GlaxoSmithKline Pakistan Limited

Ten Years of Success

Ten years is an achievement, but for us it is a celebration of touching the lives of millions of people across Pakistan. Being one of the worlds leading research healthcare companies, we devote all our resources and efforts towards creating truly innovative medicines, and delivering products of value. This years Annual Report celebrates our journey and our continued resolve to make a meaningful difference in peoples lives. We look forward to many more years of success together, helping the world do more, feel better and live longer.

Contents
02 04 06 08 10 11 14 16 20 26 Corporate Information Vision and Mission Ethical Conduct Values and Behaviours History of GlaxoSmithKline Milestones Strategic Priorities GSK Products Corporate Social Responsibility at GSK Awards

28 31 33 34 38 41 42 43 45 46

Great People Power Directors Profiles Board & Management Committees Directors Report to Shareholders Chairman / Chief Executives Review Financial Performance at a Glance Statement of Value Added Key Operating & Financial Data Vertical Analysis Horizontal Analysis

48 Financial Statements 2010 49 Statement of Compliance with the Code of Corporate Governance 51 Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance 52 53 55 56 57 58 90 91 92 93 95 96 Auditors Report to the Members Balance Sheet Profit and Loss Account Cash Flow Statement Statement of Changes in Equity Notes to and forming part of the Financial Statements Pattern of Shareholding Categories of Shareholders Shareholding Information Notice of Annual General Meeting Factories and Distribution / Sales Offices Proxy Form

Corporate Information
Board of Directors
Mr. M. Salman Burney Chairman / Chief Executive Mr. Rafique Dawood Non-Executive Director Mr. Husain Lawai Non-Executive Director Dr. Iffat Yazdani Area Director Asia Pacific Clinical Operations Dr. Muzaffar Iqbal Technical Director Mr. Shahid Mustafa Qureshi Legal, Corporate Affairs, Industrial Relations, Administration & Regulatory Affairs Director / Company Secretary Mr. Javed Ahmedjee Director Finance and Logistics

Management Committee
Mr. M. Salman Burney Chairman / Chief Executive Dr. Muzaffar Iqbal Technical Director Mr. Shahid Mustafa Qureshi Legal, Corporate Affairs, Industrial Relations, Administration & Regulatory Affairs Director / Company Secretary Mr. Javed Ahmedjee Director Finance and Logistics Ms. Erum S. Rahim Director Marketing and Business Development Mr. Maqbool ur Rehman Sales Director Mr. Sohail Matin Country Manager - Consumer Healthcare Dr. Atif Mirza Director Medical Services Ms. Fariha Salauddin Director Human Resources

Bankers
Citibank NA Standard Chartered Bank (Pakistan) Limited HSBC Bank Middle East Limited Habib Bank Limited Faysal Bank Limited

Auditors
A. F. Ferguson & Co. Chartered Accountants

Legal Advisors
Rizvi, Isa, Afridi & Angell Mandviwalla & Zafar Orr, Dignam & Co. Surridge & Beecheno Vellani & Vellani

Audit Committee
Mr. Rafique Dawood Chairman Mr. Husain Lawai Member Mr. M. Salman Burney Member

Registered Office
35 - Dockyard Road, West Wharf, Karachi - 74000. Tel: 92-21-111-475-725 (111-GSK-PAK) Fax: 92 21 32314898, 32311122 Website: www.gsk.com.pk

Company Secretary
Mr. Shahid Mustafa Qureshi

Chief Financial Officer

Mr. Javed Ahmedjee

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GlaxoSmithKline Pakistan Limited

Vision
GlaxoSmithKlines vision has translated into a decade of excellence and achievement:

the opportunity to make a difference to the lives of billions of people

Our value system and operating principles provide the necessary professional and ethical guidelines on how we work at GlaxoSmithKline. The key to our success is our desire and passion to pursue our vision of creating a healthier world. We feel honored by the fact that the work we do enhances the quality of peoples lives, and take pride in our commitment to help patients and communities overcome challenges. Every member of the GSK family strives to contribute his/her time, talents, and ideas to make a real and meaningful contribution towards improving the quality of human life. GSK is driven by performance, but we strongly believe that there is no achievement without integrity. We contribute to the health and well being of people with enthusiasm and vigour. Each year we set the bar higher and aim further in the quest of outperforming ourselves, and we look forward to another decade worth celebrating.

Mission
GlaxoSmithKline has a challenging and inspiring mission: to advance the quality of human lives by enabling people to This mission is at the heart of everything that we do. Our legacy of great science, development of innovative health care solutions and a history of medical breakthroughs help people live healthier and fulfilled lives around the world, every single day.

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Our Ethical Compass Always Points to Fair Practices

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 every day actions on behalf of GSK, and seeks to promote honest and ethical conduct. Our employees are committed to: Conduct business with honesty, integrity, and in a professional manner that protects the companys good public image and reputation. Build relationship with customers, vendors, suppliers and fellow employees based on trust, and treating each of these individuals with respect and dignity when conducting business. Become familiar with, and comply with legal requirements and company policies & procedures. Avoid any activity that could involve or lead to involvement in any unlawful practice or harm to GSKs reputation and image. Avoid actual or potential conflicts of interest with the company or the appearance thereof, in all transactions. Provide accurate and reliable information in records submitted, safeguard the companys confidential information, and respect the confidential information of other parties with whom GSK does business or competes. Where permitted by local laws, promptly report to the company any breach of laws or regulations, ethical principles or company policies that come to attention and cooperate fully in any audit, enquiry, review or investigations by the company. Provide access to the companys external auditor at all times to the companys records and accounts (in whatever form they are held) and provide additional information as requested by the external auditor. If such requested information is legally privileged, the legal department must be contacted before responding to the request. Managers should ensure all their employees receive guidance, trainings and communication on ethical behavior and legal compliance relevant to their duties for the company. Senior management should be the role-model for these standards by visibly demonstrating support and by regularly encouraging adherence by managers. Preventing corrupt practices and maintaining standards of documentation.

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GlaxoSmithKline Pakistan Limited

Values
Respect for people: We believe that respecting each other is the key to progress and growth for everyone; our business, employees and customers. Therefore the culture at GSK celebrates diversity and achieving goals with team work and cooperation. Patient focused: Our commitment to our purpose of improving the lives of billions ensures that all our efforts, be it research, manufacturing or distribution are geared towards improving patient access to quality health solutions. Transparency: We are committed to building and streamlining existing systems to eliminate any possibility of unfair practices. This has been possible only because of our employees who are honest and fair in everything they do and take personal responsibility for all their actions. Integrity: Our guiding principles go beyond complying with legal and ethical regulations. Each member of the GSK family takes pride in making decisions which are not only profitable but are morally sound, each has the sincere intent of benefiting the patients, which has helped us foster long-term relationships.

GSK Behaviours
GSK fosters a dynamic learning culture which thrives on innovation and flexibility. We do this so that we can provide the best customer-centric health solutions by adapting to the changing needs of the healthcare market. Therefore, our work is embodied by six behaviours. Flexible thinking: We explore multiple options for problem-solving Enable and drive change: Our ideas are executed to realize benefit for customers and business growth Continuous improvement: We not only excel in what we do, but find innovative improvements to current practices Customer driven: Our philosophy of improving lives of billions of people is at the heart of everything we do Developing people: Empowered employees take initiatives and provide creative solutions to challenges Building relationships: Trust and openness inculcated in everything we do. It helps us to foster long-lasting partnerships

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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 todays 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 todays 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.

John K. Smith opens a drug store in Philadelphia

Thomas Beecham launches Beechams pills in England

Burroughs Wellcome & Company is founded

SmithKline & Co. acquires French, Richards & Company

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

SmithKline & French becomes research focused

SmithKline & Beecham merge

Glaxo & Wellcome merge GlaxoSmithKline

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Strategic Priorities
By focusing our business around our five strategic priorities, were confident that we can fulfill our promises to the world. Grow a diversified global business: We are diversifying our business and also strengthening our core pharmaceutical business, to create a more balanced portfolio by investing in key growth areas such as emerging markets, vaccines, biopharmaceuticals and healthcare to generate future sales growth. Create a culture of individual empowerment: We are working towards building an open and constructive culture by ensuring that our employees receive the tools and inspiration they need to make decisions with confidence and accountability.

Deliver more products of value: We are transforming R&D by focusing on best science, diversifying through externalization of research and building a sustainable industryleading pipeline of products.

Building trust We are nurturing partnerships with all our stakeholders, because we see building trust as a fundamental platform. Essentially, without trust, we dont have a business.

Simplify the operating model: We are simplifying our operating model by streamlining processes to aid efficient decision-making, which supports our diverse and growing business.

We believe that these strategic priorities will transform GSK into a company that delivers more growth with less risk and will result in improved financial performance. They will also enable us to successfully navigate through the coming years and help us retain our competitive edge as a company.

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GlaxoSmithKline Pakistan Limited

Innovative Products that deliver great value

Pharmaceutical Products Our pharmaceutical products cover a wide array of health categories with new portfolios and products added every year. Our products include treatment for asthma, chronic hepatitis B, depression, heart failure, infectious diseases, GI disorders and cancers. Vaccines GSK delivered 1.4 billion vaccine doses in 2009, of which nearly 1 billion were shipped for use in developing countries. Our vaccines protect against potentially life-threatening or crippling illnesses such as hepatitis A, hepatitis B, diphtheria, tetanus, whooping cough, measles, mumps, rubella, polio, typhoid, influenza and bacterial meningitis. Skincare Range Stiefel, a GSK company, is committed to advancing dermatology and skin science around the world by providing consumers with innovative pharmaceutical, non-prescription and aesthetic dermatology products to better achieve healthier skin. Consumer Health Products We bring dental health products, over-the-counter medicines and nutritional drinks to millions of people. Many of our brands, such as Panadol, Aquafresh, Sensodyne, Horlicks, Iodex and Eno have been trusted household names for years.

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GSK in the Community

GlaxoSmithKline (GSK) strives to be a valued corporate citizen no matter where it does business. We have always shown strong commitment and support for public health and awareness initiatives and champion many social causes. GSK CORPORATE RESPONSIBILITY PRINCIPLE We will make a positive contribution to the communities in which we operate, and will invest in health and education programmes and partnerships that aim to bring sustainable improvements to under-served people in the developed and developing world Medicine Index for the second successive time. The Access to Medicine Index is a ranking of the worlds largest pharmaceutical companies on their efforts to increase access to medicine for societies in need. This year, GSK also announced the formation of a new operating unit dedicated to expanding access to medicines for people living in Least Developed Countries (LDCs).

At GSK, we know that part of being a successful and sustainable business is fulfilling our social responsibilities, In March 2010, GSK became one of the first manufacturers making our company more responsive, more flexible and to sign an Advance Market Commitment agreement with more open to societys expectations. GAVI, to supply up to 300 million doses of Synflorix (GSKs Pneumonia vaccine) over ten years, to prevent deaths from We are working towards improving access to our pneumonia of millions of children in the worlds poorest medicines, enhancing research opportunities for countries. neglected tropical diseases, raising the ethical standards for conducting our research and business activities, and being more open and transparent in the way we run our business. We are adapting our business model to adopt a more open approach to R&D for diseases of the developing world. GSK has put many of its important resources including a pool of patents, research know-how and technology assets into an open knowledge pool. Researchers outside of GSK can now use this information, which will hopefully stimulate cutting-edge research on medicines for neglected diseases, including malaria. The knowledge pool is now being administered by the not-for-profit BIO Ventures for Global Health. As part of this initiative, GSK announced in January 2010, the establishment of the first ever Open Lab to act as an engine room of scientific innovation for neglected tropical diseases. GSK has created capacity for up to 60 scientists from around the world to have access to the Open Lab, which will be based at the companys research centre at the Tres Cantos Campus, Spain. In the Open Lab, scientists will be encouraged to tap into the expertise, knowledge and infrastructure of the company, while pursuing their own projects as part of an integrated drug discovery team. In June 2010, GSK was ranked top in the Access to At GSK, we work as partners with under-served communities in the developed and developing world supporting programmes that are innovative, sustainable and bring real benefit to these communities Our programmes are organised into global, regional and local activities. Global health programmes In communities around the world, people affected by certain diseases face stigma and discrimination, disability and a vicious cycle of ill health and poverty. In the

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developing world, diseases that can be prevented, managed or cured cause significant suffering and mortality due to a lack of basic knowledge and inadequate health services. We support activities to tackle these diseases through donations of medicines, financial and practical support.

preferential pricing of our anti-malarials in the least developed countries and sub-Saharan Africa and through our community investment activities funded by the GSK African Malaria Partnership. GSKs RTS,S the worlds most advanced malaria vaccine candidate is now in a Phase III clinical trial that includes 11 sites in seven African countries.

We have chosen to focus our efforts on lymphatic filariasis (LF) and malaria as well as diarrhoea-related disease in Personal Hygiene and Sanitation Education (PHASE) children. Established in 1988, PHASE is a low-cost education programme helping to reduce diarrhoea-related disease by encouraging school children to wash their hands. PHASE currently operates in 16 countries Bangladesh, Bolivia, Brazil, India, Indonesia, Kenya, Malawi, Mexico, Nicaragua, Peru, Philippines, Senegal, Tajikistan, Uganda, UK and Zambia- reaching more than one million children and their extended families.

Lymphatic Filariasis Also known as elephantiasis or LF, this is a disfiguring disease found mainly in tropical countries. It is caused by a parasite and spread by mosquitoes and is one of the worlds major causes of permanent disability affecting over 120 million people. GSK is a key member of the Global Alliance to Eliminate Lymphatic Filariasis, a 20 year programme to eliminate the disease by donating our anti- Humanitarian relief parasitic medicine albendazole. We know that our medicines can play a vital role in the humanitarian Relief efforts in disaster zones, or to As part of our commitment to eliminate LF, we have donated support basic healthcare provision in the worlds poorest over 1.4 billion treatments to stop the transmission of this communities. Donations of these products where they are disease. In 2009, we donated 425 million albendazole needed most form an important part of our community treatments to 28 countries. Our aim is to donate as much investment activities. albendazole as required to treat the one billion people in 83 countries who are at risk from this disease. We provided supplies of antibiotics and basic medicines in response to: Malaria At GSK we are committed to playing a significant role Pakistan (2010), Haiti (2010), the disasters in South East in improving the health of communities affected by Asia (2009), Floods in El Salvador (2009), Myanmar (2008) malaria in three ways: Through on-going research into and China (2008) new malaria medicines treatments and vaccines, with
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GSK Pakistan - Local Community Programmes GlaxoSmithKline Pakistan supports various health, women and social development, education, and relief programs at grass root level in Pakistan. Center of Nursing Excellence In 2008, GSK approved a grant of 250,000 to support the development of a Center of Nursing Excellence in Karachi. This three-year project, in collaboration with the Pakistan National Forum on Womens Health (PNF) and the Pakistan Nursing Council (PNC), aims at improving the quality of nursing education through 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. GSKs work with communities It is estimated that a single well-trained nursing teacher The companys programmes are tailored to the needs of could eventually impact the care of approximately 40,000 the communities they support. GSK supports community patients each year by teaching an average of 100 new initiatives in both the developed and the developing world. nurses. Corporate social investment programmes are identified on the basis of need and their potential to bring real benefits to the communities concerned. Additionally, they must be sustainable and innovative, must target neglected or underserved areas and must deliver measurable results. Around the world, some examples of our community partnerships include: Independent living programme for young people with disabilities in the UK Residential camps in Ireland, Hungary, France and Italy where seriously-ill children can have fun and develop their self-confidence Care for children with incurable illness in Romania The Trust for Health and Medical Sciences GSK Pakistan supports the Trust for Health and Medical Migrant Health Promotion programme in Xintu, China Sciences which has been running a charitable clinic in the Landhi area of Karachi since the early 1980s and charges Leonard Cheshire Disability Resource Centre, Sri Lanka a nominal fee for treating patients. Since 1983, around two million patients have been treated and the clinic has National Forum of Womens Health, Nurse and Midwifery matured into a large set up with multiple medical facilities. Training, Pakistan More than 90,000 patients receive medical attention annually, and the clinic has recently started treatment and counselling for drug addicts.

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Concern for Children Trust Concern For Children (CFC) has been promoting preventive and primary healthcare and education for children in Pakistan since 1997. With GSKs support, CFC has set up three computer literacy projects with 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.

(NCHD), Provincial relief efforts and other NGOs. These organizations have played a timely and significant role in the emergency relief efforts, and provided aid to the millions of displaced across Pakistan. GlaxoSmithKline flood relief contributions also assisted the World Food Programme (WFP) and International Federation of Red Cross (IFRC) operations in provision of food and clean water in the flood affected regions.

A mother and child healthcare centre is also being set up to provide primary, pre-natal, anti-natal services and In the true spirit of GSK, employees also actively contributed health information and education to 8,000-10,000 mothers to the flood relief efforts through donations in kind and and children each year. GSK Pakistan regularly provides cash. medicines for free healthcare camps organized by CFC in different parts of the country.

GSK Flood Relief Contributions GlaxoSmithKline was one of the first pharmaceutical companies to respond to the healthcare needs of the flood victims, by urgently and proactively donating medicines and through contributions. GSK has partnered with a number of organisations, working in all flood-affected areas to provide shelter, clean water, healthcare and food. GSK donated medicines such as antibiotics, analgesics, skin ointments, and anti-diarrhoeals, to a number of local and foreign relief agencies. GSK medicines have helped support a number of medical camps set up by partner organizations, including the Pakistan Medical Association (PMA), International Medical Corps (IMC), National Commission for Human Development of Pakistan

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GSK Pakistan employees give back! The GSK Orange Day initiative allows employees to take one day fully paid to volunteer for a chosen community project, organisation or cause which they support. In July 2010, GSK Pakistan employees invited over 320 children from the Mohammadi (Machar) Colony & SOS Childrens Village to spend a fun filled day at Sindbad Amusement Park, Karachi, Pakistan. 191 GSK Pakistan employees from across all departments took part in this event. The children spent the day thrilled by the park rides and playing challenging carnival games. They crowded the face painting and henna stalls, and enjoyed the candy floss and popcorn. At the end of the busy day, the children happily departed with their orange colored school bags, filled with stationary and notebooks. Orange Day served as an emotionally fulfilling and personally gratifying experience for every employee who volunteered. And the efforts and energy of the GSK Pakistan Orange Day volunteers translated into hundreds of bright smiles on the faces of our special guests.

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GlaxoSmithKline Pakistan Limited

Awards
GSK Pakistan Wins Corporate Excellence Award GSK Pakistan Limited was judged to be the winner of the 27th Corporate Excellence Award in the Pharma & Bio Tech Sector by the Management Association of Pakistan (MAP) in an award ceremony on 23rd November, 2010. The Corporate Excellence Awards recognize the best managed companies in Pakistan and have become one of the most sought after accolades in the Pakistan corporate space. The award is synonymous with quality, achievement, prestige and progress.

Corporate Social Responsibility (CSR) Excellence Award GSK Pakistan was once again awarded the CSR National Excellence Award by Help International Welfare Trust (HIWT), in an award ceremony on 13th January, 2011. The award is in recognition of our values, efforts and a clear commitment to make sustainable difference in the community. The GSK CSR philosophy aims to support programmes that are innovative, long-lasting and which produce tangible benefits to the communities in which GSK operates. Best Place to Work Award 2010 GSK Pakistan was recognized as the Best Place to work by Engage HR, a leading HR consultancy in Pakistan, in association with the Pakistan Society for Human Resource Management. Annual Environment Excellence Award 2010 For a successive year, GSK Pakistan was awarded the Annual Environment Excellence Award by the National Forum for Environment and Health, an independent NGO advocating environmental-friendly practices, health care GSK Pakistan received the highest score out of all and safety. pharmaceutical companies that participated in the survey. Companies were judged by an independent panel of GSK strongly believes in managing its ecological footprint experts in four categories; sense of belonging, growth efficiently by implementing policies and practices that opportunities, level of commitment, and alignment with ensure environmental responsibility and wellbeing of employees and community. the organization.

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Great People Power

GSK Pakistan strives to be the Employee Champion and we at GSK truly believe that our employees are our most valuable asset. We not only recognize and reward hard work and talent of our people but more importantly we contribute towards their professional and personal development and growth. Enabling our people to guide GSKs success story requires honesty, integrity, reciprocity and most importantly, respect. At GSK, people come together and work as teams, facilitating one another to go one step ahead and deliver excellence. We encourage our people to speak their minds without inhibitions. Challenging the norm and creative problem solving helps us generate a pool of innovators, each contributing inspiring ideas that have made GSK Pakistan the leading pharmaceutical company in Pakistan. Our focus on transparency and integrity has gained us the reputation of being one of the best organizations in Pakistan. We help each member of the GSK family maximize their potential to accomplish great things every day. Some of our initiatives to bring the best out in our people include: I 2 US: an interactive session where employees from across business functions are given the opportunity to interact with one another via group discussions and games The Coffee hour: an initiative taken to bring employees together in small informal group meetings with the CEO Caf Learning: an interactive session encouraging discussion and learning in areas of personal development such as work-life balance, health and safety etc Workshops: an ongoing initiative, encouraging employees to undertake trainings to strengthen their skills and knowledge. These training sessions are held by leading HR consultancies in Pakistan, conducted by renowned national and international trainers

My decade-long journey at GSK has been extremely rewarding. Great diversity balanced with excellent leadership and empowerment has inculcated a culture of performers at GSK, each member striving to overcome challenges and going an extra mile to find innovative healthcare solutions to improve the lives we touch.

Great People Power

One asset that GSK Pakistan has always been proud of is the people that are associated with it. Our employees have been contributing towards GSKs success with their relentless hardwork, support and dedication for over a decade and share their views on being an integral part of GSK Pakistan.

Each day at GSK comes with new opportunities and prospects to strengthen our commitment of making a meaningful difference to healthcare in Pakistan. We enjoy taking bold initiatives to implement our ideas and provide quality life-saving drugs to patients across Pakistan.

GSK has been a truly wonderful experience for me. The dynamic culture with work-life balance at GSK does not only provide avenues for exposure and growth but it instills in its people the confidence to embrace challenges and aim higher every time.

GSK has emerged as a winner through time, growing and diversifying its business to remain the largest pharmaceutical in Pakistan. I am proud to be a part of GSK, a dynamic workplace where diverse individuals come together to deliver excellence.

I am excited to be a part of the GSK team. All our efforts are geared towards raising the platform for excellence. With a culture that celebrates diversity, promotes teamwork and goal orientation, I believe GSK will continue to lead tomorrow with integrity and excellence.

My GSK journey has been nothing short of an exhilarating experience. Each new day brings new challenges which we readily accept with the desire of outperforming ourselves every time. This has been a result of exceptional leadership at GSK coupled with our mission of safeguarding the health and well being of patients.

I feel honored to be part of GSK, a team of dedicated individuals pursuing business excellence with ethics, integrity and moral responsibility, taking decisions with the sincere intent of benefitting the communities we serve. At GSK we implement robust policies to ensure ethical standards that become the industry benchmark.

I am extremely proud of the progress GSK has made in the last decade. Our progress is fuelled by our unmatched passion and strong commitment to integrity and ethics. GSK is one place where people live their values, where systems and policies are transparent and our business and partnerships are built upon respect and trust.

GSK truly believes in people power where everyone is empowered to explore opportunities with creative problem-solving. Each individual takes pride and personal responsibility in making decisions that ensure performance with integrity and transparency.

At GSK, I feel part of one big family with an immense sense of belonging. Respect for people is deeply embedded in GSK culture and is at the heart of everything we do. This drives us to continuously improve and innovate with a patient-focus approach.

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 is the CEO of GlaxoSmithKline Pakistan since the SmithKline Beechams merger with GlaxoWellcome in 2001. He also has Regional management responsibility for Iran & Afghanistan.

Mr. Rafique Dawood Mr. Rafique Dawood is the Chairman of First Dawood Investment Bank Limited, B.R.R. Modaraba and Crescent Standard Modaraba. Apart from the group companies, he is also on the Board of GSK Pakistan Limited, Pioneer Cement Limited and Hyderabad Electric Supply Corporation.

Mr. Husain Lawai Mr. Hussain Lawai is the President and CEO of Summit Bank Limited and is a seasoned banker with vast experience in the banking and financial services industry. Mr. Lawai held the position of President & Chief Executive Officer at Muslim Commercial Bank and holds the distinction of establishing Faysal Islamic Bank, Pakistan branches; the first Islamic Sharia compliant Bank (now known as Faysal Bank Limited). He also served as the General Manager, Emirates NBD Bank for Pakistan and Far East, and as Director, Security investment and Finance Limited, UK. Currently, Mr. Lawai is on the Board of Directors of Pakistan International Airlines (PIA), SanofiAventis Pakistan Limited, and on the Implementation & Coordination Board of Civil Hospital Karachi.

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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 Services 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.

Dr. Muzaffar Iqbal Dr. Muzaffar Iqbal joined GSK in 1987. He was appointed Technical Director GlaxoWellcome in 1998. He is currently Technical Director GSK, responsible for manufacturing and supply functions in Pakistan. He worked as Research Associate at Case Western Reserve University, Cleveland, Ohio and as a Senior Research Associate at Washington University, St. Louis, Missouri, USA before joining GSK. He has a PhD degree in Chemistry and an MS degree in Manufacturing Leaders Programme from Cambridge University UK. He is a Certified Facilitator from Senn-Delaney Leadership Consulting Group Inc., USA for Leadership Edge Programme.

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.

Mr. Javed Ahmedjee 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 with over 16 years experience in senior management positions in financial/ manufacturing sectors. Over the period he has gained extensive experience in business partnering, shared services, multiple entity integration/merger & ERP implementations, supply chain management and institutional sales. He has also gained rich business experience while facilitating Egypt/Sudan and Gulf Near East Markets in preparing for Global Internal Audit.

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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 oversees 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.

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Directors Report to Shareholders

The Board of Directors of GlaxoSmithKline Pakistan Limited is pleased to present the annual report and the Companys audited financial statements for the year ended December 31, 2010. Pattern of Shareholding: The Company shares are traded in Karachi and Lahore stock exchanges. The shareholding information as at December 31, 2010 and other related information are set out on pages 90 to 92.

The directors report is prepared under section 236 of the Companies Ordinance, 1984 and clause xix of the Code of The Directors, CEO, Company Secretary and CFO, their Corporate Governance. This report is to be submitted to spouses and minor children did not carry out any trade in the members at the Sixty Fourth Annual General Meeting the shares of the Company. of the Company to be held on April 20, 2011. Chairman / Chief Executives review The Chairman / Chief Executives review on pages 38 to 40 Operating results deals with: Rs. in million The performance of the Company during the year in Profit for the year before taxation 1,931 comparison to last year with reasons for variances. Taxation (874) Effective cash management strategy. Profit after taxation 1,057 Significant plans and decisions. Un-appropriated profit brought forward 2,023 Future outlook, business risks and challenges Transfer to Amalgamation reserve (4) Profit available for appropriation 3,076 The directors of the Company endorse the contents of the Appropriations: same. - Final dividend 2009 Rs. 5.00 per share (853) Un-appropriated profit carried forward 2,223 Basic earnings per share The Board of Directors is pleased to propose a final cash Basic earnings per share after taxation were Rs. 5.08 (2009: dividend of Rs. 4.0 per share (2009: Rs. 5.0 per share) and Rs.5.22). also issue of 15 bonus shares for every 100 shares held (15%). Earnings Per Share & Price Earning Ratio Net sales grew by 8.9%* during the year to Rs. 18.9 billion. Profit after tax in this year was Rs 1.1 billion. Holding company As at December 31, 2010, S.R. One International B.V., Netherlands held 160,180,718 shares of Rs. 10 each. The ultimate parent of the company continues to be GlaxoSmithKline plc, UK.

Earnings per share

Price earning ratio

* The corresponding figures of GSKPPL are included from January 30, 2009 to December 31,2009 and SLPPL are included from July 22, 2009 to December 31,2009. For comparison purposes growth % ages used for revenues and expenditure are shown and calculated on a like to like basis (covering the same period last year i.e. January 1, 2009 to December 31, 2009).

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Corporate and social responsibility award by Engage HR in association with the Pakistan Corporate social responsibility (CSR) is an integral and Society for Human Resource Management (PSHRM). embedded part of the way GSK does business. GSK CSR philosophy aims to support programmes that are Sales per Employee innovative, long lasting and which produce tangible benefits to the communities in which GSK operates. During the year GlaxoSmithKline Pakistan was one of the first pharmaceutical companies to respond to the healthcare needs of the flood victims, by urgently and proactively donating medicines and through contributions. Since the beginning of August GSK has partnered with a number of organisations, working in all flood-affected areas to provide shelter, clean water, healthcare and food. GSK employees have contributed through salary donations, volunteering with Pakistan Medical Association (PMA) for packing of relief bags and in kind donations. GlaxoSmithKline Pakistan remains committed to continually assessing the situation across the affected regions and responding to needs of the Environment, Health and Safety (EHS) victims of this national tragedy. GSK is committed to maintain the standards of Environment, Health and Safety (EHS) at the highest The Company has also setup and supports two community level. The company has a dedicated EHS department to trusts/ NGOs ie Concern for Children Trust (CFC) and oversee the implementation of EHS objective and reports Trust for Health and Medical Sciences, which work in the to Executive management. As part of our governance underserved communities of Muhammdi (Machar) Colony responsibility, we conduct EHS audits of our manufacturing and Landhi in Karachi. sites, assessing the management of key risks and impacts and performance against our global EHS standards. Various CSR initiatives of the year 2010 are fully covered on page 20 to Page 24. Key Highlights of the year 2010 are: Human resource development The environment and culture at GSK revolves around incorporating and continuously implementing the GSK spirit which is to do more, feel better and live longer. Recruiting, retaining and developing our employees are critical to enhancing and sustaining our performance and reputation. We continue to provide a fulfilling, healthy environment where our employees can learn, grow and develop. The concept of Empowerment is further supported by the values that are incorporated at GSK. During the year Learning Fair has been conducted in four different cities offering a diverse range of courses for employees development and learning exposure. Recruitment/Campus Drive was also conducted at various universities and colleges to attract talent and create branding for GSK. In this year, GSK Pakistan has received Best Place to Work The company has received the Annual Environment Excellence Award from the National Forum for Environment and Health , an independent NGO advocating environmental-friendly practices , healthcare and safety. Energy reduction has been identified as a key objective for the business. GSK is committed to continuous improvement in energy consumption as part of sustainability initiatives. We have eliminated the use of Ozone depleting substance from aerosol formulation. We have also achieved 5.2% reduction in energy consumption at West Wharf site and 2% and 4.8% water consumption reduction at West Wharf and F-268 sites respectively. During the year Glove box isolator was installed to ensure that factory workers are not prone to the hazards of pharmacological active dust while handling the hazardous materials.

35

This year, machinery safety standards were also taken to the next level with the launch of zero access initiative in order to eliminate any machinery related risks present to the operators thereby improving the overall occupational health and safety of the workers. Reportable Injury and Illness Rate (RIIR) target of 0.45 for 2010 achieved at all the sites. GSK has waste water treatment plant present at all sites to comply with the legal requirement of National Environmental Quality Standards (NEQS). We have achieved 8.3% and 37% reduction in hazardous waste generation at F-268 and Korangi sites respectively. Statement of ethics and business practice Performance with integrity is central to operating at GSK. The Board of Directors of the Company has adopted a statement of ethics and business practices. All employees are informed and aware of this and are required to observe these rules of conduct in relation to business and regulations.

over 9 years and for his valuable inputs and contribution over this period. The board would also like to welcome Mr. Hussain Lawai and look forward to his contribution to the board of the Company. 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 in the Listing Regulations and advised to the Committee for compliance. The Committee held four meetings during the year. An independent Internal Audit function reporting to the Boards Audit Committee reviews the financial and internal reporting process, the system of internal control, the management of risks and the external and internal audit process. The internal Audit functions utilizes the services of independent audit firm for continuous reviews of internal controls and management of risks. .

Board of Directors meetings and attendance The Board of Directors met six times in 2010, with each Management Committee member attending as follows: The Management Committee comprises of 9 senior members who meet and discuss important business plans, Name Meetings attended issues and progress made in their functions. Significant matters to be put forth in the Board are discussed for onward approval by the Board. Mr. M. Salman Burney 6 Mr. Tariq Iqbal Khan 1 Risk Management and Compliance Board (RMCB) Mr. Hussain Lawai 1 Risk Management and Compliance Board (RMCB) have Mr. Rafique Dawood 6 been established which comprises of the business unit Mr. Shahid Mustafa Qureshi 6 heads. The RMCBs actively oversee management of all risks Mr. Javed Ahmedjee 5 that are considered important for their respective business Dr. Muzaffar Iqbal 5 units. Each business unit must periodically review the Dr Iffat Yazdani 2 significant risks facing their businesses. This review should Leave of absence was granted to the Directors who could include identifying operational risks, legal compliance risks and risks to the achievement of strategic goals and not attend some of the board meetings. objectives. The company also has a full time compliance officer. Board Changes Mr. Hussain Lawai was appointed as a member of the Auditors Board of Directors of GlaxoSmithKline Pakistan Limited The present auditors, Messrs A.F. Ferguson & Co. Chartered Accountants, retire and being eligible, offer themselves with effect from 27th August 2010 to fill the casual vacancy for re-appointment. The Board of Directors endorses created by the resignation of Mr. Tariq Iqbal Khan. recommendation of the Audit Committee for their reappointment as auditors of the Company for the financial The Board would like to record their appreciation and year ending December 31, 2011, at a fee to be mutually thanks to Mr. Tariq Iqbal Khan for serving on the board for agreed.

36

Contribution to National Exchequer Corporate and financial reporting framework During the year the Company has paid Rs 1.957 billion a. The financial statements, prepared by the management ( 2009: Rs.1.860 billion) to Government treasury on account of the Company, present fairly its state of affairs, the of Income Tax, Sales Tax, Customs Duty and Federal Excise result of its operations, cash flows and changes in Duty equity. Subsequent events b. Proper books of account of the Company have been Subsequent to the year end honourable High Court of Sindh maintained. sanctioned scheme of arrangement for amalgamation of Stiefel Laboratories Pakistan (Private) Limited (SLPPL) with c. Appropriate accounting policies have been consistently the company, effective from July 1, 2010. This has been applied in preparation of financial statements and accounted for as an adjusting event and consequently accounting estimates are based on reasonable and SLPPL has been amalgamated with the company in these prudent judgements. financial statements. d. The financial statements are prepared in accordance Value of investments of provident and gratuity funds with International Financial Reporting Standards, as The Company maintains retirement benefits plans for their applicable in Pakistan. employees. Value of investments of provident, and gratuity funds based on their un-audited accounts as on December e. The Company maintains a sound internal control 31, 2010 (audit in progress) were as follows: system which gives reasonable assurance against any material misstatement or loss. The internal control system is regularly reviewed. This has been formalized Investment in funds by the Boards Audit Committee and is updated as and when needed.
72%

f. There are no significant doubts upon the Companys 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 is set out on pages 43 to 44.

28%

2010 Rupees 000 Provident fund Gratuity fund 1,460,418 577,924

By order of the Board

M. Salman Burney Chairman/Chief Executive Karachi March 07, 2011

37

Javed Ahmedjee Chief Financial Officer

Chairman/Chief Executives review

I am pleased to present the Annual report of your Company for the financial year ended December 31, 2010. Overview of Economy & Market Pakistans economy came under stress in the aftermath of the worst flood in the history of the country. The rehabilitation of wide spread damage to agricultural crop, livestock and infrastructure along with crippling power crisis remains a major challenge. However, continued foreign assistance along with fiscal reforms, increased foreign remittances, improved agricultural productivity in the wheat crop and higher spending on reconstruction maintained moderate growth in the economy, but with high inflation. The Pharmaceutical industry in Pakistan continues to face significant challenges. Rising inflation and currency depreciation coupled with a highly restrictive pricing policy on pharmaceuticals create a challenging environment with the industry being adversely impacted by declining margins and profitability. Though the Government has given some hardship price increase on a few products the impact is not significant enough to improve the overall situation. The company continues to evaluate cost saving initiatives to curtail the impact of rising cost of doing business, but the need for a price adjustment for inflation and a less restrictive pricing policy is now urgent. The Pakistan pharma market grew by approximately 13% in 2010. Your Company retained its position as the largest research based pharmaceutical company in Pakistan in terms of value, prescription and volume. Out of top 20 products in the Pharmaceutical industry, 8 are manufactured and sold by your Company which is unparalleled in the industry. Legal Merger The schemes of arrangement for amalgamation of GlaxoSmithKline Pharmaceuticals (Private) Limited (GSKPPL), (formerly Bristol Myers Squibb (Pakistan) Limited) and also Stiefel Laboratories Pakistan Private Limited (SLPPL) with your Company have been sanctioned by the honorable High Court of Sindh dated March 17, 2010 and January 22, 2011 respectively. The amalgamation is against 25.74 million and 11.65 million shares of your company for GSKPPL and SLPPL respectively. These consolidated financial statements are presented giving effect to the legal merger of GSKPPL and SLPPL with the Company. The effective dates of the mergers are January 01, 2010 and July 01, 2010 respectively.
* The corresponding figures of GSKPPL are included from January 30, 2009 to December 31,2009 and SLPPL are included from July 22, 2009 to December 31,2009. For comparison purposes growth % ages used for revenues and expenditure are shown and calculated on a like to like basis (covering the same period last year i.e. January 1, 2009 to December 31, 2009).

These amalgamations give rise to new growth opportunities and also market access to fast growing therapeutic areas, a broader product portfolio, optimization in capacity utilization, and other synergies arising from economies of scale. Celebrating Ten Years GlaxoSmithKline Pakistan proudly celebrated its first decade of success and achievements marked by a journey of introducing truly innovative medicines and delivering products of value. GSK Pakistan has remained true to its values, and focused on its mission to improve the quality of human life by enabling people to Do More, Feel Better and Live Longer by providing access to affordable and innovative medicines, whilst sustaining a successful business for its shareholders. Business Review Sales performance continued to reflect sustained growth in 2010, despite the logistical issues faced from environmental challenges such as the devastation and infrastructure damage caused by wide spread floods coupled with the adverse security situation. Net sales grew by 8.9%* during the year to Rs 18.9 billion. Underlying Pharma sales growth (excluding the large vaccine tenders), was recorded at 13.5%*. Within the Pharmaceutical business, the Antibiotics, Dermatology, Analgesics, Cardiovascular and CNS portfolios achieved double digit growth during the year. Net Sales

38

A number of milestone achievements contributed to the Companys success during the year. Augmentin, our blockbuster brand achieved the feat of becoming the first brand to achieve Rs. 3 billion sales in the history of Pakistans pharmaceutical industry. The integrated Derma business grew by 18.2%*, and now operates under the Stiefel brand umbrella. In terms of innovative products, two key launches Cervarix, a vaccine for cervical cancer, and Tykerb, a treatment for certain types of breast cancers have helped GSK to offer novel life saving options to doctors and patients. The momentum of legacy brands and other existing operations was maintained alongside the smooth and successful integration of new acquired businesses within the Company.

consistent cash dividend payouts, new capital investments, and increased cost of doing business due to inflation and devaluation, partly offset by higher interest rates. Net profit after tax for the year was Rs. 1.1 billion. Profit after tax

The Consumer Health Care Business grew strongly by 21.5% to Rs. 1.8 billion, as a result of brand innovation and enhanced consumer marketing. Panadol, Actifed, Eno and Horlicks were the main growth drivers. Cash Flows & Capital Expenditure Cash generated from operations during the year was at Rs. Export sales also achieved double digit growth during the 2.4 billion increasing by Rs. 1.1 billion from last year, mainly year with sales of Rs 594.7 million represented by major reflecting initiatives taken for working capital reduction. export markets such as Afghanistan and Srilanka. The surplus funds as at December 31, 2010 at Rs. 3.5 billion, increased by Rs. 845.0 million from last year mainly Gross margins for this year at 25.7% declined from last year due to reduction in working capital (including change of due to factors already highlighted in the past years such as trade terms of newly acquired businesses) partly offset by (a) long standing price freeze on the majority of products, dividend payouts and tax payments. (b) rupee devaluation and rising domestic inflation and (c) continuous escalation in fuel, power and utilities costs. The company invests its surplus funds in a mix of sovereign The above negative impacts have been offset to a limited investments and high credit rated bank deposits to extent by price increases obtained on a few loss making maintain a risk averse optimum interest yielding portfolio. products and also by cost savings initiatives undertaken in Effective liquidity management is in place through sound manufacturing operations. cash management strategies and active investment management in bank deposits, treasury bills and PIBs. Selling, marketing and distribution expenses stood at Liquidity risk is managed by maintaining sufficient cash and Rs. 2.3 billion. The expenses under this head increased by balances with banks in deposit accounts and short term 15.4%* mainly due to general inflation and freight cost investments. The Company maintains strong relationships on account of rising oil prices and sales volumes, coupled with its banks and constantly evaluates cash management with increased promotional investments in new and core and trade solutions to improve its investment and banking brands in particular the Consumer portfolio. operations. The Company continued to use its strong cash flows to make the required levels of investments in Administrative expenses were recorded at Rs. 826.2 business necessary to sustain long term growth. million. The impact of inflation was partially offset by cost reduction efforts in non core areas through rationalization During this year capital expenditure was Rs. 789.9 million initiatives and synergies in newly acquired businesses. (2009: Rs. 514.9 million) mainly spent on plant upgradations and integrations, expansion and upgradation Other operating income was recorded at Rs. 397.7 million of warehousing and purchase of vehicles. decreasing by Rs. 66.0 million mainly due to a decline in investment income on lower average surplus funds outstanding during the year. This was attributable to

39

Capital Expenditure

Regulatory Agency in line with previous Cabinet decisions in this regard. A modern and efficient Regulatory Authority would be needed to provide the legal regulatory structure framework essential for the growth of a quality industry in line with global standards and is also essential for the maintenance of manufacturing export standards. An early decision in this regard is being pursued.

The Companys commitment towards improving healthcare in Pakistan particularly in the area of preventive healthcare & vaccines remains integral and explicit. GSK is the worlds leading developer and manufacturer of Dividends The Company has maintained its history of providing vaccines, and hopes to partner with the government in good returns and payouts to its shareholders. The Board of protecting people against preventable diseases. Directors in its meeting held on March 07, 2011 proposed The pharmaceutical industry in Pakistan has great potential a cash dividend of Rs. 4.0 (2009: Rs. 5.0) per share and also for growth. However, its sustained success depends on issue of 15 bonus shares for every 100 shares held (15%). a regulatory environment which is able to balance the interests of this research based industry, and the need for Over the last few years, payout as well as shareholder value affordable healthcare. have been maintained as a result of Companys sustained Intellectual property business growth. Intellectual property is a key business asset for our company and the effective legal protection of our Future outlook and Challenges Our operating environment remains under pressure on intellectual property is critical in ensuring a reasonable various fronts. However, we continue to focus on growth return on investment in research and commercialization of and strengthening our diversified product portfolio. We new treatments. are also actively engaged in developing a new products pipeline, so as to ensure a balanced business for the future, During the recent years Pakistan has made some progress creating value for our shareholders and providing new and in this regard, by updating its IPR laws to the levels required by global conventions but many gaps remain. affordable healthcare solutions to patients. At a practical level much more needs to be done to A number of new and innovative research based discourage both piracy and counterfeiting. Effective pharmaceutical products are under registration and implementation will protect both consumers and the launch. industry; and also lead to a quality and research-oriented culture which is vital for the future progress of this industry. In the Consumer Business, we have plans to invest further in developing our leading and competitive brands to Acknowledgment Your Company has emerged successfully through this ensure that the business segment grows to potential. years many challenges. This would not have been Pressure on margins due to devaluation of the rupee possible without the passion, resilience and commitment coupled with soaring inflation remains an area of serious of the GSK Pakistan team. On behalf of the Board; I concern. The industry is too pervasively price controlled would like to recognize the valuable contribution and and the last general price adjustment was given in 2001. strong commitment of all our employees in achieving Without a general price increase, there will be a serious the Companys objectives. I would also appreciate risk on the future viability and profitability of the business the continuous support of our valued customers and as there is no further room to counterbalance rising costs shareholders and we look forward to delivering successfully in the future. through cost cutting initiatives. We request the Government to take immediate steps to review and approve a pricing policy and allow a general price increase to safeguard the future of this industry. The devolution of the functions of the Ministry of Health following the 18th Constitutional amendment has raised significant concerns on the future Regulatory framework for governing this industry. It is the unanimous view of the industrys associations as well as your Company that there is an urgent need to immediately set up a Drug
40

M. Salman Burney Chairman / Chief Executive Karachi March 07, 2011

Financial Performance at a Glance

2010 2009 Rupees in million 16,754 4,239 1,751 1,706 665 1,041 Net Sales Gross Profit Operating Profit Profit before Taxation Taxation Profit after Taxation 18,916 4,853 1,952 1,931 874 1,057

Dividend - cash* - per share - Rs. Issue of bonus shares* Paid-up Capital

832.2 4.0 312.1 1,964.1

853.4 5.0 1,706.7

* Represents final cash dividend @ Rs. 4.0 per share and also issue of bonus shares @ 15% proposed by the Board of Directors subsequent to the year end.

Payout to Shareholders

Gross Profit Operating Profit

Cash Dividend Bonus Shares

41

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: 2010 Rs. 000 Revenue Generated Total revenue Revenue distributed Bought-in-materials and Services Selling, Marketing and Distribution Expenses Administrative Expenses and Financial Charges Income tax Workers funds and Central research fund Sales tax To Government Salaries,Wages and other benefits To Employees Donations To Society Cash dividend* To Shareholders Retained in the Business 19,381,633 % 100.0 2009 Rs. 000 17,278,364 % 100.0

13,030,513 1,533,503 471,097 874,341 171,143 67,746 1,113,230 2,150,226 2,150,226 25,681 25,681 832,240 832,240 225,143 19,381,633

67.2 7.9 2.4 4.5 0.9 0.3 5.7 11.1 11.1 0.1 0.1 4.3 4.3 1.3 100.0

11,544,102 1,188,789 538,718 665,289 151,802 60,798 877,889 2,073,122 2,073,122 14,453 14,453 853,359 853,359 187,932 17,278,364

66.8 6.9 3.1 3.9 0.9 0.4 5.2 12.0 12.0 0.1 0.1 4.9 4.9 1.0 100.0

* Represents final cash dividend @ Rs. 4.0 per share proposed by the Board of Directors subsequent to the year end.

42

2005 Assets employed Fixed assets - property, plant and equipment Goodwill Investments Long-term loans and deposits Net current assets Less: Non-Current Liabilities Staff retirement benefits - Staff gratuity Deferred taxation Net assets employed Financed by Issued, subscribed and paid-up capital Reserves Shareholders Equity Turnover and profit Net sales Gross profit Operating profit Profit before taxation Taxation Profit after taxation EBTIDA Cash Dividend including bonus shares* Sale per Employee (Rs. in 000)

2006

2007

2008 2009 (Rs. in million) 2,415 172 69 6,032 8,688 21 312 333 8,355 1,707 6,648 8,355 3,830 956 169 73 6,057 11,085 73 418 491 10,594 1,707 8,887 10,594

2010

1,503 192 47 5,252 6,994 159 97 256 6,738 1,092 5,646 6,738

1,774 96 43 5,827 7,740 66 137 203 7,537 1,365 6,172 7,537

2,237 347 61 5,758 8,403 23 262 285 8,118 1,707 6,411 8,118

4,190 956 85 6,101 11,332 115 417 532 10,800 1,964 8,836 10,800

9,417 3,846 2,708 2,695 881 1,814 2,858 1,092 5,087

10,088 3,867 2,651 2,632 967 1,665 2,804 1,365 5,549

10,611 3,952 2,670 2,659 988 1,671 2,842 1,621 5,850

13,403 3,856 3,078 3,001 1,046 1,955 3,309 1,621 7,659

16,754 4,239 1,751 1,706 665 1,041 2,061 853 9,585

18,916 4,853 1,952 1,932 874 1,058 2,324 1,144 9,388

Note: - Figures for 2009 and 2010 include financial data of GloxoSmithKline Pharmaceutical (Private) Limited (GSKPPL) (formaly Bristol Myers Squibb Pakistan (Private) Limited) and Stiefel Laboratories Pakistan (Private) Limited (SLPPL). Figures for 2009 of GSKPPL are included from January 30, 2009 to December 31, 2009 and SLPPL are included from July 22, 2009 to December 31, 2009.

Debtors Turnover & Inventory Turnover

Debtors Turnover Inventory Turnover

43

2005 Cashflows Operating Activities Investing Activities Financing Activities Changes in Cash equivalents Cash & equivalents - Year end Ratios Earnings per share Cash dividend per share* Bonus shares* Price earning ratio Market value per share - year end Market value per share - high Market value per share - low Break-up value per share Break-up value per share-with surplus on revaluation Market price to Book value with surplus Market capitalization Dividend payout Dividend yield Dividend cover ratio Return on equity Total assets turnover Fixed assets turnover Debtors turnover Creditors turnover Inventory turnover Current ratio Acid test ratio Gross profit EBITDA Margin to Sales Net profit
*

2006

2007 2008 2009 (Rs. in million) 1,497 (824) (1,086) (413) 4,253 9.8 7.5 25 19.6 192.4 210.0 151.1 47.6 47.6 4.0 32,837 97.0 5.2 1.0 20.6 1.0 4.7 3.5 25 69 4.3 3.0 37.2 26.8 15.7 (402) 572 (1,698) (1,528) 2,725 11.5 9.5 6.6 75.9 200.0 75.9 48.9 48.9 1.6 12,961 83.0 12.5 1.2 23.4 1.3 5.5 15.4 17 56 4.1 2.3 28.8 24.7 14.6 1,348 (262) (1,189) (103) 2,693 5.2 5.0 20.9 109.3 143.8 75.0 50.9 50.9 2.1 18,649 91.3 4.6 1.1 9.8 1.2 4.4 25.5 33 66 2.8 1.5 25.3 12.3 6.2

2010

1,721 (179) (609) 933 3,990 Rs. Rs. % Times Rs. Rs. Rs. Rs. Rs. Times Rs.in million % % Times % Times Times Days Days Days % % % 10.6 8.0 25 17.5 186.3 240.3 162.1 61.7 61.7 3.0 20,350 60.2 5.6 1.7 26.9 1.1 6.3 1.9 23 54 5.1 3.6 40.8 30.4 19.3

1,765 (220) (869) 676 4,666 9.8 8.0 25 16.2 157.9 215.8 148.0 55.2 55.2 2.9 21,559 82.0 6.6 1.2 22.1 1.1 5.7 2.7 25 63 4.4 3.1 38.3 27.8 16.5

2,433 (739) (849) 845 3,538 5.1 4.0 15 17.4 88.2 89.5 86.3 51.9 51.9 1.7 17,321 108.1 6.2 0.9 9.8 1.3 4.5 15.7 34 68 2.7 1.5 25.7 12.3 5.6

Represents final cash dividend @ Rs 4.0 per share and also issue of bonus shares @ 15% proposed by the Board of Directors subsequent to the year end.

44

Vertical Analysis
Balance Sheet Analysis (%) 2005 Share Capital and Reserves Non Current Liabilities Current Liabilities Total Equity and Liabilities Non Current Assets Current Assets Total Assets 81.5 3.1 15.4 100.0 21.1 78.9 100.0 2006 79.8 2.1 18.1 100.0 20.3 79.7 100.0 2007 79.9 2.8 17.3 100.0 26.0 74.0 100.0 2008 78.6 3.1 18.3 100.0 25.0 75.0 100.0 2009 73.4 3.4 23.2 100.0 34.8 65.2 100.0 2010 72.5 3.6 23.9 100.0 35.1 64.9 100.0

Profit and Loss Account Analysis (%) Net sales Cost of sales Gross profit Selling, marketing and distribution expenses Administrative expenses Other operating expenses Other operating income Operating profit Financial charges Profit before taxation Taxation Profit after taxation 100.0 59.2 40.8 9.6 3.7 2.4 3.7 28.8 0.1 28.6 9.4 19.3 100.0 61.7 38.3 10.4 4.3 2.2 4.9 26.3 0.2 26.1 9.6 16.5 100.0 62.8 37.2 11.4 4.6 2.1 6.0 25.1 0.1 25.0 9.3 15.7 100.0 71.2 28.8 9.9 3.9 1.6 9.6 23.0 0.6 22.4 7.8 14.6 100.0 74.7 25.3 11.6 5.1 0.9 2.8 10.5 0.3 10.2 4.0 6.2 100.0 74.3 25.7 12.2 4.4 0.9 2.1 10.3 0.1 10.2 4.6 5.6

Note: - Figures for 2009 and 2010 include financial data of GloxoSmithKline Pharmaceutical (Private) Limited (GSKPPL) (formaly Bristol Myers Squibb Pakistan (Private) Limited) and Stiefel Laboratories Pakistan (Private) Limited (SLPPL). Figures for 2009 of GSKPPL are included from January 30, 2009 to December 31, 2009 and SLPPL are included from July 22, 2009 to December 31, 2009.

45

Horizontal Analysis
Balance Sheet Analysis (%) 2005 Share Capital and Reserves Non Current Liabilities Current Liabilities Total Equity and Liabilities Non Current Assets Current Assets Total Assets 21.4 13.8 16.5 20.4 (8.1) 31.3 20.4 Change from preceeding year 2006 2007 2008 2009 11.9 (20.7) 33.8 14.2 9.8 15.4 14.2 7.7 40.4 3.5 7.6 38.3 (0.1) 7.6 2.9 16.8 10.0 4.5 0.4 6.0 4.5 26.8 47.4 72.7 35.8 89.3 18.0 35.8 2010 1.9 8.4 6.4 3.2 4.0 2.7 3.2

Profit and Loss Account Analysis (%) Change from preceeding year Net sales Cost of sales Gross profit Selling, marketing and distribution expenses Administrative expenses Other operating expenses Other operating income Operating profit Financial charges Profit before taxation Taxation Profit after taxation 6.2 3.9 9.7 (13.1) 3.1 44.2 86.2 26.1 (55.2) 27.1 36.0 23.3 7.1 11.7 0.5 16.7 20.7 (1.3) 41.7 (2.1) 46.2 (2.3) 9.8 (8.2) 5.2 7.0 2.2 15.0 11.4 0.9 28.8 0.7 (36.8) 1.0 2.2 0.4 26.3 43.4 (2.4) 9.7 6.8 (7.1) 100.3 15.3 541.7 12.9 5.9 17.0 25.0 31.1 10.0 46.7 63.7 (26.9) (63.8) (43.1) (41.6) (43.2) (36.4) (46.8) 12.9 12.4 14.5 18.1 (2.9) 12.5 (14.2) 11.5 (55.6) 13.2 31.4 1.6

46

Statement of Compliance with the Code of Corporate Governance for the year ended December 31, 2010
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. The directors have confirmed that none of them is serving as a director in more than ten listed companies including this company. 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. 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. The Company has prepared a Statement of Ethics and Business Practices which has been signed by the directors and employees of the Company. One casual vacancy occurred in the Board of Directors during the year which was filled in as per law. 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. 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 at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. There was no new appointment of CFO or Company Secretary during the year.

2. 3.

4. 5. 6. 7.

8.

9.

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 roles and responsibilities. Further, the Booklet on Code of Corporate Governance as published by the Securities and Exchange Commission of Pakistan was circulated amongst the directors on the Board.

49

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 nonexecutive directors including the chairman of the committee. 16. The Board has outsourced the internal audit function to Ford Rhodes Sidat Hyder & Co. who are considerad suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the company and they are involved in the internal audit function on a full time basis. 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 arms length transactions. 21. We confirm all other material principles contained in the Code have been complied with.

Karachi March 07, 2011

M. Salman Burney Chairman / Chief Executive

50

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, 2010.

A. F. Ferguson & Co. Chartered Accountants Karachi March 07, 2011

51

Auditors Report to the Members

We have audited the annexed balance sheet of GlaxoSmithKline Pakistan Limited as at December 31, 2010 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 ; the expenditure incurred during the year was for the purpose of the company's business; and the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company;

(ii) (iii) (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, 2010 and of the profit, its cash flows and changes in equity for the year then ended; and

(d) In our opinion, Zakat deductible of source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the company and deposited in the Central Zakat Fund established under section 7 of the Ordinance.

A. F. Ferguson & Co. Chartered Accountants Karachi March 07, 2011 Name of Engagement Partner: Syed Fahim ul Hasan
52

Balance Sheet as at December 31, 2010

Note 2010 Restated Restated 2009 2008 Rupees '000

SHARE CAPITAL AND RESERVES Share capital Reserves NON-CURRENT LIABILITIES Staff retirement benefits Deferred taxation CURRENT LIABILITIES Trade and other payables Provisions Taxation - provision less payments Short-term borrowings - running finance Mark-up accrued CONTINGENCIES AND COMMITMENTS

5 6

1,964,118 8,835,696 10,799,814 115,240 416,452 531,692 3,429,292 131,001 3,560,293 4,091,985

1,706,718 8,886,768 10,593,486 72,885 417,669 490,554 3,103,045 236,934 4,520 2,369 3,346,868 3,837,422

1,706,718 6,648,173 8,354,891 20,802 312,270 333,072 1,770,158 97,117 70,387 1,937,662 2,270,734

7 8

9 10

11

14,891,799

14,430,908 10,625,625

M. Salman Burney Chairman / Chief Executive

Javed Ahmedjee Chief Financial Officer

53

Note

2010

Restated Restated 2009 2008 Rupees '000

NON-CURRENT ASSETS Fixed assets - property, plant and equipment Intangible Long-term loans to employees Long-term deposits Investments CURRENT ASSETS Stores and spares Stock-in-trade Trade debts Loans and advances Trade deposits and prepayments Interest accrued Refunds due from government Other receivables Taxation - payments less provision Investments Cash and bank balances 16 17 18 19 20 21 22 15 23 15 12 13 14 4,189,996 955,742 73,590 11,871 5,231,199 150,632 4,312,535 295,762 144,267 96,234 19,443 17,534 290,056 623,410 901,955 2,808,772 9,660,600 14,891,799 The annexed notes 1 to 43 form an integral part of these financial statements. 3,829,588 956,045 61,299 12,347 168,687 5,027,966 142,065 4,543,689 1,328,457 94,848 106,224 22,522 3,050 111,196 352,849 644,889 2,053,153 9,402,942 2,415,255 61,666 6,788 171,855 2,655,564 116,084 3,494,054 1,016,968 119,242 93,377 80,596 15,468 153,864 155,511 2,724,897 7,970,061

14,430,908 10,625,625

M. Salman Burney Chairman / Chief Executive

Javed Ahmedjee Chief Financial Officer

54

Profit and Loss Account For the year ended December 31, 2010
Note Net sales Cost of sales Gross profit Selling, marketing and distribution expenses Administrative expenses Other operating expenses Other operating income Operating profit Financial charges Profit before taxation Taxation Profit after taxation Other comprehensive income Fair value gain on available-for-sale investments Deferred tax thereon Total comprehensive income Earnings per share 32 3,544 (1,240) 2,304 1,059,687 Rs.5.08 15,356 (5,375) 9,981 1,051,272 Rs. 5.22 31 30 26 27 28 29 24 25 2010 Rupees 000 Restated 2009

18,916,191 (14,063,242) 4,852,949 (2,301,516) (826,236) (171,143) 397,696 1,951,750 (20,026) 1,931,724 (874,341) 1,057,383

16,753,873 (12,514,592) 4,239,281 (1,949,079) (850,868) (151,802) 463,693 1,751,225 (44,645) 1,706,580 (665,289) 1,041,291

The annexed notes 1 to 43 form an integral part of these financial statements.

M. Salman Burney Chairman / Chief Executive

Javed Ahmedjee Chief Financial Officer

55

Cash Flow Statement For the year ended December 31, 2010
Note CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Financial charges paid Staff retirement benefits paid Taxes paid (Increase) / decrease in long-term loans to employees Decrease in long-term deposits Net cash from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Fixed capital expenditure Proceeds from sale of operating assets Investments encashed Return on investments - PIBs Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents acquired through business combinations - notes 3 & 4 Cash and cash equivalents at the end of the year (849,019) 844,974 2,693,522 34 3,538,496 (1,189,558) (103,336) 2,724,897 71,961 2,693,522 (789,884) 34,278 16,275 (739,331) (514,950) 54,660 175,000 24,171 (261,119) 33 3,647,883 (2,369) (53,016) (1,147,359) (12,291) 476 2,433,324 2,417,330 (14,477) (45,073) (1,011,671) 367 865 1,347,341 2010 Rupees 000 Restated 2009

The annexed notes 1 to 43 form an integral part of these financial statements.

M. Salman Burney Chairman / Chief Executive

Javed Ahmedjee Chief Financial Officer

56

Statement of Changes in Equity For the year ended December 31, 2010
Share capital C A P I T A L R E S E R V ES Share Reserve Issue of premium arising on shares amalgamation Notes 3&4 Rupees '000
1,409 375,572 1,579,721 428,422 257,400 116,483 -

Fair value reserve

General reserve

Unappropriated profit

Total

Balance at January 1, 2009 Amalgamation of former GlaxoSmithKline Pharmaceuticals (Private) Limited (GSK PPL) - Note 3 Amalgamation of former Stiefel Laboratories Pakistan (Private) Limited (SLPPL) - Note 4 Final dividend for the year ended December 31, 2008 @ Rs. 7.00 per share Profit after taxation for the year ended December 31, 2009 Profit of GSKPPL and SLPPL for the period prior to effective date of legal amalgamation transferred to capital reserve - Note 2.16 Fair value gain on available-for-sale investments Total comprehensive income for the year ended December 31, 2009 Balance at December 31, 2009 Final dividend for the year ended December 31, 2009 @ Rs. 5.00 per share Issuance of 25,740,000 ordinary shares to the qualifying shareholders of former GlaxoSmithKline Pharmaceuticals (Private) Limited - Note 3 Profit after taxation for the year ended ended December 31, 2010 Profit of SLPPL for the period prior to effective date of legal amalgamation transferred to capital reserve - Note 2.16 Fair value gain on available-for-sale investments Total comprehensive income for the year ended December 31, 2010 Balance at December 31, 2010

1,706,718 -

(12,368) -

3,999,970 -

2,283,590 (1,194,703) 1,041,291

8,354,891 1,837,121 544,905 (1,194,703) 1,041,291

1,706,718 -

1,409 -

107,361 107,361 2,491,076 -

373,883 -

9,981 9,981 (2,387) -

3,999,970 -

(107,361) 933,930 2,022,817 (853,359)

9,981 1,051,272 10,593,486 (853,359)

257,400 -

(257,400) -

1,057,383

1,057,383

1,964,118

1,409

3,843 3,843 2,494,919

116,483

2,304 2,304 (83)

3,999,970

(3,843) 2,304 1,053,540 2,222,998 1,059,687 10,799,814

The annexed notes 1 to 43 form an integral part of these financial statements.

M. Salman Burney Chairman / Chief Executive

Javed Ahmedjee Chief Financial Officer

57

Notes to and forming part of the Financial Statements For the year ended December 31, 2010
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 specialties, 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) ii) iii) iv) v) Provision for retirement benefits Impairment of non-current assets Provision for obsolete and slow moving stock Provision for doubtful receivables 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. 2.2 Change arising from standards, interpretations and amendments to published approved accounting standards that are effective in the current year New standards, amendments and interpretations that are mandatory for accounting periods beginning on or after January 1, 2010 are considered not to be relevant or to have any significant effect on the companys financial reporting and operations. 2.3 Overall valuation policy These financial statements have been prepared under the historical cost convention except as otherwise disclosed in the accounting policies below.

58

Notes to and forming part of the Financial Statements

2.4 2.4.1 Staff retirement benefits The company operates following defined benefit plans: Approved funded gratuity schemes for its permanent employees; and Approved funded pension scheme only for management employees of former GlaxoSmithKline Pharmaceuticals (Private) Limited.

Contributions to the gratuity and pension schemes are based on actuarial recommendations. The latest actuarial valuations of the schemes were carried out as at December 31, 2010 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 funds 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 the schemes. 2.4.2 2.5 The company also operates approved contributory provident funds for all its permanent employees. 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. 2.6 2.6.1 Taxation 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 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.

59

2.8

Fixed assets - property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation / amortisation and accumulated impairment. Depreciation is charged using the straight line method whereby the carrying value of an asset less estimated residual value, if not insignificant, is written off over its estimated remaining useful life. Depreciation / amortisation on assets is charged from the month of addition to the month of disposal. Cost of leasehold land is amortised over the period of the lease. Maintenance and normal repairs are charged to income as and when incurred. 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.

2.9

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, assets or cash-generating units are tested for impairment. Cash-generating units to which goodwill is allocated are also tested for impairment annually. Where the carrying values of assets or cash-generating units exceed the estimated recoverable amount, these are written down to their recoverable amount and the resulting impairment is charged to profit and loss account. Impairment is reversed only if there has been a change in estimates used to determine recoverable amounts and only to the extent that the revised recoverable amount does not exceed the carrying values that would have existed, had no impairments been recognised, except impairment of goodwill which is not reversed.

2.10

Goodwill Goodwill is stated at cost less impairments. Goodwill represents excess of consideration transferred over the fair value of the interest acquired in the net assets of an entity. After initial recognition, it is carried at cost less accumulated impairment, if any. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cashgenerating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other non financial assets of the unit. Impairment tests are based on risk-adjusted future cash flows discounted using appropriate discount rates. These future cash flows are based on business forecasts and are therefore inherently judgemental. Future events could cause the assumptions used in these impairment tests, as set out in note 13, Intangible, to change with a consequent adverse effect on the future results of the company.

2.11

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 investment with fixed or determinable payments and fixed maturity with the company having postitive intent and ability to hold to maturity. These are stated at amortised cost.

60

Notes to and forming part of the Financial Statements

2.12 Stores and spares These are valued at lower of cost, determined 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. 2.13 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. 2.14 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.

2.15

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, short-term investments and short-term borrowings under running finance,maturing within three months of the balance sheet date.

2.16

Business combination The company accounts for business combinations involving entities or businesses under common control using predecessor value method. The financial statements present the results as if both the combining businesses were always combined from the later of the earliest period presented and the date when both the combining businesses came under common control. Accordingly, the financial statements incorporate the assets and liabilities at the values on which these were included in the consolidated financial statements of the highest entity having common control on the above date and the results of operations therefrom.

2.17

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.

61

2.18

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.

2.19

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.

2.20

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

2.21

Share based payment Cash settled share based payments provided to employees are recorded as liability in the financial statements at the fair value.

62

Notes to and forming part of the Financial Statements

3. AMALGAMATION OF GLAXOSMITHKLINE PHARMACEUTICALS (PRIVATE) LIMITED (GSKPPL) FORMERLY BRISTOL-MYERS SQUIBB PAKISTAN (PRIVATE) LIMITED WITH THE COMPANY GlaxoSmithKline Pharmaceuticals (Private) Limited (GSKPPL) was incorporated as a private limited company for the manufacture and sale of pharmaceutical products. Under a scheme of arrangement for amalgamation of GSKPPL with the company sanctioned by the honourable High Court of Sindh (the Scheme) on March 17, 2010, effective January 1, 2010 GSKPPL has been amalgamated with the company and the company issued 25.74 million shares to former shareholders of GSKPPL, i.e. 25.74 ordinary shares of the company for every 1 share of GSKPPL, for transfer of and vesting in, the whole of their undertaking and businesses to the company. GlaxoSmithKline plc, UK became ultimate parent of GSKPPL on January 30, 2009. GlaxoSmithKline plc, UK is also the ultimate parent of the company. 3.1 The fair values of assets and liabilities at the acquisition date, when GlaxoSmithKline plc, UK became ultimate parent of GSK PPL were as follows: Rupees '000 992,118 955,742 1,422 1,949,282 14,003 312,904 282,285 33,886 7,699 42,756 11,535 705,068 2,654,350 (97,905) (584,243) (135,081) (719,324) (817,229) 1,837,121

Non-Current assets Fixed assets - property, plant and equipment Goodwill Long term deposits Current assets Stores and spares Stock-in-trade Trade debts Trade deposits and prepayments Staff retirement benefits Taxation - payments less provision Cash and bank balances Total assets Non-Current Liabilities Deferred taxation Current liabilities Trade and other payables Short term running finance Total liabilities Net assets acquired by the company

63

4.

AMALGAMATION OF STIEFEL LABORATORIES PAKISTAN (PRIVATE) LIMITED (SLPPL) WITH THE COMPANY Stiefel Laboratories Pakistan (Private) Limited (SLPPL) was incorporated as a private limited company for manufacture, import and marketing of dermatological products. Under a scheme of arrangement for amalgamation of SLPPL with the company sanctioned by the honourable High Court of Sindh (the Scheme) on January 22, 2011, effective July 1, 2010 SLPPL has been amalgamated with the company and the company is to issue 11.65 million shares to former shareholders of SLPPL, i.e. 144.52 ordinary shares of the company for every 1 share of SLPPL, for transfer of and vesting in, the whole of their undertaking and businesses to the company. GlaxoSmithKline plc, UK became ultimate parent of SLPPL on July 22, 2009. GlaxoSmithKline plc, UK is also the ultimate parent of the company.

4.1

The fair values of assets and liabilities at the acquisition date, when GlaxoSmithKline plc, UK became ultimate parent of SLPPL, were as follows: Rupees '000 Non-Current assets Fixed assets - property, plant and equipment 303,767 Intangible 498 Long term deposits 5,002 309,267 Current assets Stock-in-trade 105,840 Trade debts 42,917 Loans and advances 867 Trade deposits and prepayments 30,311 Taxation - payments less provision 39,172 Cash and bank balances 195,507 414,614 Total assets 723,881 Non-Current Liabilities Deferred taxation Staff retirement benefits Current liabilities Trade and other payables Total liabilities Net assets acquired by the company (7,193) (4,180) (11,373) (167,603) (178,976) 544,905

64

Notes to and forming part of the Financial Statements

5. SHARE CAPITAL Authorised share capital 2010 2009 500,000,000 250,000,000 Ordinary shares of Rs. 10 each Issued, subscribed and paid-up capital Ordinary shares of Rs. 10 each 2010 2009 5,386,825 52,691,523 138,333,496 196,411,844 5.1 5,386,825 26,951,523 138,333,496 170,671,844 Shares allotted for consideration paid in cash Shares allotted for consideration other than cash Shares allotted as bonus shares 53,868 526,915 1,383,335 1,964,118 53,868 269,515 1,383,335 1,706,718 5,000,000 2,500,000 2010 Rupees 000 2009

As at December 31, 2010 S.R. One International B.V., Netherlands and its nominees held 160,180,718 shares (2009: 134,453,588 shares). During the year, 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. 2010 Restated 2009 Rupees 000

6.

RESERVES Capital reserves Share premium Reserve arising on amalgamation Issue of shares Fair value reserve - note 6.1 General reserve Unappropriated profit

1,409 2,494,919 116,483 2,612,811 (83) 3,999,970 2,222,998 8,835,696

1,409 2,491,076 373,883 2,866,368 (2,387) 3,999,970 2,022,817 8,886,768 2009 (3,672) 1,285 (2,387)

6.1

This represents deficit arising on revaluation of available-for-sale investments as follows: 2010 Deficit on revaluation Deferred tax Thereon

Rupees 000

(128) 45 (83)

65

7. 7.1

STAFF RETIREMENT BENEFITS Movement in liability / (asset) Opening balance Liability / (asset) acquired through business combinations - notes 3 & 4 Charge / (Reversal) for the year - note 7.5 Payments to the fund Closing balance

Gratuity funds Restated 2010 2009 Rupees 000

Pension fund Restated 2010 2009 Rupees 000

72,885 95,371 (53,016) 115,240

20,802 2,319 94,837 (45,073) 72,885

(13,467) (5,388) (18,855)

(5,838) (7,629) (13,467)

7.2

Balance sheet reconciliation Present value of defined benefit obligation Fair value of plan assets Unrecognised actuarial (loss) / gain 940,478 (635,425) 305,053 (189,813) 115,240 883,550 (641,827) 241,723 (168,838) 72,885 67,850 (111,558) (43,708) 24,853 (18,855) 58,593 (100,610) (42,017) 28,550 (13,467)

7.3

Movement in the present value of defined benefit obligation during the year is as follows: Balance at January 1 Liability assumed through business combinations - notes 3 & 4 Current service cost Interest cost Actuarial loss / (gain) Benefits paid Balance at December 31 883,550 55,976 109,927 19,796 (128,771) 940,478 641,237 137,417 54,323 107,475 (6,992) (49,910) 883,550 58,593 2,343 8,203 1,246 (2,535) 67,850 46,316 2,715 6,947 4,812 (2,197) 58,593

7.4

Movement in the present value of plan assets during the year is as follows: Balance at January 1 Asset acquired through business combinations - notes 3 & 4 Expected return on plan assets Actuarial (loss) / gain Employer's contributions Benefits paid Balance at December 31 641,827 81,486 (12,133) 53,016 (128,771) 635,425 446,759 118,535 75,990 5,380 45,073 (49,910) 641,827 100,610 14,085 (602) (2,535) 111,558 95,039 14,256 (6,488) (2,197) 100,610

7.5

Charge / (reversal) for the year Current service cost Interest cost Expected return on plan assets Recognition of actuarial loss / (gain) 55,976 109,927 (81,486) 10,954 95,371 69,353 54,323 107,475 (75,990) 9,029 94,837 81,370 2,343 8,203 (14,085) (1,849) (5,388) 13,483 2,715 6,947 (14,256) (3,035) (7,629) 7,768

7.6
66

Actual return on plan assets

Notes to and forming part of the Financial Statements

Gratuity funds Restated 2010 2009 Rupees 000 Pension fund Restated 2010 2009 Rupees 000

7.7

Principal actuarial assumptions Expected return on plan assets (% per annum) Expected rate of increase in salaries (% per annum) Discount factor used (% per annum) Retirement age (years) Average remaining working life of employees (years)

14.50 14.50 14.50 60 10 - 13

12.75 - 14.00 12.75 - 14.00 12.75 - 14.00 60 10 - 13

14.50 14.50 14.50 60 14

14.00 14.00 14.00 60 14

7.8

Expected return on plan assets has been determined considering the expected risk adjusted returns available on the assets underlying the current investment policy. Gratuity funds Pension fund 2010 2009 2010 2009 % % % % Plan assets Plan assets are comprised of the following: - Equity and mutual funds - Bonds - Others 16.11 52.21 31.68 100.00 21.95 51.42 26.63 100.00 95.06 4.94 100.00 98.75 1.25 100.00

7.9

For the year ending December 31, 2011 expected contribution to funded gratuity schemes is Rs. 110.08 million. No contribution is expected to be paid to funded pension scheme.

7.10 Comparison for five years Gratuity fund 2010 635,425 (940,478) (305,053) (12,133) 19,796 2009 641,827 (883,550) (241,723) 5,380 (6,992) 2008 Rupees '000 446,759 (641,237) (194,478) 128,538 23,432 2007 529,756 (574,654) (44,898) (47,104) 25,082 2006 372,849 (482,634) (109,785) (8,910) 23,080

Fair value of plan assets Present value of defined benefit obligation Deficit Experience (loss) / gain on plan assets Experience loss / (gain) on plan liabilities Pension fund Fair value of plan assets Present value of defined benefit obligation Surplus / (Deficit) Experience (loss) / gain on plan assets Experience loss / (gain) on plan liabilities

111,558 (67,850) 43,708 (602) 1,246

100,610 (58,593) 42,017 (6,488) 4,812

7.11 Information given in note 7 is primarily based on actuarial advice.

67

2010 8. DEFERRED TAXATION Credit balance arising in respect of accelerated tax depreciation allowances Debit balances arising in respect of: Provision for retirement benefits Provision for doubtful debts Provision for slow moving and obsolete stock Provision for slow moving and obsolete stores and spares Provision for refunds due from government doubtful of recovery Loss on revaluation of available-for-sale investments 9. TRADE AND OTHER PAYABLES Creditors - Associated companies - Others Bills payable - Associated companies - Others Royalty and technical fee payable - Associated company - Others Accrued liabilities Advances from customers Contractors' earnest / retention money Taxes deducted at source and payable to statutory authorities Workers' Profits Participation Fund - note 9.1 Workers Welfare Fund Central Research Fund Unclaimed dividend Payable to provident fund Others 9.1 Workers' Profits Participation Fund Opening liability / (asset) Liability assumed through business combinations - notes 3 & 4 Allocation for the year note 28 Interest on funds utilised in company's business note 30 Amounts paid to the Fund Closing liability 10. PROVISIONS Restructuring cost - note 10.2 10.1 Reconciliation of provisions Balance as at January 1 Charge for the year - note 10.2.1 Payments during the year Balance as at December 31
68

Restated 2009 Rupees 000 466,770 21,004 6,325 13,019 2,031 5,437 1,285 49,101 417,669 961,723 196,370 95,950 53,983 233,897 60,247 1,124,821 174,769 5,009 10,772 10,102 58,559 17,159 38,554 8,984 52,146 3,103,045 (3,205) 32,049 91,686 120,530 120,530 (110,428) 10,102 236,934 97,117 235,424 (95,607) 236,934

481,094 29,736 8,995 17,571 2,711 5,584 45 64,642 416,452 932,909 297,963 41,242 33,086 247,136 79,346 1,429,335 185,682 11,836 15,919 24,119 53,635 19,512 42,894 14,678 3,429,292 10,102 105,150 115,252 136 115,388 (91,269) 24,119 131,001 236,934 257,218 (363,151) 131,001

Notes to and forming part of the Financial Statements

10.2 The amount represents costs incurred due to planned restructuring of GlaxoSmithKline Pharmaceuticals (Private) Limited and Stiefel Laboratories Pakistan (Private) Limited, consequent to amalgamation with the company. The full amount is expected to be utilised in the coming year.

10.2.1 This includes severance cost of Rs. 127.82 million (2009 : Rs. 58.82 million) reimbursed by an associated company. 11. 11.1 CONTINGENCIES AND COMMITMENTS Contingencies (a) Claims against the company not acknowledged as debt (b) Income Tax (i) In prior years, while finalising the companys assessments for the years 1999-2000 through 2002-2003 (accounting years ended December 31, 1998 through 2001) the Assessing Officer (AO) had made additions to income raising tax demands of Rs. 73.6 million. Such additions were made on the contention that the company had allegedly paid excessive amount for importing certain raw materials. Upon company's appeal, the Commissioner of Inland Revenue (Appeals) (CIRA) had maintained the addition to income for assessment years 1999-2000 and 20002001 (accounting years ended December 31, 1998 and 1999) while the additions made in assessment years 2001-2002 and 2002-2003 (accounting years ended December 31, 2000 and 2001) were deleted. In respect of assessment years 1999-2000 and 2000-2001 the company, and in respect of assessment years 2001-2002 and 2002-2003, the department, had filed respective appeals with the Income Tax Appellate Tribunal (ITAT). All the above assessments were set aside by ITAT for fresh consideration by the AO during the year ended December 31, 2008. During the current year, assessment orders for the above years have been passed by the AO and additions of same amounts as described above have been made. The company has filed appeals with CIRA. (ii) In prior years, while finalising the assessment of former Smith Kline & French of Pakistan Limited for the assessment year 2002-2003 (accounting year ended December 31, 2001), the Assessing Officer (AO) had made addition to income raising tax demands of Rs. 4.03 million. Such addition was made on the contention that the company had allegedly paid excessive amount for importing certain raw materials. Upon company's appeal, the CIRA had maintained the addition to income against which the company had filed an appeal with the ITAT. The above assessment was set aside by ITAT for fresh consideration by the AO during the year ended December 31, 2008. During the current year, assessment order for the above year has been passed by the AO and addition of same amount as described above has been made. The company has filed appeal with CIRA. (iii) During the year, while amending the assessment of the company for the tax years 2005, 2006, 2007 and 2008 (accounting year ended December 31, 2004, 2005, 2006 and 2007) the Assessing Officer (AO) has made additions to income raising tax demands totalling Rs. 151.15 million. Such additions were made on the contention that the company had allegedly paid excessive amount for importing certain raw materials and in respect of royalty. The company has filed appeal with CIRA in respect of above tax years. (iv) In prior years, while finalising the assessment of former GlaxoSmithKline Pharmaceuticals (Private) Limited (GSKPPL) formerly Bristol-Myers Squibb Pakistan (Private) Limited for assessment years 1989-1990 to 2002-2003 (accounting years ended December 31, 1989 through 2002) the Assessing Officer (AO) had made additions to income raising tax demands of Rs. 314.10 million on the contention that the company had allegedly paid excessive amounts for importing certain raw materials. CIRA also maintained the additions. On GSKPPL's appeals, the additions made by the AO were deleted by ITAT. Later, the department filed appeals against the decision of ITAT in the High Court of Sindh (the High Court).
69

2010

Restated 2009 Rupees '000 323,521

310,822

In October 2007, the High Court awarded its verdict for the assessment years 1989-1990 and 1990-1991 in favour of the tax department confirming tax demands of Rs. 11.99 million. However, the decisions in respect of the department's appeals for the assessment years 1991-1992 through 2002-2003 are still pending in the High Court for which the net aggregate tax liability, if such cases are decided against the company, will be Rs. 302.11 million. The company has filed an appeal in the Supreme Court of Pakistan against the above decision of the High Court and a leave to appeal has been granted to the company. The company through its legal counsel has also filed review petition before the High Court in this regard. The management is confident that the ultimate decisions in the above cases will be in favour of the company, hence provision has not been made in respect of the aforementioned additional tax demands. 11.2 Commitments Commitments for capital expenditure outstanding as at December 31, 2010 amounted to Rs. 607.81 million (2009: Rs. 475.63 million). Restated Note 2010 2009 Rupees 000 FIXED ASSETS - property, plant and equipment Operating assets Capital work-in-progress 12.1 Operating assets 12.1 12.4 3,367,436 822,560 4,189,996 3,407,310 422,278 3,829,588
Net Book Annual rate of value as at depreciaDecember 31, tion / 2010 amortisation %

12.

Cost as at January 1, 2010 Restated

Additions / Cost as at (disposals) / December 31, (write offs) */ 2010 Acquired through business combinations notes 3 & 4** 105 32,983 (10) 139,148 (45,129) 31,002 (4,335) 126,779 (63,119) 59,585 (9,233) 389,602 (121,826) 425,102 (185,032) (2,936) * 1,103,987**

Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Plant and machinery Furniture and fixtures Vehicles Office equipments December 31, 2010 December 31, 2009 - Restated

174 385,452 66,494 1,113,540 2,717,113 155,719 372,680 541,863 5,353,035 4,011,914

Accumulated Depreciation / Accumulated Impairment depreciation / Amortisation depreciation / loss as at amortisation for the year amortisation December 31, as at (on disposals) / as at 2010 January 1, (write offs) * December 31, 2010 2010 Restated Rupees '000 174 9,283 30,383 208,244 1,062,251 65,817 129,201 361,566 1,866,745 1,693,929 6,766 835 25,234 (4) 200,254 (35,910) 10,519 (4,135) 69,189 (32,001) 59,037 (8,894) 371,834 (80,944) 310,126 (135,702) (1,608) * 16,049 31,218 233,474 1,226,595 72,201 166,389 411,709 2,157,635 1,866,745 19,062 26,581 41,259 7,971 867 95,740 78,980

174 369,403 16,319 886,458 1,543,278 102,214 269,951 179,639 3,367,436 3,407,310

2.5 to 10 2.5 2.5 5 to 10 10 25 10 to 33.33

385,452 66,599 1,146,513 2,811,132 182,386 436,340 592,215 5,620,811 5,353,035

70

Notes to and forming part of the Financial Statements

12.1.1 Leasehold land includes land with a net book value of 18.45 million on provisional allotment from Punjab Industrial Estates Development and Management Company. 12.2 Reconciliation of opening and closing Net Book Value (NBV)
Cost Accumulated depreciati on / amortisation As at January 1, 2010 Restated Rupees '000 Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Plant and machinery Furniture and fixtures 155,719 65,817 7,854 82,048 31,002 (200) (10,519) (173) 56 Vehicles Office equipments 372,680 541,863 5,353,035 129,201 361,566 1,866,745 49 78,980 243,479 180,248 3,407,310 126,779 59,585 389,602 (31,118) (339) (40,882) (69,189) (59,037) (371,834) (818) (18,309) 1,549 269,951 179,639 3,367,436 102,214 2,717,113 1,062,251 27,827 1,627,035 139,148 (9,219) (200,254) (14,925) 1,493 1,543,278 1,113,540 208,244 26,581 878,715 32,983 (6) (25,234) 886,458 66,494 30,383 16,669 19,442 105 (835) (2,393) 16,319 174 385,452 9,283 174 376,169 Impairment loss NBV Cost of additions during the year Cost less depreciation of disposals during the year Depreciation / for the year (Charge) / Reversal of impairment loss on disposals during the year NBV as at December 31, 2010

accumulated Amortisation

(6,766)

174 369,403

71

12.3

Details of operating assets sold Details of operating assets sold, having net book value in excess of Rs. 50,000 each are as follows: Description Plant and machinery Cost Accumulated Book depreciation value Rupees ' 000 21,469 6,390 Sale proceeds Mode of disposal Particulars of purchaser

27,859

6,390

Negotiation

" " "

910 588 568

435 218 317

475 370 251

135 112 187

Tender " "

Akhai Pharmaceuticals (Private) Limited, 103 - K, Block-2, P.E.C.H.S, Shahra-e-Quaideen, Karachi Shahzad and Sons 3-D 21/15, Near Gole Market, North Nazimabad, Karachi Mushtaq Ahmed and Sons 89, Timber Market, Landhi, Karachi Shakoor Brothers Plot No. SA-6, ST-4, Sector-27, Korangi Industrial Area, Karachi." Akhai Pharmaceuticals (Private) Limited, 103 - K, Block-2, P.E.C.H.S, Shahra-e-Quaideen, Karachi. EFU General Insurance Limited " "

Office equipment

8,018

7,834

184

185

Negotiation

" " " Furniture and fixture

135 53 53

78 3 3

57 50 50

163 65 65

Insurance Claim " "

3,405

3,344

61

61

Negotiation

Akhai Pharmaceuticals (Private) Limited, 103 - K, Block-2, P.E.C.H.S, Shahra-e-Quaideen, Karachi. Mr. Mahmood Tahir - Ex-executive " " Mr. Pervaiz Iqbal Awan - Executive Dr. Gohar Nayab - Executive Mr. Saleem Ansari - Ex-executive Mr. Muhammad Asim - Executive Mr. Muhammad Khalid - Ex-executive Mr. Ahad Sharif - Ex-executive Mr. Arif Ahmed Shah - Ex-executive Mr. Azfar Ghauri Ex - executive Mr. Azhar Hussain - Ex-executive Mr. Muhammad Hayat Khan - Ex-executive Mr. Zahid Ali Jaffri - Ex-executive Mr. Shahid Farooqui - Ex-executive Mr. Sheikh Abdul Waheed - Executive Mr. G. A. Jaffary - Ex-executive Mr. Iqbal Naseem - Ex-executive Mr. Sanjay Gajria - Executive Mr. Amjad Ali - Ex-employee Mr. Syed Tahir Jalil Azeemi - Ex-employee Dr. Amad Subhani - Ex-executive Mr. Muhammad Hafeez - Executive

Vehicles " " " " " " " " " " " " " " " " " " " " " "

3,045 1,391 1,263 4,200 1,879 1,840 1,429 1,429 1,429 1,043 1,043 996 1,036 1,014 1,014 886 886 936 725 597 646 931 636

1,167 301 968 1,641 206 390 356 356 402 318 318 316 363 380 428 336 336 386 283 189 242 574 298

1,878 1,090 295 2,559 1,673 1,450 1,073 1,073 1,027 725 725 680 673 634 586 550 550 550 442 408 404 357 338

1,000 900 330 2,520 1,879 578 765 540 750 372 360 840 420 608 630 280 725 320 700 140 420 290 685

Company Policy " " " " " " " " " " " " " " " " " " " " " "

72

Notes to and forming part of the Financial Statements

Description Cost Accumulated Book depreciation value Rupees ' 000 642 877 330 133 133 367 387 664 407 386 697 689 659 659 637 637 416 221 221 221 220 535 289 227 296 457 420 420 416 341 340 986 298 292 289 288 288 285 265 262 245 234 233 230 220 220 212 212 204 180 180 180 180 179 175 174 168 152 140 140 139 123 114 329 Sale proceeds 280 292 220 216 210 675 625 280 326 248 280 280 220 220 212 212 615 120 120 126 130 178 182 120 168 152 140 140 139 186 120 375 Mode of disposal Company Policy " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " Tender Particulars of purchaser

Vehicles
" " " " " " " " " " " " " " " " " " " " " " " " " " " " " " "

940 1,169 619 421 421 652 652 926 652 620 930 919 879 879 849 849 620 401 401 401 400 714 464 401 464 609 560 560 555 464 454 1,315

Ms. Sabeen Saad - Ex-executive Mr. Zafarullah Khan - Executive Mr. Atta ul Qadoos - Ex-employee Mr. Fahim Siddiqui - Ex-employee Mr. Saqib Iftikhar - Ex-employee Mr. Talal Ahmed - Executive Mr. Imran Amin - Executive Mr. Hassan Yousaf - Ex-executive Ms. Shahida Javed Ex - executive Mr. Taufeeq Ahmed - Ex-executive Mr. Imran ul Haq - Ex-executive Mr. Shoukat Ali Siddiqui - Ex-executive Mr. Muhammad Ali Shah - Ex-executive Mr. Shahrukh Hafeez - Ex-executive Mr. Mohi-ul-Islam - Executive Mr. Naeem Baig - Executive Ms. Ayesha Muharram - Executive Mr. Shamraiz Khan - Ex-employee Mr. Ashraf Javaid - Ex-employee Mr. Tariq Mahmood - Ex-employee Mr. Mubeen Ahmad - Ex-executive Mr. Qaiser Ghani Jangua - Executive Mr. Mukhtiar Baig - Ex-executive Mr. Salman Saeed - Ex-executive Mr. Altaf Hussain Butt - Ex-employee Mr. Kaleem Ahmed - Executive Mr. Jamaluddin - Executive Mr. Tariq Jangua - Executive Mr. Imran Haider Raza - Executive Mr. Mian Jan Badshah - Executive Mr. Ilyas Farooq - Ex-employee Mr. Mohammad Akram Malik, House No. N-573, Samanabad, Near Qayyum Park, Lahore. EFU General Insurance Limited " " " "

" " " " "

1,849 1,414 1,319 655 1,309

376 177 433 194 982

1,473 1,237 886 461 327

1,849 1,414 1,319 455 700

Insurance Claim " " " "

73

12.4 Capital work-in-progress Civil work Plant and machinery Furniture and fixtures Office equipments Advances to suppliers Less: Provision for impairment 13. INTANGIBLE Goodwill Software licences 13.1 Goodwill

Note

2010

Restated 2009 Rupees 000 210,198 178,543 9,169 24,701 32,246 454,857 32,579 422,278 955,742 303 956,045

324,180 417,687 17,655 75,460 20,157 855,139 32,579 822,560 3.1 & 13.1 955,742 955,742

Goodwill is allocated to cash generating units to which it relates, which are tested for impairment in line with note 2.9. The recoverable amount of cash generating unit is the higher of value in use or fair value less cost to sell. Value in use is calculated as the net present value of the projected cash flows discounted at risk-adjusted discount rate. Details relating to the discounted cash flow model used in the impairment test are as follows: GlaxoSmithKline Pharmaceuticals (Private) Limited Valuation basis Key assumptions Value in use Sales growth rates Profit margins Discount rate Growth rates are internal forecasts based on both internal and external market information and past performance. Cost reflects past experience, adjusted for inflation and expected changes. Discount rate is parimarily based on weighted average cost of capital. Terminal growth rate Period of specific projected cash flows Discount rate 4% 5 Years 18.40%

Determination of assumptions

The valuation indicates sufficient headroom such that a reasonably possible change to key assumptions is unlikely to result in an impairment of the related goodwill.

74

Notes to and forming part of the Financial Statements

14. LONG-TERM LOANS TO EMPLOYEES Reconciliation of the carrying amount of loans to executives and other employees: 2010 Executives Other employees NonInterest Noninterest bearing interest bearing bearing Balance at January 1 Disbursements Repayments Balance at December 31 Current portion included in note 19 2,667 6,044 (3,156) 5,555 (2,371) 3,184 3,108 1,315 (1,448) 2,975 (1,651) 1,324 90,738 71,404 (52,788) 109,354 (40,272) 69,082 2009 Executives Other employees NonInterest Noninterest bearing interest bearing bearing Rupees 000 Total 96,513 78,763 (57,392) 117,884 (44,294) 73,590 4,166 2,772 (4,271) 2,667 (1,533) 1,134 2,267 2,499 3,108 2,990 88,334 41,878 90,738 57,175 Total

94,767 47,149 (45,403) 96,513 (35,214) 61,299

(1,658) (39,474) (118) (33,563)

14.1 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 (2009: 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. 5.64 million (2009: Rs. 4.75 million). Note 15. INVESTMENTS Available-for-sale Pakistan Investment Bonds Held-to-maturity Treasury bills Less: short term 15.2 729,724 901,955 901,955 644,889 813,576 644,889 168,687 15.1 172,231 168,687 2010 Rupees 000 2009

15.1 These are held by company's banker for safe custody. The yield on these bonds is 13.37% per annum (2009: 12.25% per annum) and these bonds will mature in May 2011. 15.2 These are held by company's banker for safe custody. The yield on these bills ranges from 13.12% to 13.16% per annum (2009: 12.42% per annum) and these bills will mature in March 2011. Restated 2010 2009 Rupees 000 16. STORES AND SPARES Stores and spares Less: Provision for slow moving and obsolete items - note 16.1 158,378 7,746 150,632 147,905 5,840 142,065

75

16.1 Stores and spares of Rs. 520 thousand (2009: Rs. 11.78 million) have been written off against the provision during the year. Restated 2010 2009 Rupees 000 17. STOCK-IN-TRADE Raw and packing materials including in transit Rs. 323.86 million (2009: Rs. 441.99 million) Work-in-progress Finished goods including in transit Rs. 310.63 million (2009: Rs. 153.44 million) Less: Provision for slow moving, obsolete and damaged items - note 17.3

1,590,899 394,146

1,794,766 301,944

2,609,148 4,594,193 281,658 4,312,535

2,647,191 4,743,901 200,212 4,543,689

17.1 Stock-in-trade includes Rs. 40.10 million (2009: Rs. 50.31 million), Rs. 79.73 million (2009: Nil) and Rs. 47.14 million (2009: Nil) held with Pharmatec Pakistan (Private) Limited, Vikor Enterprises (Private) Limited and Akhai Pharmaceuticals (Private) Limited, respectively. 17.2 Stock-in-trade includes items costing Rs. 899.90 million (2009: Rs. 196 million) valued at net realisable value of Rs. 762.84 million (2009: Rs. 159 million). 17.3 Stocks of Rs. 91.128 million (2009: Rs. 32.76 million) have been written off against the provision during the year. 2010 18. TRADE DEBTS Considered good GSK Trading Services Limited - Associated company Others Considered doubtful Less: Provision for doubtful debts Restated 2009 Rupees 000

15,580 280,182 29,741 325,503 29,741 295,762

11,542 1,316,915 16,829 1,345,286 16,829 1,328,457

18.1 The maximum aggregate amount due from the related party at the end of any month during the year was Rs. 18.83 million (2009: Rs. 14.75 million). 18.2 Trade debts of Rs. 1.15 million (2009: Rs. 0.44 million) have been written off against the provision during the year.

76

Notes to and forming part of the Financial Statements

Note 19. LOANS AND ADVANCES - considered good Loans due from employees - note 14 Advances to employees Advances to suppliers 2010 Restated 2009 Rupees 000 35,214 25,648 33,986 94,848

44,294 27,244 72,729 144,267

20.

TRADE DEPOSITS AND PREPAYMENTS Trade deposits Prepayments Margins held with banks 69,591 23,738 2,905 96,234 69,923 21,730 14,571 106,224

21.

REFUNDS DUE FROM GOVERNMENT Custom duty and sales tax - considered good - considered doubtful Less: Provision for doubtful receivables 17,534 18,464 35,998 18,464 17,534 3,050 18,464 21,514 18,464 3,050

22.

OTHER RECEIVABLES Due from related parties - Associated companies - GSK Pakistan Limited senior staff pension fund - BMS Pakistan (Private) Limited management staff pension fund Claims recoverable from suppliers Receivable against sale of fixed assets Others 22.1 214,858 7.1 18,855 233,713 13,622 6,636 36,085 290,056 40,918 31,212 13,467 85,597 7,956 17,643 111,196

22.1 Due from associated companies GlaxoSmithKline Services Unlimited, UK GlaxoSmithKline Export Limited, UK GlaxoSmithKline Limited, Bangladesh GSK Services Corporation, UK Stiefel Laboratories (Pte) Limited, Singapore Stiefel Laboratories Limited, US 57,266 15,235 8,377 128,614 5,366 214,858 18,429 14,051 8,377 61 40,918

77

22.2 The maximum aggregate amount due from related parties at the end of any month during the year was Rs. 214.86 million (2009: Rs. 113.57 million). Restated 2010 2009 Rupees 000 23. CASH AND BANK BALANCES With banks on deposit accounts on PLS savings accounts on current accounts Cash and cheques in hand 2,475,000 254,580 74,176 5,016 2,808,772 1,750,743 134,120 163,383 4,907 2,053,153

23.1 At December 31, 2010 the rates of mark-up on PLS savings accounts and on term deposit accounts were 5% to 6.5% (2009: 5% to 5.5%) per annum and 11.30% to 12.05% (2009: 10.82% to 11.35%) per annum respectively. 2010 24. NET SALES Manufactured goods Gross sales Local Export Less: Commissions, returns, discounts and rebates Sales tax Trading goods Gross sales Local Export Less: Commissions, returns, discounts and rebates Sales tax Restated 2009 Rupees 000

16,391,285 585,963 16,977,248 165,176 47,295 16,764,777 2,320,634 8,754 2,329,388 157,523 20,451 2,151,414 18,916,191

13,794,994 440,466 14,235,460 182,026 43,539 14,009,895 2,950,708 3,126 2,953,834 192,597 17,259 2,743,978 16,753,873

24.1 Sales values of pharmaceutical and consumer products amount to Rs. 17.15 billion and Rs. 1.77 billion (2009: Rs. 15.30 billion and Rs. 1.46 billion) respectively. 24.2 Sales of major product categories i.e. antibiotics, dermatologicals and vaccines during the year amounted to Rs. 7.92 billion, Rs. 2.47 billion and Rs. 848.23 million (2009: Rs. 7.16 billion, Rs. 1.65 billion and Rs. 1.60 billion) respectively. 24.3 Company sells its products through a network of distribution channels involving various distributors / subdistributors and also directly to government and other institutions. Sales to one distributor (2009: one distributor) exceed 10 percent of the net sales during the year, amounting to Rs. 1.94 billion (2009: Rs. 1.68 billion).

78

Notes to and forming part of the Financial Statements

2010 25. COST OF SALES Raw and packing materials consumed Manufacturing charges to third party Stores and spares consumed Salaries, wages and other benefits - note 25.1 Fuel and power Rent, rates and taxes Royalty and technical fee Insurance Repairs and maintenance Training expenses Travelling and entertainment Vehicle running Depreciation / amortisation Impairment charge Provision for slow moving and obsolete stock - raw and packing materials Provision for slow moving and obsolete stores and spares Canteen expenses Laboratory expenses Communication and stationery Security expenses Stock written off Other expenses Opening stock of work-in-process Closing stock of work-in-process Cost of goods manufactured Opening stock of finished goods Closing stock of finished goods Cost of samples shown under selling, marketing and distribution expenses - sales promotion expenses Trading goods Opening stock of finished goods Purchase of finished goods Closing stock of finished goods Provision for slow moving, obsolete and damaged stock - finished goods Cost of samples shown under selling, marketing and distribution expenses - sales promotion 8,931,872 201,508 41,658 1,032,729 367,376 2,702 154,028 66,865 125,375 3,038 11,154 14,524 254,859 18,309 91,794 2,426 77,077 33,686 10,673 12,532 30,803 32,904 11,517,892 301,944 (394,146) 11,425,690 1,580,625 13,006,315 (1,615,963) 8,262,577 146,038 36,670 970,490 287,673 5,204 157,754 50,559 116,333 127 9,174 14,749 208,963 58,050 84,874 80 72,629 32,484 9,254 9,032 4,352 30,355 10,567,421 201,425 (301,944) 10,466,902 685,183 11,152,085 (1,580,625) Restated 2009 Rupees '000

(104,696) 11,285,656 1,066,566 2,500,151 3,566,717 (993,185) 217,844 (13,790) 2,777,586 14,063,242

(78,356) 9,493,104 974,383 3,099,777 4,074,160 (1,066,566) 55,901 (42,007) 3,021,488 12,514,592

79

25.1 Salaries, wages and other benefits include Rs. 42.79 million and Rs. 28.80 million (2009: Rs. 43.22 million and Rs. 25.82 million) in respect of defined benefit plan and contributory provident fund respectively. Restated 2010 2009 Rupees '000 26. SELLING, MARKETING AND DISTRIBUTION EXPENSES Salaries, wages and other benefits - note 26.1 Sales promotion Advertising Handling, freight and transportation Travelling and entertainment Depreciation / amortisation Vehicle running Publication and subscriptions Fuel and power Communication Provision for doubtful debts Repairs and maintenance Insurance Printing and stationery Security expenses Rent, rates and taxes Canteen expenses Training expenses Bad debts written off Other expenses 768,013 693,572 172,787 227,529 166,151 44,340 42,093 20,408 23,461 20,100 14,066 24,132 14,396 13,174 9,259 9,900 1,716 4,173 32,246 2,301,516 760,290 525,826 131,983 150,627 156,290 32,199 44,330 21,537 14,848 18,038 17,564 12,205 11,035 10,157 7,944 6,521 1,060 1,175 141 25,309 1,949,079

26.1 Salaries, wages and other benefits include Rs. 35.5 million and Rs. 24.15 million (2009: Rs. 34.50 million and Rs. 20.14 million) in respect of defined benefit plan and contributory provident fund respectively. 2010 27. ADMINISTRATIVE EXPENSES Salaries, wages and other benefits - note 27.1 Depreciation Communication Training expenses Travelling and entertainment - note 27.2 Legal and professional charges Repairs and maintenance Donations - note 27.3 Printing and stationery Auditors remuneration - note 27.4 Vehicle running Security expenses Publication and subscriptions Rent, rates and taxes Insurance Canteen expenses Restructuring cost Less: recovery from associated undertaking - note 10.2.1 Other expenses - note 27.5 Restated 2009

Rupees '000

349,484 72,938 37,644 12,062 23,632 27,974 27,620 25,681 15,662 11,863 17,243 14,957 12,195 7,113 6,759 8,402 257,218 (127,823) 129,395 25,612 826,236

342,342 69,159 34,321 28,529 19,375 34,255 21,164 14,453 13,689 11,784 13,194 11,229 8,638 6,339 4,618 4,361 235,424 (58,824) 176,600 36,818 850,868

80

Notes to and forming part of the Financial Statements

27.1 Salaries, wages and other benefits include Rs. 11.69 million and Rs. 11.21 million (2009: Rs. 9.49 million and Rs. 8.35 million) in respect of defined benefit plans and contributory provident fund respectively. 27.2 These are net of recovery from related party of Rs. 985 thousand (2009: Rs. 1.80 million). 27.3 Donations include a sum of Rs. 537 thousand (2009: Rs. 386 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. 2010 27.4 Auditors' remuneration Audit fee Fee for review of half yearly financial statements, special certifications and others Taxation services Out-of-pocket expenses Rupees '000 2009

3,900 3,578 3,485 900 11,863

3,000 5,110 2,774 900 11,784

27.5 These are net of recovery from related party of Rs. 75.88 million (2009 : Rs. 75.50 million) 2010 28. OTHER OPERATING EXPENSES Workers' Profits Participation Fund - note 9.1 Workers' Welfare Fund Central Research Fund 29. OTHER OPERATING INCOME Income from financial assets Return on PIBs Return on Treasury Bills Income on savings and deposit accounts Discount on investments 16,141 68,045 238,167 322,353 22,296 75,616 268,378 965 367,255 Restated 2009 Rupees '000 91,686 43,281 16,835 151,802

105,150 46,481 19,512 171,143

Income from non-financial assets Gain on disposal of operating assets Others Scrap sales Insurance commission Service fee on clinical trial studies Liabilities no longer required written back Others 30. FINANCIAL CHARGES Exchange loss - net Bank charges Interest on Workers' Profits Participation Fund note 9.1 Mark-up on short term loan
81

1,581 18,818 13,647 6,634 31,000 3,663 397,696

26,334 18,614 16,107 6,975 16,081 12,327 463,693

5,058 14,832 136 20,026

14,660 13,139 16,846 44,645

2010 31. TAXATION Current - for the year - prior years Deferred 31.1 Relationship between tax expense and accounting profit Profit before taxation Tax at the applicable rate of 35% Prior years' adjustment Effect of final tax regime Tax effect of other than temporary differences

Restated 2009 Rupees '000

864,298 12,500 (2,457) 874,341

722,067 (42,349) (14,429) 665,289

1,931,724 676,103 12,500 129,217 56,521 874,341

1,706,580 597,303 (42,349) 89,149 21,186 665,289

32.

EARNINGS PER SHARE Profit after taxation Shares outstanding for the whole year Shares issued under the Scheme of Amalgamation of GSKPPL - Note 3 Shares to be issued under the Scheme of Amalgamation of SLPPL - Note 4 Weighted average number of outstanding shares Basic earnings per share 1,057,383 170,672 25,740 11,648 208,060 Rs. 5.08 1,041,291 170,672 23,681 5,242 199,595 Rs. 5.22

32.1 A diluted earnings per share has not been presented as the company did not have any convertible instruments in issue as at December 31, 2010 and 2009 which would have any effect on the earnings per share if the option to convert is exercised.

82

Notes to and forming part of the Financial Statements

2010 33. CASH GENERATED FROM OPERATIONS Profit before taxation Add / (less): Adjustments for non-cash charges and other items Depreciation / amortisation Return on investments - PIBs Impairment charge Gain on disposal of operating assets Provision for staff retirement benefits Financial charges Amortisation of discount on investments Profit before working capital changes Effect on cash flow due to working capital changes (Increase) / decrease in current assets Stores and spares Stock-in-trade Trade debts Loans and advances Trade deposits and prepayments Accrued return on term deposits Refunds due from government Other receivables Increase / (decrease) in current liabilities Provisions Trade and other payables 34. CASH AND CASH EQUIVALENTS Cash and bank balances- note 23 Short term investments - Treasury bills - note 15 Short-term borrowings - running finance (8,567) 231,154 1,032,695 (49,419) 9,990 2,945 (14,484) (166,836) 1,037,478 (105,933) 321,907 1,253,452 3,647,883 2,808,772 729,724 3,538,496 (11,978) (630,891) 13,713 25,261 51,350 56,199 12,418 56,135 (427,793) 139,817 575,896 287,920 2,417,330 2,053,153 644,889 (4,520) 2,693,522 372,137 (16,141) 18,309 (1,581) 89,983 462,707 2,394,431 310,321 (22,296) 58,050 (26,334) 87,208 16,846 (965) 422,830 2,129,410 Restated 2009

Rupees '000

1,931,724

1,706,580

83

35.

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 Executive 2010 2009 2010 2009 2010 2009 (Rupees in 000) Managerial remuneration Severance Bonus and SARs Retirement benefits House rent Utilities Medical expensss Others Number of person (s) 13,401 16,533 3,130 5,482 1,218 133 528 40,425 1 11,878 16,318 3,010 4,854 1,079 102 938 38,179 1 14,800 12,032 3,802 6,660 1,480 216 1,999 40,989 3 13,562 11,454 3,651 5,887 1,308 182 713 36,757 3 238,363 252,218 84,990 53,273 88,107 19,579 8,922 15,449 760,901 213 161,004 41,600 72,344 40,548 65,376 14,528 4,964 5,912 406,276 146

In addition to the above, fee to three (2009:two) non-executive Directors during the year amounted to Rs. 135 thousand (2009: Rs. 60 thousand). 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. 7.61 million, Rs. 3.11 million and Rs. 8.12 million (2009: Rs. 5.42 million, Rs. 3.53 million and Rs. 9.59 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. 36. TRANSACTIONS WITH RELATED PARTIES Relationship Holding Company: Associated companies: Nature of transactions Dividend paid a. b. c. d. e. f. g. a. b. c. Key management personnel: a. b. c. d. Purchase of goods Sale of goods Royalty paid Recovery of expenses from related parties Service fee on clinical trial studies Donations Severance cost reimbursement Expense charged for retirement benefit plans Payments to retirement benefit plans Receipts from retirement benefit plans Salaries and other employee benefits Post employment benefits Sale of assets Legal / professional fee 2010 2009 Rupees '000 672,268 4,152,353 115,790 88,496 74,699 6,634 537 127,823 941,175 4,454,339 99,038 134,166 82,850 6,975 386 -

Staff retirement funds:

154,140 126,160 31,212 138,967 12,945 292 12,000

125,303 87,689 52,500 129,605 13,656 246 -

84

Notes to and forming part of the Financial Statements

36.1 Balances of related parties as at December 31, 2010 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. 37. RUNNING FINANCE UNDER MARK-UP ARRANGEMENTS Facilities for running finance available from various banks amounted to Rs. 350 million (2009: Rs. 1.06 billion). Rate of mark-up ranges from one month KIBOR plus 1.25% to three month KIBOR plus 0.50% (2009: from one month KIBOR plus 1.75% to three month KIBOR plus 1.70%). 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 (2009: Rs. 10 million). These facilities carry mark-up at 1% (2009: 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, 2010 amounted to Rs. 2.16 billion (2009: Rs. 2.38 billion) of which unutilised balances at the year end amounted to Rs. 1.28 billion (2009: Rs. 1.46 billion). 38. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

38.1 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 Maturity up Maturity Total to one after one year year Financial assets Loans and receivables Loans and advances Deposits Trade debts Accrued return on investments and bank deposits Other receivables Cash and bank balances Available for sale PIBs Held to maturity Treasury Bills December 31, 2010 December 31, 2009 Financial liabilities Trade and other payables December 31, 2010 December 31, 2009 On balance sheet date gap December 31, 2010 December 31, 2009 1,651 2,729,580 172,231 729,724 3,633,186 2,526,135 4,520 3,633,186 2,521,615 1,324 1,324 171,677 1,324 171,677 Non-interest bearing Maturity up Maturity Total to one after one year year Rupees '000 Total

2,975 2,729,580 172,231

69,887 69,591 295,762 19,443 290,056 79,192 -

72,266 11,871 -

142,153 81,462 295,762 19,443 290,056 79,192 -

145,128 81,462 295,762 19,443 290,056 2,808,772 172,231 729,724 4,542,578 4,523,998 3,154,544 3,154,544 2,986,904

729,724 3,634,510 823,931 2,697,812 1,755,530 3,154,544 3,154,544 4,520 2,982,384 3,634,510 (2,330,613) 2,693,292 (1,226,854)

84,137 908,068 70,656 1,826,186 3,154,544 3,154,544 2,982,384

84,137 (2,246,476) 1,388,034 70,656 (1,156,198) 1,537,094

The effective mark-up rates for the financial assets and liabilities are mentioned in respective notes to the financial statements.
85

38.2

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, 2010 the company does not have any borrowings. Further out of Rs. 3.63 billion interest bearing financial assets of Rs. 3.46 billion are on fixed interest rates, hence 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, 2010 amount to Rs. 1.02 billion (2009: Rs. 689.17 million). The liability is mainly denominated in US Dollars and at December 31, 2010, 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. 51.08 million (2009: Rs. 34.46 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: 2010 Trade debts Loans, advances, deposits and other receivables Investments Bank balances Rupees 000 2009 1,328,457 356,586 813,576 2,048,246 4,546,865

295,762 536,089 901,955 2,803,756 4,537,562

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. 108.77 million (2009: Rs. 220.91 million) are past due of which Rs. 29.74 million (2009: Rs. 15.76 million) have been impaired. Past due but not impaired balances include Rs. 5.61 million (2009: 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.

86

Notes to and forming part of the Financial Statements

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. 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, 2010 there is no maturity mismatch between financial assets and liabilities that expose the company to liquidity risk. 39. 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. 40. CAPACITY AND PRODUCTION The capacity and production of the companys plants are indeterminable as these are multi-product and involve varying processes of manufacture. 41. RESTATEMENTS Consequent to amalgamation of GSKPPL and SLPPL as described in notes 3 and 4, respectively, corresponding figures for 2009 have been restated in these financial statements in accordance with the requirements of International Accounting Standard - 1 'Presentation of Financial Statements'.

87

Further, provisions have been disclosed separately which were previously reported in trade and other payables. Following is the effect of restatement. Balance Sheet As at December 31, 2009 Balances as previously reported ASSETS NON-CURRENT ASSETS Fixed assets - property,plant and equipment Intangible Long-term loans to employees Long-term deposits Investments CURRENT ASSETS Stores and spares Stock-in-trade Trade debts Loans and advances Trade deposits and prepayments Interest accrued Refunds due from goverment Other receivables Taxation - payments less provision Investments Cash and bank balances TOTAL ASSETS EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital Reserves LIABILITIES NON - CURRENT LIABILITIES Staff retirement benefits Deferred taxation CURRENT LIABILITIES Trade and other payables Provisions Short-term borrowings - running finance Mark-up accrued TOTAL EQUITY AND LIABILITIES
88

Restatement on amalgamation Restatement of GSKPPL and of provisions SLPPL notes 3 & 4 Rupees 000

Total

2,600,814 61,299 7,027 168,687 2,837,827 129,239 4,061,840 996,915 91,315 87,754 21,503 15,436 129,156 252,744 644,889 1,739,236 8,170,027 11,007,854

1,228,774 956,045 5,320 2,190,139

3,829,588 956,045 61,299 12,347 168,687 5,027,966

12,826 142,065 481,849 4,543,689 331,542 1,328,457 3,533 94,848 18,470 106,224 1,019 22,522 (12,386) 3,050 (17,960) 111,196 100,105 352,849 644,889 313,917 2,053,153 1,232,915 9,402,942 3,423,054 14,430,908

1,706,718 6,397,381 8,104,099

1,706,718 2,489,387 8,886,768 2,489,387 10,593,486

58,894 320,435 379,329 2,524,426 2,524,426 11,007,854

(43,110) 43,110 -

13,991 97,234 111,225 621,729 193,824 4,520 2,369 822,442

72,885 417,669 490,554 3,103,045 236,934 4,520 2,369 3,346,868

3,423,054 14,430,908

Notes to and forming part of the Financial Statements

Profit and loss account For the year ended December 31, 2009 Balances as previously reported Net sales Cost of sales Gross profit Selling, marketing and distribution expenses Administrative expenses Other operating expenses Other operating income Operating profit Financial charges Profit before taxation Taxation Profit after taxation Other comprehensive income Fair value gain on available-for-sale investments Deferred tax thereon Total comprehensive income 42. SUBSEQUENT EVENTS The Board of Directors in its meeting held on March 7, 2011: a) proposed a cash dividend of Rs. 4.0 per share (2009 : Rs.5.0 per Share) amounting to Rs. 0.83 billion (2009: Rs 0.85 billion) and proposed transfer of Rs. 310.68 million (2009 : Nil) from reserve arising on amalgamation and Rs. 1.41 million (2009:Nil) from share premium account to reserve for bonus shares for issuance of fifteen bonus shares for every hundred shares held (2009:Nil) subject to the approval of the company in the forthcoming annual general meeting of the company: and b) approved the allotment of 11,648,312 ordinary shares of GlaxoSmithKline Pakistan Limited to the qualifying shareholder of former Stiefel Laboratories Pakistan (Private) Limited as detailed in note 4. 43. DATE OF AUTHORISATION FOR ISSUE These financial statements were approved and authorised for issue by the Board of Directors of the company on March 07, 2011. 14,719,132 (11,173,470) 3,545,662 (1,673,809) (588,814) (138,585) 436,615 1,581,069 (14,348) 1,566,721 (632,791) 933,930

Restatement on amalgamation of GSK PPL Reclassifia- and SLPPL tions notes 3 & 4 Rupees 000 2,034,741

Total 16,753,873

- (1,341,122) (12,514,592) 693,619 4,239,281 29,000 (304,270) (1,949,079) (29,000) (233,054) (850,868) (13,217) (151,802) 27,078 463,693 170,156 1,751,225 (30,297) (44,645) 139,859 1,706,580 (32,498) (665,289) 107,361 1,041,291

15,356 (5,375) 9,981 943,911

107,361

15,356 (5,375) 9,981 1,051,272

M. Salman Burney Chairman / Chief Executive

89

Javed Ahmedjee Chief Financial Officer

Form 34 Pattern of Shareholding

NUMBER OF SHAREHOLDERS 1,008 1,271 899 1,125 269 108 56 37 11 6 10 16 6 4 9 2 1 4 2 2 1 2 2 1 1 1 3 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4,876 From 1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 95001 105001 115001 125001 135001 140001 155001 160001 195001 200001 255001 260001 415001 480001 575001 580001 605001 705001 1250001 1290001 3155001 5945001 6415001 25725001 134450001 SHAREHOLDING To TOTAL SHARES HELD 44,823 389,487 631,679 2,619,527 1,884,126 1,310,173 972,024 843,213 297,622 199,469 380,864 682,486 285,771 213,733 526,964 121,919 65,812 291,051 156,356 162,851 95,706 213,929 235,438 125,310 138,648 143,150 469,607 164,619 397,463 200,157 259,557 261,400 417,118 484,672 576,052 581,554 606,947 707,976 1,252,894 1,294,866 3,158,249 5,945,881 6,419,983 25,727,130 134,453,588 196,411,844 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 100000 110000 120000 130000 140000 145000 160000 165000 200000 205000 260000 265000 420000 485000 580000 585000 610000 710000 1255000 1295000 3160000 5950000 6420000 25730000 134455000

90

Categories of Shareholders
a) Sr. No. 1 2 3 4 5 6 7 8 Others: i ii iii iv v b) Categories of Shareholders Individuals Investment Companies Insurance Companies Joint Stock Companies Financial Institutions Associated Companies Central Depository Company (b) Others (see below) Number of Shareholders 2,145 4 1 10 2 3 2,706 5 4,876 1 1 1 1 1 5 Shares Held 4,389,505 1,992 1 19,855 4,762 160,193,588 31,771,778 30,363 196,411,844 17,283 2,718 1 218 10,143 30,363 Percentage (%) 2.23 0.00 0.00 0.01 0.00 81.56 16.18 0.02 100.00 0.01 0.00 0.00 0.00 0.01 0.02

Mohsin Trust The Al-Malik Charitable Trust Securities Exchange Commission of Pakistan Punjabi Saudagar Co-operative Society The Anjuman Wazifa Sadat-o-Momineen Pakistan Categories of Account holders and Sub-Account holders as per Central Depository Company of Pakistan as at December 31, 2010 Categories of Shareholders Individuals Investment Companies Insurance Companies Joint Stock Companies Financial Institutions Modarabas Foreign Companies Others (see below)

Sr. No. 1 2 3 4 5 6 7 8 Others: i ii iii iv v vi vii viii ix x

Number of Shareholders 2,597 19 11 51 12 3 3 10 2,706 1 1 1 1 1 1 1 1 1 1 10

Shares Held 7,463,111 1,786,860 7,575,179 402,107 14,096,869 33,012 75,297 339,343 31,771,778 23,200 42,000 44,657 45,000 75,000 18,956 35,437 48,093 3,000 4,000 339,343

Percentage (%) 3.80 0.91 3.86 0.20 7.18 0.02 0.04 0.17 16.18 0.01 0.02 0.02 0.02 0.04 0.01 0.02 0.03 0.00 0.00 0.17

The Aga Khan University Foundation The Pakistan Memon Educational & Welfare Society Trustees Kandawala Trust Trustees Saeeda Amin WAKF Trustees Mohammad Amin WAKF ESTATE Managing Committee Karachi Zorthosti Banu Mandal Trustees Mrs. Khorshed H. Dinshaw & Mr. Hosh Trustees D.N.E. Dinshaw Charity Trust Centre for Development of Social Service Trustee A Saadat & Co. Employees Gratuity Fund

91

Shareholding Information
Categories of Shareholders Holding Company: S.R. One International B.V., Netherlands SmithKline Beecham Nominee Ltd. N.I.T. & I.C.P: Investment Corporation of Pakistan National Bank of Pakistan (Trustee Department) Directors, CEO and their spouses and minor children: Mr. M. Salman Burney Mr. Shahid Mustafa Qureshi Dr. Muzaffar Iqbal Mr. Rafique Dawood Dr. Iffat Yazdani Executives Public sector companies and corporation : Banks, Development Finance Institutions, Non-Banking Finance Institutions, Insurance Companies, Modarabas and Mutual Funds Shareholders holding 10% or more voting interest : S.R. One International B.V., Netherlands 2 160,180,718 51 16,997,809 1 1 1 1 1 4 3,125 3 1 1 335 2,043 2 3 320 6,575,843 2 1 160,180,718 12,870 Number of Shareholder No. of Shares Held

82%

Distribution of Shares Holding Company Individuals Insurance Companies Financial Institutions Others

82% 6% 4% 7% 1%

6% 1% 7% 4%

92

Notice of Annual General Meeting

Notice is hereby given that the SIXTY-FOURTH Annual General Meeting of the Shareholders of the Company will be held at the Beach Luxury Hotel, Karachi at 11:00 a.m. on Wednesday, April 20, 2011to transact the following business: 1. (a) (b) 2. 3. To receive and adopt the Report of the Directors and the Accounts for the year ended December 31, 2010 and the Auditors' Report thereon; to approve the payment of a dividend.

To appoint Auditors and fix their remuneration. To elect ten (10) Directors of the Company as fixed by the Board for a term of three years commencing from May 7, 2011 in accordance with the provisions of Section 178(1) of the Companies Ordinance 1984. Retiring Directors are Mr. M. Salman Burney, Mr. Shahid Mustafa Qureshi, Mr. Javed Yousuf Ahmedjee, Dr. Muzaffar Iqbal, Mr. Rafique Dawood, Mr. Husain Lawai and Dr. Iffat Yazdani. The retiring directors are eligible for re-election.

4.

To consider and if thought fit to capitalize a sum of Rs. 312.09 million out of the capital reserves of the Company for the issuance of 31,208,977 bonus shares in the proportion of fifteen ordinary shares for every one hundred ordinary shares held by the Members of the Company as on April 13, 2011. By Order of the Board

Karachi March 29, 2011

Shahid Mustafa Qureshi Director/Company Secretary

A Statment as required by Section 160(1)(b) of the Companies Ordinance 1984 in respect of the special business to be considered at the meeting is being sent to the Members, along with a copy of this notice. Notes: 1. The Share Transfer Books of the Company will be closed for the purpose of determining the entitlement for the payment of Final Dividend and for determining the entitlement for the issuance of bonus shares from April 13, 2011 to April 20, 2011 (both days inclusive). Transfers received at the Office of the Share Registrars of the Company at 516, Clifton Centre, Khayaban-e-Roomi, Kehkashan, Block-5 Clifton, Karachi-75600 at the close of business on April 12, 2011 will be treated in time for the purposes of entitlement to the transferees. Article 66 of the Articles of Association of the Company states The Members in General Meeting shall elect the Directors from amongst persons who, not being ineligible in accordance with section 178 of the Ordinance, offer themselves for election as Directors in accordance with this Article. Any person claiming to be eligible who desires to offer himself for election shall, whether he is a retiring Director or not, file with the Company not later than fourteen days before the date of the General Meeting at which Directors are to be elected, a notice that he, being eligible, intends to offer himself for election as a Director at that meeting and that he consents to act as a Director if elected. 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.

2.

3.

93

4. 5.

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

94

Factories and Distribution / Sales Offices

FACTORIES 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 Plot # 5, Sector 21 Korangi Industrial Area Karachi - 74900 Fax: (92 - 21) 35015800 UAN: 111-000-267 Lahore 18.5 Km., Ferozepur Road, P.O.Box No. 244 Tel: (92 - 42) 5811931 - 35 Fax: (92 - 42) 5820821 DISTRIBUTION / SALES OFFICE Karachi Estate Avenue, B-63, 65 S.I.T.E Karachi Tel: (92 - 21) 32561200-07 Fax: (92 - 21) 32564908 Sukkur Plot No. 77/80, Block B, Friends Cooperative Housing Society, Akhuwat Nagar, Airport Road. Tel: (92 - 71) 5630668, 5630144 Fax: (92 - 71) 5631665 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) 35111061- 64 Fax: (92 - 42) 35111065 Islamabad Aleem House, Plot No. 409, Sector I-9, Industrial Area. Tel: (92 - 51) 4433589, 4433598 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

95

Form of Proxy

GlaxoSmithKline Pakistan Limited

I/We _____________________________________ of __________________________________________________, being a Member of GlaxoSmithKline Pakistan Limited holding ____________ ordinary shares, HEREBY APPOINT ____________________________________________ of ______________________________________________, another member of the Company, failing him/her _________________________ of ____________________________________ as my/our proxy in my/our absence to attend and to vote and act for me/us and on my/our behalf at the Annual General Meeting of the Company to be held at the Beach Luxury Hotel, Karachi on Wednesday, April 20, 2011 and at any adjournment thereof. As witness my/our hand(s) this _____ day of _______________ 2011. Signed in the presence of:

(Signature of Witness 1) Name of witness: CNIC No.:

(Signature of Witness 2) Name of witness: CNIC No.:

Ten Rupees Revenue Stamp

Address

Address

Notes: 1. The (a) (b) (c)

(Name in Block Letters) Folio No.

Signature of Shareholder

Member is requested: to affix Revenue Stamp of Rs. 10/- at the place indicated above; to sign in the same style of signature as is registered with the Company; to write down his/her Folio Number.

2. For the appointment of the above proxy to be valid, this instrument of proxy must be received at the Office of the Share Registrars of the Company at 516, Clifton Centre, Khayaban-e-Roomi, Kehkashan, Block 5, Clifton, Karachi75600, at least 48 hours before the time fixed for the Meeting. 3. Any alteration made in this instrument of proxy should be initialed by the person who signs it. 4. In the case of joint holders, the vote of the senior who tenders a vote whether in person or by proxy will be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority will be determined by the order in which the names stand in the Register of Members. 5. The Proxy must be a Member of the Company. For CDC Account Holders / Corporate Entities In addition to the above, the following requirements have to be met: (i) The proxy form must be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. (ii) Attested copies of CNIC or the passport of the beneficial owners and of the Proxy must be furnished with the proxy form. (iii) The Proxy must produce his original CNIC or original passport at the time of the Meeting. (iv) In case of corporate entities, the Board of Directors resolution/power of attorney and specimen signature must be submitted (unless it has been provided earlier) alongwith proxy forms to the Share Registrars.

AFFIX CORRECT POSTAGE Gangjees Registrar Services (Pvt.) Ltd. 516, Clifton, Khayaban-e-Roomi, Kahkeshan, Block-5, Clifton, Karachi-75600