,533) (118) (33,563) (35,214) (2,966) (1,312) (28,823) (33,101)
1,134 2,990 57,175 61,299 1,200 955 59,511 61,666

10.1 These loans have been given in accordance with the terms of employment for purchase of house, motor car,
motor cycle, computer and for the purpose of staff welfare and are repayable in 12 to 60 equal monthly
installments depending upon the type of the loan. These loans are interest free except certain loans which
carry interest ranging from 5% to 8% per annum (2008: 5% to 8% per annum). All loans are secured against
the retirement fund balances.
The maximum aggregate amount of loans due from executives at the end of any month during the year was
Rs. 4.75 million (2008: Rs. 5.06 million).
Note 2009 2008
Rupees ‘000
11. INVESTMENTS
Available-for-sale
Pakistan Investment Bonds 11.1 168,687 327,366
Held-to-maturity
Treasury bills 11.2 644,889 -
813,576 327,366
Less: short term 644,889 155,511
168,687 171,855

70
11.1 These are held by company's banker for safe custody. The yield on these bonds is 12.25% per annum and
these bonds will mature in May 2011.

11.2 These are held by company's banker for safe custody. The yield on these bills is 12.42% per annum and these
bills will mature in January 2010.
2009 2008
Rupees ‘000
12. STORES AND SPARES

Stores and spares 134,529 133,071

Less: Provision for slow moving and obsolete items - note 12.1 5,290 16,987
129,239 116,084

12.1 Stores and spares of Rs. 11.78 million (2008: Nil) have been written off against the provision during the year.
2009 2008
Rupees ‘000
13. STOCK-IN-TRADE

Raw and packing materials including

in transit Rs. 401.9 million
(2008: Rs. 542.3 million) 1,550,739 1,763,245

Work-in-progress 245,411 201,425

Finished goods including

in transit Rs. 143.0 million
(2008: Rs. 84.66 million) 2,452,874 1,659,565
4,249,024 3,624,235
Less: Provision for slow moving, obsolete and
damaged items - note 13.3 187,184 130,181
4,061,840 3,494,054

13.1 Stock-in-trade includes Rs. 50.31 million (2008: Rs. 40.73 million) and Rs. 106.47 million (2008: Rs. 113.41
million) held with Pharmatec Pakistan (Private) Limited and Al-Ghazi Distributors (Private) Limited respectively.

13.2 The above balances include items costing Rs. 196 million (2008: Rs. 353 million) valued at net realisable value
of Rs. 159 million (2008: Rs. 317 million).

13.3 Stocks of Rs. 32.76 million (2008: Rs. 37.92 million) have been written off against the provision during the year.

71
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

2009 2008
Rupees ‘000
14. TRADE DEBTS
Considered good
GSK Trading Services Limited - Associated company 11,542 5,076
Others 985,373 1,011,892
Considered doubtful 15,760 4,604
1,012,675 1,021,572
Less: Provision for doubtful debts 15,760 4,604
996,915 1,016,968

14.1 The maximum aggregate amount due from the related party at the end of any month during the year was
Rs. 14.75 million (2008: Rs. 12.53 million).

14.2 Trade debts of Rs. 0.44 million (2008: Rs. 0.12 million) have been written off against the provision during the year.
Note 2009 2008
Rupees ‘000
15. LOANS AND ADVANCES - considered good

Loans due from employees - note 10 35,214 33,101

Advances to employees 25,373 20,206
Advances to suppliers 30,728 65,935
91,315 119,242
16. TRADE DEPOSITS AND PREPAYMENTS
Trade deposits 57,238 53,762
Prepayments 16,816 21,139
Margins held with banks 13,700 18,476
87,754 93,377
17. REFUNDS DUE FROM GOVERNMENT
Custom duty and sales tax
considered good 15,436 15,468
considered doubtful 18,465 18,465
33,901 33,933
Less: Provision for doubtful receivables 18,465 18,465
15,436 15,468
18. OTHER RECEIVABLES
Due from related parties
- Associated companies 18.1 82,355 57,470
- Pension Fund 18.2 31,212 83,712
- Workers' Profits Participation Fund 7.1 - 3,205
113,567 144,387
Claims recoverable from suppliers 7,956 2,917
Others 7,633 6,560
129,156 153,864

72
 2009 2008
Rupees ‘000
18.1 Due from associated companies

GlaxoSmithKline Services Unlimited, UK 18,429 36,185

GlaxoSmithKline Export Limited, UK 14,051 -
GlaxoSmithKline Pharmaceuticals (Private)
Limited, Pakistan 41,437 -
GlaxoSmithKline Limited, Bangladesh 8,377 8,377
GSK Services Corporation, UK 61 -
GlaxoSmithKline Limited Biologicals, Belgium - 12,606
SB R&D Upper Merion, USA - 302
82,355 57,470

18.2 This represents amount receivable from pension fund on discontinuation of the pension scheme in 2007. The
pension fund will be wound up after the assets of the Fund have been realised and the liabilities have been
settled.

18.3 The maximum aggregate amount due from related parties at the end of any month during the year was
Rs. 113.57 million (2008: Rs. 144.39 million).
2009 2008
Rupees ‘000
19. CASH AND BANK BALANCES
With banks
on deposit accounts 1,545,001 2,630,000
on PLS savings accounts 130,384 50,502
on current accounts 59,074 40,800
Cash and cheques in hand 4,777 3,595
1,739,236 2,724,897

19.1 At December 31, 2009 the rates of mark-up on PLS savings accounts and on term deposit accounts were
5% to 5.5% (2008: 5%) and 10.82% to 11.35% (2008: 10% to 15%) per annum respectively.
2009 2008
Rupees ‘000
20. NET SALES
Gross sales
Local 14,669,361 13,397,423
Export 390,370 289,640
15,059,731 13,687,063
Less: Commissions, returns, discounts and rebates 310,212 263,832
Sales tax 30,387 20,007
14,719,132 13,403,224

20.1 Sales values of pharmaceutical and consumer products amount to Rs. 14.42 billion and Rs. 0.30 billion (2008:
Rs. 13.17 billion and Rs. 0.23 billion) respectively.

73
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

20.2 Sales of major product categories i.e. antibiotics, vaccines and dermatologicals during the year amounted to
Rs. 5.99 billion, Rs. 1.55 billion and Rs. 1.31 billion (2008: Rs. 5.03 billion, Rs. 1.86 billion and Rs. 1.13 billion)
respectively.

20.3 The company sells its products through a network of three distribution channels involving various distributors/
sub-distributors and also directly to Government and other institutions. Sales to only one distributor exceed
10 percent of the net sales during the year, amounting to Rs. 1.5 billion (2008: Rs. 1.38 billion).
2009 2008
Rupees ‘000
21. COST OF SALES
Raw and packing materials consumed 7,108,891 4,912,391
Manufacturing charges to third party 136,211 115,585
Stores and spares consumed 31,814 20,166
Salaries, wages and other benefits - note 21.1 887,668 827,758
Fuel and power 238,002 218,633
Rent, rates and taxes 4,191 2,421
Royalty and technical fee 157,754 152,256
Insurance 48,995 38,146
Repairs and maintenance 94,139 96,987
Training expenses 127 1,567
Travelling and entertainment 11,647 9,294
Vehicle running 9,723 10,835
Depreciation / amortisation 167,483 141,214
Impairment charge 17,913 14,541
Provision for slow moving and obsolete stock - raw
and packing materials 13,857 18,569
Provision for slow moving and obsolete
stores and spares 80 805
Canteen expenses 72,184 62,648
Laboratory expenses 29,378 25,738
Communication and stationery 7,699 8,093
Security expenses 7,366 4,597
Other expenses 20,535 21,221
9,065,657 6,703,465
Opening stock of work-in-process 201,425 118,537
Closing stock of work-in-process (245,411) (201,425)
Cost of goods manufactured 9,021,671 6,620,577
Opening stock of finished goods 1,659,566 1,250,190
Purchase of finished goods 2,989,569 3,344,404
Provision for slow moving, obsolete and damaged
stock - finished goods 75,901 59,674
13,746,707 11,274,845
Closing stock of finished goods (2,452,874) (1,659,565)
Cost of samples shown under selling, marketing
and distribution expenses - sales promotion (120,363) (67,661)
11,173,470 9,547,619
21.1 Salaries, wages and other benefits include Rs. 38.04 million and Rs. 22.54 million (2008: Rs. 22.44 million and
Rs. 21.19 million) in respect of defined benefit plan and contributory provident fund respectively.
74
 2009 2008
Rupees ‘000
22. SELLING, MARKETING AND DISTRIBUTION EXPENSES
Salaries, wages and other benefits - note 22.1 & 22.2 612,538 484,198
Sales promotion 470,436 374,776
Advertising 118,682 70,059
Handling, freight and transportation 163,783 128,507
Travelling and entertainment 120,831 104,079
Depreciation / amortisation 31,298 28,339
Vehicle running 34,164 33,611
Publication and subscriptions 21,513 15,775
Fuel and power 14,814 10,419
Communication 13,417 15,172
Provision for doubtful debts 11,600 1,824
Repairs and maintenance 10,796 12,711
Insurance 9,448 8,562
Printing and stationery 9,370 7,532
Security expenses 7,944 7,682
Rent, rates and taxes 2,581 5,912
Canteen expenses 1,013 880
Training expenses 1,060 1,107
Other expenses 18,521 17,780
1,673,809 1,328,925

22.1 Salaries, wages and other benefits include Rs. 27.85 million and Rs. 16.61 million (2008: Rs. 16.17 million and
Rs. 15.17 million) in respect of defined benefit plan and contributory provident fund respectively.
22.2 Salaries, wages and other benefits include staff severance cost of Rs. 29 million (2008: Nil).
2009 2008
Rupees ‘000
23. ADMINISTRATIVE EXPENSES
Salaries, wages and other benefits - note 23.1 & 23.2 301,647 239,959
Depreciation / amortisation 68,145 61,488
Communication 33,567 27,082
Training expenses 28,529 16,397
Travelling and entertainment - note 23.3 14,264 18,980
Legal and professional charges 28,181 15,743
Repairs and maintenance 19,317 33,787
Donations - note 23.4 14,572 22,452
Printing and stationery 13,086 12,641
Auditors’ remuneration - note 23.5 11,784 11,312
Vehicle running 11,390 14,568
Security expenses 11,209 8,376
Publication and subscriptions 8,418 7,863
Rent, rates and taxes 5,817 8,985
Insurance 4,199 4,935
Canteen expenses 4,171 4,406
Other expenses - note 23.6 10,518 11,242
588,814 520,216

75
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

23.1 Salaries, wages and other benefits include Rs. 12.59 million and Rs. 7.67 million (2008: Rs. 3.83 million and Rs.
6.58 million) in respect of defined benefit plan and contributory provident fund respectively.
23.2 Salaries, wages and other benefits include staff severance cost of Rs. 12.6 million (2008: Nil).
23.3 These are net of recovery from related party of Rs. 1.80 million (2008: Rs. 1.39 million).
23.4 Donations
Donations include a sum of Rs. 386 thousand (2008: Rs. 440 thousand) paid to Concern for Children Trust,
B/63, Estate Avenue, S.I.T.E, Karachi in which Mr. Muhammad Salman Burney, Chairman / Chief Executive and
Mr. Shahid Mustafa Qureshi, Director, are the trustees.
2009 2008
Rupees ‘000
23.5 Auditors' remuneration

Audit fee 3,000 2,750

Fee for review of half yearly financial statements,
special certifications and others 5,110 3,260
Taxation services 2,774 4,491
Out-of-pocket expenses 900 811
11,784 11,312

23.6 These are net of recovery from related party of Rs. 75.50 million (2008: Rs. 71.59 million).
2009 2008
Rupees ‘000
24. OTHER OPERATING EXPENSES
Workers' Profits Participation Fund - note 7.1 84,474 116,795
Workers' Welfare Fund 38,286 61,246
Central Research Fund 15,825 30,314
138,585 208,355

25. OTHER OPERATING INCOME

Income from financial assets
Return on PIBs 22,296 37,619
Return on Treasury Bills 75,616 7,056
Income on savings and deposit accounts 256,976 344,761
354,888 389,436
Income from non-financial assets
Gain on disposal of operating assets 29,793 857,078
Others
Scrap sales 17,768 15,816
Insurance commission 16,056 12,761
Service fee on clinical trial studies 6,975 3,418
Others 11,135 1,281
436,615 1,279,790

76
 2009 2008
Rupees ‘000

26. FINANCIAL CHARGES

Exchange loss - net 3,329 67,400

Bank charges 11,019 8,749
Interest on Workers' Profits Participation Fund – note 7.1 - 282
Amortisation of premium on investments - 428
14,348 76,859

27. TAXATION

Current
- for the year 670,000 990,000
- prior years (40,000) -
Deferred 2,791 55,853
632,791 1,045,853

27.1 Relationship between tax expense

and accounting profit

Profit before taxation 1,566,721 3,001,040

Tax at the applicable rate of 35% 548,352 1,050,364

Tax effect of exempt income - (295,210)
Reversal of prior years provision (40,000) -
Tax effect of other than temporary differences 21,186 58,657
Effect of final tax regime 103,253 232,042
632,791 1,045,853

28. EARNINGS PER SHARE

Profit after taxation 933,930 1,955,187

Weighted average number of outstanding shares 170,672 170,672
Basic earnings per share Rs. 5.47 Rs. 11.46

28.1 A diluted earnings per share has not been presented as the company did not have any convertible instruments
in issue as at December 31, 2009 and 2008 which would have any effect on the earnings per share if the
option to convert is exercised.

77
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

2009 2008
Rupees ‘000

29. CASH GENERATED FROM OPERATIONS

Profit before taxation 1,566,721 3,001,040

Add / (less): Adjustments for non-cash charges

and other items

Depreciation / amortisation 266,926 231,041

Return on investments - PIBs (22,296) (37,619)
Impairment charge 17,913 14,541
Gain on disposal of operating assets (29,793) (857,078)
Provision for staff gratuity 78,476 42,437
Amortisation of (discount) / premium
on investments (967) 428
310,259 (606,250)
Profit before working capital changes 1,876,980 2,394,790

Effect on cash flow due to working capital changes

(Increase) / decrease in current assets

Stores and spares (13,155) (8,885)

Stock-in-trade (567,786) (1,216,879)
Trade debts 20,053 (900,121)
Loans and advances 27,927 (38,203)
Trade deposits and prepayments 5,623 (9,029)
Accrued return on term deposits 57,218 27,674
Refunds due from government 32 (570)
Other receivables 24,708 224,207
(445,380) (1,921,806)
Increase in trade and other payables 652,006 160,349
206,626 (1,761,457)
2,083,606 633,333

30. CASH AND CASH EQUIVALENTS

Cash and bank balances - note 19 1,739,236 2,724,897

Short term investments - Treasury bills - note 11 644,889 -
2,384,125 2,724,897

78
31. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
The aggregate amount charged in these financial statements for remuneration of the Chief Executive, Directors
and Executives are as follows:

Chief Executive Directors Executives

2009 2008 2009 2008 2009 2008
Rupees ‘000
Managerial remuneration 13,040 11,091 14,555 10,345 161,004 144,703
Bonus and SARs 15,156 16,467 10,461 10,279 72,344 43,430
Retirement benefits 3,010 1,880 3,651 1,919 40,548 24,882
House rent 4,854 4,125 5,887 4,210 65,376 54,593
Utilities 1,079 917 1,308 936 14,528 12,132
Medical expenses 102 29 182 137 4,964 3,957
Others 938 698 713 517 5,912 3,243
38,179 35,207 36,757 28,343 364,676 286,940
Number of person (s) 1 1 3 4 146 127

In addition to the above, fee to two non-executive Directors during the year amounted to Rs. 60 thousand
(2008: Rs. 52.5 thousand).

The Chief Executive, Executive Directors and certain executives are also provided with free use of company
maintained cars and certain items of fixtures and household furniture in accordance with the company policy.

Bonus includes Share Appreciation Rights (SARs) and other share options to be settled in cash (subject to
tax), payable to Chief Executive, Directors and certain executives, amounting to Rs. 5.42 million, Rs. 3.53 million
and Rs. 9.59 million (2008: Rs. 4.24 million, Rs. 4.66 million and Rs. 4.68 million) respectively. These are granted
every year and are payable on completion of qualifying period of service. They are linked with the share value
of ultimate parent company, GlaxoSmithKline plc, UK.
2009 2008
Rupees ‘000
32. TRANSACTIONS WITH RELATED PARTIES
Relationship Nature of transactions

Holding Company: Dividend paid 941,175 1,344,536

Associated
companies: a. Royalty paid 134,166 96,577
b. Purchase of goods 4,454,339 3,766,212
c. Sale of goods 99,038 68,884
d. Recovery of expenses from related parties 82,850 73,568
e. Service to associated company 35,895 -
f. Service fee on clinical trial studies 6,975 3,418
g. Donations 386 540

Staff retirement
funds: a. Expense charged for retirement benefit plans 125,303 85,377
b. Payments to retirement benefit plans 87,689 77,212
c. Receipts from retirement benefit plans 52,500 240,000
Key management
personnel: a. Salaries and other employee benefits 129,605 106,722
b. Post employment benefits 13,656 8,539
c. Sale of assets 246 1,703

79
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

32.1 The related parties balances as at December 31, 2009 are included in the respective notes to the financial
statements. These are settled in the ordinary course of business. The receivables and payables are mainly
unsecured in nature and bear no interest.
33. RUNNING FINANCE UNDER MARK-UP ARRANGEMENTS
The facilities for running finance available from various banks amounted to Rs. 560 million
(2008: Rs. 560 million). The rate of mark-up ranges from one month KIBOR plus 1.75% to three month KIBOR
plus 1.70% (2008: from 6% to three month KIBOR plus 0.5%). The arrangements are secured by way of pari-
passu charge against hypothecation of company's stock-in-trade and book debts.
The facilities for export refinance available from various banks amounted to Rs. 10 million (2008: Rs 10 million).
These facilities carry mark-up at 1% (2008: 1%) above the State Bank of Pakistan Export Refinance rate per
annum.
The facilities for opening letters of credit and guarantees as at December 31, 2009 amounted to Rs. 2.38 billion
(2008: Rs. 2.17 billion) of which unutilised balances at the year end amounted to Rs. 1.46 billion (2008: Rs.
1.49 billion).

34. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

34.1 Financial assets and liabilities
All the financial assets of the company, except PIBs classified as available for sale investments are categorised as
loans and receivables and all the financial liabilities are categorised as financial liabilities measured at amortised
cost. The carrying values of all financial assets and liabilities approximate their fair values.
Interest bearing Non-interest bearing Total
Maturity Maturity Total Maturity Maturity Total
up to after up to one after
one one year year one year
year
Rupees ‘000
Financial assets
Loans and advances 118 2,990 3,108 60,469 58,309 118,778 121,886
Deposits - - - 57,238 7,027 64,265 64,265
Trade debts - - - 996,915 - 996,915 996,915
Accrued return on
investments and bank deposits - - - 21,503 - 21,503 21,503
Other receivables - - - 129,156 - 129,156 129,156
Cash and bank balances 1,675,385 - 1,675,385 63,851 - 63,851 1,739,236
Investments
PIBs - 168,687 168,687 - - - 168,687
Treasury Bills 644,889 - 644,889 - - - 644,889
December 31, 2009 2,320,392 171,677 2,492,069 1,329,132 65,336 1,394,468 3,886,537
December 31, 2008 2,837,325 172,810 3,010,135 1,396,645 67,499 1,464,144 4,474,279

Financial liabilities
Trade and other payables - - - 2,271,127 - 2,271,127 2,271,127
December 31, 2009 - - - 2,271,127 - 2,271,127 2,271,127
December 31, 2008 - - - 1,618,781 - 1,618,781 1,618,781

On balance sheet date gap

December 31, 2009 2,320,392 171,677 2,492,069 (941,995) 65,336 (876,659) 1,615,410
December 31, 2008 2,837,325 172,810 3,010,135 (222,136) 67,499 (154,637) 2,855,498

The effective mark-up rates for the financial assets and liabilities are mentioned in respective notes to the
financial statements.
80
34.2 Financial Risk Management

(a) Market risk

(i) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in the market
interest rates. As at December 31, 2009, the company's interest bearing financial assets amounted to Rs. 2.5
billion and if interest rates on these net assets had been 300 basis points higher / lower with all other variables
held constant, post-tax profit for the year and equity would have been higher / lower by Rs. 45 million and
Rs. 41 million respectively. Therefore, the management believes that the company is not materially exposed
to interest rate changes.

(ii) Currency risk

Foreign currency risk arises mainly where receivables and payables exist in foreign currency due to transactions
with foreign undertakings. Net payables exposed to foreign currency risk as at December 31, 2009 amount
to Rs. 662 million (2008: Rs. 465 million). The liability is mainly denominated in US Dollars and at December
31, 2009, if the Pakistan Rupee had weakened / strengthened by 5% against the US Dollar with all other
variables held constant, post-tax profit for the year would have been higher / lower by Rs. 19 million.

(b) Credit risk

Credit risk represents the accounting loss that would be recognised at the reporting date if counterparts failed
to perform as contracted. The analysis of maximum exposure to credit risk resulting from each class of financial
assets is as follows:
2009 2008
Rupees ‘000

Trade debts 996,915 1,016,968

Loans, advances and other receivables 336,810 405,048
Investments 813,576 327,366
Bank balances 1,734,459 2,721,302
3,881,760 4,470,684

Trade debts of the company are not exposed to significant credit risk as the company trades with credit worthy
third parties. Trade debts of Rs. 220.91 million are past due of which Rs. 15.76 million have been impaired.
Past due but not impaired balances include Rs. 12.59 million outstanding for more than three months.

Deposits, loans, advances and other receivables include loans and advances recoverable from employees that
are secured against their retirement benefits.

Investments represent Pakistan Investment Bonds (PIBs) and treasury bills. PIBs are backed by the Government
of Pakistan and therefore have very low credit risk. The treasury bills are of short term nature and therefore
have a low credit risk.

81
 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

Bank balances represent low credit risk as they are placed with banks having good credit rating assigned by
credit rating agencies.

(c) Liquidity risk

Liquidity risk reflects the company's inability in raising funds to meet commitments. The company manages
liquidity risk by maintaining sufficient cash and balances with banks in deposit accounts and the availability of
financing through banking arrangements. As at December 31, 2009 there is no maturity mismatch between
financial assets and liabilities that expose the company to liquidity risk.

35. CAPITAL RISK MANAGEMENT

The company's objectives when managing capital are to safeguard the company's ability to continue as a going
concern so that it can continue to provide adequate returns for shareholders and benefits for other stakeholders
and to maintain an optimal return on capital employed. The current capital structure of the company is equity
based with no financing through borrowings.

36. DIVIDEND
The Board of Directors in its meeting held on March 03, 2010 proposed a cash dividend of Rs. 5 per share
(2008: Rs. 7 per share) amounting to Rs. 0.85 billion (2008: Rs. 1.19 billion).

37. SIGNIFICANT EVENT

In an extraordinary general meeting of the company held on March 03, 2010 the shareholders of the company
have approved the scheme of arrangements for amalgamation of GlaxoSmithKline Pharmaceuticals (Private)
Limited (Formerly Bristol Myers Squibb Pakistan (Private) Limited) with the company.

38. DATE OF AUTHORISATION FOR ISSUE

These financial statements were approved and authorised for issue on March 03, 2010 by the Board of Directors
of the company.

M. Salman Burney Javed Ahmedjee

Chairman / Chief Executive Chief Financial Officer

82
Form 34
PATTERN OF SHAREHOLDING

SHARESHOLDING TOTAL SHARES HELD

NUMBER OF
SHAREHOLDERS From To

999 1 100 45,344

1,258 101 500 381,370
894 501 1000 619,130
1,109 1001 5000 2,596,069
267 5001 10000 1,871,636
105 10001 15000 1,287,607
56 15001 20000 973,574
35 20001 25000 802,122
12 25001 30000 325,309
9 30001 35000 300,037
7 35001 40000 266,630
14 40001 45000 591,381
7 45001 50000 334,632
4 50001 55000 212,354
10 55001 60000 587,665
2 60001 65000 121,919
1 65001 70000 65,812
5 70001 75000 362,906
2 75001 80000 156,356
1 80001 85000 80,351
1 95001 100000 95,706
2 105001 110000 213,929
2 115001 120000 235,438
1 125001 130000 125,310
1 140001 145000 143,150
2 155001 160000 313,772
3 195001 200000 595,347
1 200001 205000 200,157
1 255001 260000 259,557
1 260001 265000 261,400
1 305001 310000 309,743
1 415001 420000 417,118
1 480001 485000 484,672
1 605001 610000 606,947
1 665001 670000 666,545
1 705001 710000 707,976
1 5945001 5950000 5,945,881
1 6230001 6235000 6,233,421
1 6415001 6420000 6,419,983
1 134450001 134455000 134,453,588
4,822 170,671,844

83
 CATEGORIES OF SHAREHOLDERS

a)
Sr. Categories of Shareholders Number of Shares Percentage
No. Shareholders Held (%)
1 Individuals 2,181 4,661,135 2.73
2 Investment Companies 4 2,139 0.00
3 Insurance Companies 1 1 0.00
4 Joint Stock Companies 11 19,863 0.01
5 Financial Institutions 2 4,762 0.00
6 Associated Company 1 134,453,588 78.78
7 Central Depository Company (b) 2,617 31,499,993 18.46
8 Others (see below) 5 30,363 0.02
4,822 170,671,844 100.00

Others:
i Mohsin Trust 1 17,283 0.01
ii The Al-Malik Charitable Trust 1 2,718 0.00
iii Securities Exchange Commission of Pakistan 1 1 0.00
iv Punjabi Saudagar Co-operative Society 1 218 0.00
v The Anjuman Wazifa Sadat-o-Momineen Pakistan 1 10,143 0.01
5 30,363 0.02

b) Categories of Account holders and Sub-Account holders

as per Central Depository Company of Pakistan as at December 31, 2009

Sr. Categories of Shareholders Number of Shares Percentage

No. Shareholders Held (%)
1 Individuals 2,498 7,049,550 4.13
2 Investment Companies 23 2,027,481 1.19
3 Insurance Companies 12 7,575,179 4.44
4 Joint Stock Companies 59 420,143 0.25
5 Financial Institutions 9 13,985,592 8.19
6 Modarabas 3 34,012 0.02
7 Foreign Companies 4 72,796 0.04
8 Others (see below) 9 335,240 0.20
2,617 31,499,993 18.46

Others:
i The Aga Khan University Foundation 1 23,200 0.01
ii The Pakistan Memon Educational & Welfare Society 1 41,897 0.03
iii Trustees Kandawala Trust 1 44,657 0.03
iv Trustees Saeeda Amin WAKF 1 45,000 0.03
v Trustees Mohammad Amin WAKF Estate 1 75,000 0.04
vi Managing Committee Karachi Zorthosti Banu Mandal 1 18,956 0.01
vii Trustees Mrs. Khorshed H. Dinshaw & Mr. Hosh 1 35,437 0.02
viii Trustees D.N.E. Dinshaw Charity Trust 1 48,093 0.03
ix Centre for Development of Social Service 1 3,000 0.00
9 335,240 0.20

84
SHAREHOLDING INFORMATION

Categories of Shareholders Number of No. of

Shareholder Shares Held

Holding Company:

Setfirst Limited U.K. 1 134,453,588

N.I.T & I.C.P :

Investment Corporation of Pakistan 1 320

National Bank of Pakistan (Trustee Department) 1 12,653,429

Directors, CEO and their spouses and minor children:

Mr. M. Salman Burney 1 3,125

Mr. Shahid Mustafa Qureshi 1 3
Dr. Muzaffar Iqbal 1 1
Mr. Rafique Dawood 1 1
Dr. Iffat Yazdani 1 335

Executives 5 4,378

Public sector companies and corporation :

Banks, Development Finance Institutions,

Non-Banking Finance Institutions, Insurance
Companies, Modarabas and Mutual Funds 53 11,048,213

Shareholders holding 10% or more voting interest :

Setfirst Limited U.K. 1 134,453,588

2%
8%

4% Distribution of Shares
Holding Company 79%
Individuals 7%
Insurance Companies 4%
7% Financial Institutions 8%
Others 2%
79%

85
 NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the SIXTY-THIRD Annual General Meeting of the Shareholders of the Company will
be held at the Beach Luxury Hotel, Karachi at 11:00 a.m. on Tuesday, March 30, 2010 to transact the following
business:

1. (a) To receive and adopt the Repor t of the Director s and the Accounts for the year ended
December 31, 2009 and the Auditors' Report thereon;

(b) To approve the payment of a dividend.

2. To appoint Auditors and fix their remuneration.

3. To approve an increase in the authorised share capital of GlaxoSmithKline Pakistan Limited to

Rs. 5,000,000,000 by the creation of 250 million ordinary shares of Rs.10/= each.

By Order of the Board

Karachi Shahid Mustafa Qureshi

March 08, 2010 Director / Secretary

Notes:

1. The Share Transfer Books of the Company will be closed from March 23, 2010 to March 30, 2010 (both
days inclusive) for the purpose of determining the entitlement for the payment of Dividend.

2. A member entitled to attend and vote at the Meeting may appoint another member as his/her Proxy to
attend, speak and vote at the Meeting on his/her behalf. Instrument appointing Proxy must be deposited at
the Office of the Share Registrars of the Company at 516, Clifton Centre, Khayaban-e-Roomi, Kehkashan,
Block - 5, Clifton, Karachi-75600 not less than 48 hours before the time of the Meeting.

3. The shareholders are requested to notify the Share Registrars of the Company if there is any change in
their address.

86
4. CDC Account Holders will further have to follow the under mentioned guidelines as laid down in
Circular No. 1 of 2000 dated January 26, 2000 issued by the Securities and Exchange Commission of
Pakistan.

A. For Attending the Meeting:

i) In case of individuals, the account holder or sub-account holder and/or the person whose securities are in
group account and their registration details are uploaded as per the Regulations, shall authenticate his/her
identity by showing his/her original Computerized National Identity Card (CNIC) or original passport at
the time of attending the meeting.

ii) In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signature
of the nominee shall be produced (unless it has been provided earlier) at the time of the meeting.

B. For Appointing Proxies:

i) In case of individuals, the account holder or sub-account holder and/or the person whose securities are in
group account and their registration details are uploaded as per the Regulations, shall submit the proxy
form as per the above requirement.

ii) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be
mentioned on the form.

iii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with
the proxy form.

iv) The proxy shall produce his/her original CNIC or original passport at the time of the meeting.

v) In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signature
shall be submitted (unless it has been provided earlier) along with proxy form to the Company.

87
 CONTACT
DETAILS
Karachi
35, Dockyard Road,
West Wharf, Karachi - 74000
Tel: (92-21) 32315478 - 82
Fax: (92 - 21) 32311120
UAN: 111-475-725
F-268, S.I.T.E.
Near Labour Square,
Karachi - 75700
Tel: (92 - 21) 32570665 - 69
Fax: (92 - 21) 32572613
Lahore
18.5 Km., Ferozepur Road,
P.O.Box No. 244
Tel: (92 - 42) 5811931 - 35
Fax: (92 - 42) 5820821
DISTRIBUTION /
SALES OFFICE
Karachi
F-268, S.I.T.E.,
Near Labour Square,
Karachi - 75700
Tel: (92 - 21) 32564355 - 65
Fax: (92 - 21) 32570119
94, Deh Landhi,
Karachi - 75120
Tel: (92 - 21) 35015040 - 44
Fax: (92 -21) 35015515
88
Sukkur
Plot No. 77/80, Block B,
Friends Cooperative Housing Society,
Akhuwat Nagar, Airport Road.
Tel: (92 - 71) 5630668, 5630144
Fax: (92 - 71) 5630755
Multan
Islam-ud-din House, Mehmood Kot,
Bosan Road.
Tel: (92 - 61) 6222061-63
Fax: (92 - 61) 6222064
Lahore
Cordeiro House,
Plot No. 27, Kot Lakhpat Industrial Estate,
Kot Lakhpat.
Tel: (92 - 42) 5111061- 64
Fax: (92 - 42) 5111065
Islamabad
Aleem House, Plot No. 409,
Sector I-9, Industrial Area.
Tel: (92 - 51) 4435701 - 03
Fax: (92 - 51) 4433706
Peshawar
D’ Souza House, Nasirpur,
Near Abid Flour Mills,
G. T. Road.
Tel: (92 - 91) 2261451-52
Fax: (92 - 91) 2261457