Annual Report2009

THE HOPE OF MILLIONS
GSK has a proud tradition Devoted to innovation and access, we offer cures, solutions and hope. We strive, on a daily basis, to fight suffering and to provide health and comfort to millions. As long as there are people in the world who are in need, we will find a way to help them. It is with great pride that GSK leaves this mark on peoples lives, enabling them to
CONTENTS
Corporate Information Vision & Mission Strategic Priorities Ethical Conduct Values and Behaviours History of GlaxoSmithKline The World of GlaxoSmithKline
1 3 4 5 6 8 9 42 Key Operating & Financial Data 44 Balance Sheet Analysis 45 Profit and Loss Account Analysis 47 Financial Statements 2009 48
Statement of Compliance with the Code of Corporate Governance
Building Pathways of Hope 11 CSR at GlaxoSmithKline GSK Pakistan Success Stories 15 Product Launches 16 Highlights of the Year 17 Environment, Health & Safety 19 Global Manufacturing & Supply (GMS) 20 Human Resource Development 22 Our Flagship Products 24 Awards for Excellence 27 Directors Profiles 30
50 Review Report to the Members on Statement

of Compliance with Best Practices of Code of Corporate Governance
51 Auditors Report to the Members 52 Balance Sheet 54 Profit and Loss Account 55 Cash Flow Statement 56 Statement of Changes in Equity 57 Notes to and forming part of the
Financial Statements
83 Pattern of Shareholding
Board & Management Committees 32
84 Categories of Shareholders
Directors Report to Shareholders 33
85 Shareholding Information
Chairman / Chief Executives Review 37
86 Notice of Annual General Meeting

Financial Performance at a Glance 40
88 Contact Details
Statement of Value Added 41
89 Proxy Form
CORPORATE INFORMATION
Board of Directors
Mr. M. Salman Burney Mr. Tariq Iqbal Khan
Non-Executive Director Non-Executive Director Chairman / Chief Executive
Management Committee
Mr. M. Salman Burney Dr. Muzaffar Iqbal
Technical Director Chairman / Chief Executive
Bankers
The Royal Bank of Scotland Citibank NA Habib Bank Limited Standard Chartered Bank (Pakistan) Limited HSBC Bank Middle East Limited
Mr. Rafique Dawood Mr. Shahid Mustafa Qureshi

Legal and Regulatory Affairs Director
Mr. Shahid Mustafa Qureshi Mr. Javed Ahmedjee Ms. Erum S. Rahim
Director Finance and Logistics Director Marketing and Business Development
Legal and Regulatory Affairs Director
Auditors
A. F. Ferguson & Co. Chartered Accountants
Dr. Muzaffar Iqbal

Technical Director
Mr. Javed Ahmedjee Dr. Iffat Yazdani
Director Finance and Logistics Area Director Asia Pacific Clinical Operations.
Mr. Pervaiz Iqbal Awan

Sales Director Sales Director
Legal Advisors
Rizvi, Isa, Afridi & Angell Mandviwalla & Zafar Orr, Dignam & Co. Surridge & Beecheno Vellani & Vellani
Mr. Maqbool ur Rehman Mr. Sohail Matin Dr. Atif Mirza

Head of Quality Country Manager Consumer Healthcare Director Medical Services
Audit Committee
Mr. Rafique Dawood
Chairman Member Member
Registered Office
35 - Dockyard Road, West Wharf, Karachi - 74000. Tel: 92 21 111-475-725 (111-GSK-PAK) Fax: 92 21 2314898, 2311122 Website: www.gsk.com.pk
Mr. Tariq Iqbal Khan Mr. M. Salman Burney
Dr. Z. U. Khan Haji Muhammad Hanif

Head of Procurement Head of HR & OD
Ms. Fariha Salahuddin
Company Secretary
Mr Shahid Mustafa Qureshi .
Chief Financial Officer

Mr. Javed Ahmedjee
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DO SHARE HOPE WIN CARE GROW FEEL LEARN LIVE THINK WISH DREAM
The only pharmaceutical company tackling the three WHO priority diseases: HIV/AIDS, tuberculosis and malaria
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VISION & MISSION
VISION
GlaxoSmithKline s vision is exciting:
the opportunity to make a difference to the lives of billions of people

Our value system and operating principles provide t h e n e c e s s a r y g u i d a n c e o n h ow we wo r k a t GlaxoSmithKline.The key to our success is our desire and passion to pursue GlaxoSmithKlines vision. We take pride in our commitment to produce products that benefit patients and improves the quality of peoples lives.
MISSION
GlaxoSmithKline has a challenging and inspir ing mission:to advance the quality of human lives by enabling p e o p l e t o This mission drives us in our purpose to develop innovative medicines and products that help millions of people.We have a legacy of great science,and what we do helps people live healthier,happier lives around the world, every single day.
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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 reducing risk by broadening and balancing our portfolio, diversifying new product areas, while also fully capturing opportunities for our products across all geographic boundaries.
Transforming R&D to ensure that we not only deliver the current pipeline of new pharmaceuticals, vaccines and Consumer Healthcare products, but that we are also able to sustain this flow of new products for years to come.
Deliver more products of value
Simplify the operating model

We are simplifying our operating model to ensure that it is fit for purpose and able to support our business in the most efficient and effective way.
Empowerment is key to achieving our goals and we ensure that our employees receive the tools and inspiration they need to make decisions with confidence and accountability.
Create a culture of individual empowerment
Building trust
We see building trust as a fundamental platform. Essentially, without trust, we dont have a business.
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ETHICAL CONDUCT
Our Ethical Compass Always Points to Fair Practice
We are committed to creating a strong ethical culture at GSK. Putting patients first is the core principle of being an ethical pharmaceutical company. Profit without principle is short lived. Our Code of Conduct sets out the fundamental standards to be followed by staff in their everyday actions on behalf of GSK, and seeks to promote honest and ethical conduct. Our employees are committed to: Conducting business with honesty, integrity, and in a professional manner. Building relationship with customers and fellow employees which are based on trust. Treating individuals with respect and dignity. Becoming familiar and complying with legal requirements, Company policies and procedures. Avoiding any activity that could involve or lead to involvement in any unlawful practices. Avoiding actual or potential conflicts of interest with the Company or the appearance thereof, in all transactions. Providing accurate and reliable information in records submitted and to respect the confidential information of other parties. Where permitted by local laws, promptly repor t to the Company any breach of laws or regulations, ethical principles or company policies that come to attention. Cooperate fully in any audit, enquiry, review or investigations by the Company. Facilitate External Auditors in audits and provide required information in a timely manner. Managers to ensure that all their employees receive guidance, trainings and communication on ethical behavior and legal compliance relevant to their duties for the Company. The Company maintains policies regarding preventing Corrupt Practices & Maintaining Standards of Documentation.
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VALUES & BEHAVIOURS
OUR VALUES
Our values keep us focused, and we hold steadfast to them. Respect for People Patient Focused Transparency Integrity
OUR BEHAVIOURS
We undertake our quest with... Flexible Thinking Continuous Improvement Customer Driven Developing People Enable & Drive Change Building Relationships
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BEST PEOPLE BEST PLACE BEST WORK

GSK is the best place to work due to its professional and friendly work environment with equal growth opportunities for every employee.
By empowering individuals and holding them accountable for delivery of departmental objectives, GSK has built a performance based culture.
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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.
1830
John K. Smith opens a drugstore in Philadelphia
1842
Thomas Beecham launches Beechams pills in England
1880
Glaxo is registered by Joseph Nathan & Company as a trademark for dried milk
Burroughs Wellcome & Company was founded
1891
SmithKline & Co. acquires French, Richards & Company
1906 1989
SmithKline & Beecham merge
1929
Glaxo & Wellcome merge
SmithKline & French becomes research focused
1995
2001
GlaxoSmithKline
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THE WORLD OF GSK
GSK employs over
99,000 people in 114 countries
We manufacture over 4 billion packs per year in 28,000 different presentations, which are then supplied to over 160 markets We currently make more than 100 GSK is the Global Leader in respiratory, anti-virals and vaccines
prescription medicines and vaccines

Over 150 projects in Every second, GSK distributes more than 32 doses of vaccines
clinical development
- one of the largest pipelines in the industry
Our global HIV/AIDS education and prevention initiative supports programs in
21 countries
Over 14,500 employees work within R&D in many countries around the world
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GSK believes in mending lives and healing hearts
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BUILDING PATHWAYS OF HOPE

Corporate Social Responsibility (CSR) at GSK Community interests are at the hear t of the GSK business model. GSK provides donations, medicines, time and equipment, to non-profit organizations to help improve health and education. We support programs that are innovative, sustainable, and bring real benefits to those most in need. Every member of the GSK family strives to contribute their time , talents, and ideas to make a real and meaningful contribution towards improving the quality of human life. We cross borders and boundaries, share with, and learn from one another. We contribute to the health and well being of people with enthusiasm and vigour.
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GSK PAKISTAN CSR INITIATIVES

SERVING FROM THE HEART
GSK Pakistans vision and mission subscribe to improving the quality of human life by enabling people to do more, feel better and live longer. Today, it is the largest pharmaceutical company in the country and is proactively responding to the changing operating environment, creating a balanced business model to deliver sustainable growth. To implement its CSR program, GSK Pakistan maintains strong partnerships with non-government organizations such as Pakistan National Forum on Womens Health (PNF), Concern for Children Trust, and The Trust for Health and Medical Sciences. The Company has been one of the largest corporate donors for the National Commission for Human Development (NCHD). The Islamabad-based Pakistan Centre for Philanthropy (PCP) awarded a Corporate Philanthropy Award Cer tificate to GSK Pakistan in 2008, in recognition of its support for social development causes. According to the PCP repor t, GSK is among the top 15 companies, and the only pharmaceutical company leading corporate donations in Pakistan. GSK suppor ts various health, women and social development, education and relief programs at the grassroot level. Some of the key initiatives include:
HEALTH & SOCIAL DEVELOPMENT

Center of Nursing Excellence GSK approved a gr ant of 250,000 to suppor t the development of a Center of Nursing Excellence in Karachi in 2008. This three-year project, in collaboration with the Pakistan National Forum on Womens Health (PNF) and the Pakistan Nur sing Council (PNC), aims at improving the quality of nursing training to develop teaching capabilities of the nursing faculty across Pakistan. The Centre was formally inaugurated on 18 November 2008. The first batch of 31 students graduated in April 2009 and the second batch graduated in November 2009. It is estimated that a single well-trained nursing teacher could eventually impact the care of approximately 40,000 patients each year by teaching an average of 100 new nur ses. GSK will provide funding and support for the project for three years after which it will become self-sustained.
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The Trust for Health and Medical Sciences GSK supports the Trust for Health and Medical Sciences which has been running a charitable clinic in the Landhi area of Karachi since the early 1980s and charges a nominal fee for treating patients. Since 1983, around two million patients have been treated and the clinic has matured into a large set up with multiple medical facilities. More than 90,000 patients receive medical attention annually, and the clinic has recently star ted treatment and counseling for heroin addicts. Concern for Children Trust The Concern For Children (CFC) has been promoting preventive and primary healthcare and education for children in Pakistan since 1997. With GSKs suppor t, CFC has set up three computer liter acy projects for low-income schools across Karachi. Approximately 8,000 children have benefited from these facilities so far. CFC is developing a project in Mohammadi Machhar Colony, a shanty settlement along the Karachi port. A mother and child healthcare centre is also being set up to provide primary, pre-natal, anti-natal services and health information and education to 8,000-10,000 mothers and children each year. GSK has donated PKR 4 million for this project, and also provides medicines for the free healthcare camps organised by CFC in different parts of the country.
RELIEF
Internally Displaced Persons The military operation against extremists in the Swat, Buner and Lower Dir districts of the Malakand region of Nor th West Frontier Province (NWFP) forced more than 2.5 million people to flee their homes the second biggest internal displacement in the world after Rwanda, according to the UN. GSK Pakistan has donated bulk stocks of necessary antibiotics, analgesic, painkillers, anti-diarrhoeal and skin ointments for primary and ter tiary medical relief to the IDPs. Medicines wor th PKR 8 million were donated to the National Disaster Management Authority (NDMA), the National Commission for Human Development (NCHD), Sarhad Rural Support Programme (SRSP), and the Holy Family Hospital in Rawalpindi.
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GSK GLOBAL CSR INITIATIVES

Improving Healthcare Worldwide
GSK globally considers itself responsible for upholding values and ethical principles by contributing to the environment, investing in the society at large, and engaging stakeholders at each step, while also being involved in various community programs. The company provides donations, medicines, time and equipment to non-profit organizations to help improve health and education for under-ser ved peoplesupporting programs that are innovative, sustainable, and bring real benefits to those most in need.
As part of our commitment to the Global Alliance to eliminate Lymphatic Filariasis, we have donated over one billion albendazole treatments to stop the transmission of this disease. Our aim is to donate as much albendazole as required to treat the one billion people in 83 countries, who are at risk from this disease. Taking on the biggest killer: GSK is at the forefront of the battle against malaria. Malaria kills over one million people a year worldwide, and we have been working on a malaria vaccine for over two decades. In par tner ship with the PATH Malaria Vaccine Initiative, a non-profit research organization, we are now close to creating the worlds first vaccine for the disease. The Phase III trial of the RTS,S malaria vaccine candidate started in Bagamoyo, Tanzania, in May 2009.
Ever y year three million people globally die of diarrhoeal disease, most of them being children. Its one of the worlds biggest killers, yet also one of the m o s t e a s i ly p r e ve n t a bl e . To a d d r e s s t h i s , we developed PHASE; a simple hand-washing program which teaches children how to reduce the spread of infection. In July 2009, we announced the creation of a new Positive Action for Children Fund. The Fund will make 50 million ($80 million) available over ten years to help prevent mother-to-child transmission of HIV and to suppor t orphans and vulnerable children.
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GSK PAKISTAN SUCCESS STORIES

Were making our mark on Pakistan
GSK leads the industry in value, volume and prescription market shares. We are proud of our consistent performance. VALUE WE LEAD THE WAY IN PAKISTAN GSK maintains the largest value share of the Pakistani Pharmaceutical Industry. We are proud to have 3 of our brands in the top 10 products list by value share. Our leading product by value is
VOLUME OUR BRANDS STAND OUT FROM THE CROWD Greatest percentage of industry volume share. 7 out of top 10 products by volume share,belong to the GSK family. Leading Product by volume
PRESCRIPTION GSK REIGNS OVER THE MARKET Leaders in prescription share. Panadol maintains its position as our leading prescription product. 4 of GSKs brands make the top 10 list of prescribed products.
Source: Q4, 2009 - IMS - PKPI S2, 2009 - IMS - MIP
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PRODUCT LAUNCHES 2009
GSK Successfully Launches The First Value Health Franchise Brand: Cipval
GSK crossed yet another milestone with the launch of CipVal (ciprofloxacin), its first Value Health Portfolio Brand.
Augmentin Infant Drops: Another Welcome Addition to the Augmentin Family
The launch of Augmentin Infant Drops gives GSK the unique advantage of introducing the first and only co-amoxiclav drops formulation in Pakistan.
Axitra All Star!

This year welcomed another addition in the GlaxoSmithKline Cardiovascular Portfolio with the launch of Arixtra 7.5 mg.
Launch of Bactroban 5gm Cream & Ointment

Power of an oral Convenience of a topical The Dermatology portfolio continues to expand with the launch of Bactroban 5 gm cream and ointment.
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HIGHLIGHTS OF THE YEAR FINANCE AND LOGISTICS
Simplify the Operating Model is one of the GSKs strategic priorities. The intent of this strategy is to simplify work. It helps remove structures and processes that slow us down and distract us from focusing on the work which truly matters. Simplification in finance and logistics is achieved by increase in speed to access to information, eliminating duplication of activities across the business, standardization of process and systems, and simplifying the complex systems and processes currently utilized. In 2009, a number of initiatives have been implemented for Process Improvement, some of these include: Streamlined distributor ordering and payment timings Simplification and harmonization of the distribution transport network Implementation of goods warehousing practices at distribution Automation of customer claims
F u r t h e r, we h ave i m p l e m e n t e d t h e J D E d w a r d s s y s t e m a t G l a x o S m i t h K l i n e Pharmaceuticals (Private) Ltd. (Former ly BMS Pakistan (Pvt.) Ltd. This included pre-implementation, information gathering of existing systems, user training of JDE across the company and Prototype/User Acceptance Testing, for the cutover to JDE.
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RESEARCH AND DEVELOPMENT

Clinical Operations of Pakistan recruited the highest number of subjects to date. We had a successful CMD audit this year and were rated well. Pakistan completed the country targets in all clinical trials well ahead of timelines. Clinical Operations - Pakistan team were ranked 1st in Research and development systems competition, which was held in Europe. We have played a leading role by providing exper tise, sharing best practices and delivered systems training to the other countries of the region. We were also invited to share best recruitment practices in clinical trials. Various members of clinical research team received numerous awards by performing extraordinarily, while competing with other countries involved in similar R&D projects. Excellent performance was highlighted in various forums and meetings.
CONSUMER HEALTHCARE
Macleans Freshmint was re-launched to revitalize the brand image with a new formulation and modern packaging. This year Consumer Healthcare unveiled an aggressive outdoor campaign 'Project Smart Outdoor' on Iodex, Eno, Macleans & Horlicks. This activity involved billboards, shop fascias, floats, van branding and merchandising drive. Horlicks experienced a line extension in its current por tfolio with an addition of a new variant. The launch involved interactive and fun activities in collaboration with many schools. This has contributed immensely to the growth of the brand. Macleans won Consumer Choice Award for Best Toothpaste of the year 2009.
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ENVIRONMENT HEALTH & SAFETY (EHS)

2009 has been a successful year for GSK Pakistan in the areas of Environment, Health, Safety & Sustainability, as we continue to march towards the aim of Zero Accidents, Zero Injuries and Zero Waste. GSK ensures that all our operations are safe, the environment that we work in is protected and remains sustainable, and that the health of our employees is never compromised. We have developed a Behaviour based safety program called Living Safety. The program provides a framework for assessing safe behaviours and the tools needed to improve the safety culture. The program has been launched across all GSK manufacturing sites. Emergency evacuation drills are conducted on a regular basis to ensure the safety of our employees. GSK has also made a substantial investment in firefighting equipment, with the purchase and installation fire water engine pumps. In 2009, EHS conducted detailed Fire Risk Assessment of its sites and employed the services of FM Global, to conduct reviews of our fire safety standards. As a result of their recommendation, all GSK sites have installed seismically activated gas shut-off valves. GSK sites have Effluent Treatment Plant (ETP) and the treated effluent complies with National Environmental Quality Standards (NEQS) for Liquid Industrial Effluents. The air emissions from GSK sites are regularly monitored, and all emission sources are found to be far below the concentration of air pollutants as prescribed by the National Environmental Quality Standards (NEQS) for Industrial Gaseous Emissions. Controlling Occupational Exposures to hazardous dust remained one of the priorities for the year 2009. Exposure monitoring is being conducted for hazardous dust at all sites. Engineering controls are put in place to eliminate or reduce the exposure to acceptable levels. Noise monitoring has been completed at the GSKP manufacturing sites, and based on the results; action plans are being developed to fur ther reduce the noise level through Engineering and Administrative control. GSK has launched an ambitious program on Machinery Safety called as Zero Access Guarding.The purpose is to protect employees working on machiner y from intentional or inadver tent access to the moving and hazardous parts of the equipments as access to the moving parts has been the largest cause of accidents in GMS. GSK selected 5 sites for the pilot study and F-268 was one of them.23 facilitators were trained worldwide and 3 of them are from GSK Pakistan.
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GLOBAL MANUFACTURING & SUPPLY (GMS)
GlaxoSmithKlines Global Manufacturing and Supply capabilities in Pakistan comprises of the best quality processes and procedures associated with the production and supply of full-scale commercial manufacturing. The GMS mission is to ensure a secure source of supply of high quality products, to comply with customer expectations and regulatory requirements and to have cutting edge practices and performance. Our penicillin factory at F268 Site, is a state of the art facility. The focus is always in producing the best products, which meet the highest quality standards. Strict rules and guidelines provide us with a system of processes, procedures and documentation to ensure safety and quality within the factory.
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QUALITY MANAGEMENT SYSTEM (QMS)
Quality is at the heart of all activities that support discovery, supply and marketing of our products to our patients and customers. Quality is critical to building trust with society and, therefore, to our future business success. Andrew Witty (CEO GSK)
QUALITY BLITZ - an initiative to enhance the learnings of Quality Management Systems, with a focus on its better understanding and implementation of critical policies was conducted at all sites over a period of 6 weeks. Work on Lab Efficiency Project continued at all sites - transforming the laborator y operations to improve the Ways of Working, efficiency and productivity in the laboratories.
Simplification & Standardization

Pharma Operations Bench Mar king of Solids(POBOS) workshop - a global initiative was conducted at F-268 site by RPS OE Consultants to identify opportunities for productivity and efficiency through simplification and standardization. Low cost automation initiatives progressed at all the sites to improve product quality, productivity and process efficiency.
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HUMAN RESOURCE DEVELOPMENT
The Spirit of GSK
At GSK, we believe that our employees are our most powerful asset. They lead GSK with their strengths and are empowered to ensure GSKs success. Our employees embody characteristics that create a culture of respect, trust and integrity. We come together in a shared mission, with true passion and a sense of purpose. They have confidence in themselves, and a belief in each other. We believe in performance with integrity, coupled with entrepreneurial spirit, a focus on innovation, a sense of urgency, and a passion for achievement. We are proud to promote an open culture, encouraging employees to be themselves and giving their ideas a chance to flourish. We strive to provide our employees the freedom and suppor t they need to achieve their full potential and do great things everyday.
LEARN GROW BE INSPIRED
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Best Place, Best People & Best Work

In 2009, GlaxoSmithKlines HR Team excelled even further at building and promoting a culture that supports employee initiatives, productivity, emphasizes empowerment and the on-going development of an advanced workforce. Recruitment Drive Talent Review and Succession Planning discussions Leadership Development Program Proactive Total Reward Management Change Management Programs We are proud to be the recipient of the following prestigious awards: Employers Federation of Pakistan - Human Resource Management Excellence Award - Multinational Category 2009 Employers Federation of Pakistan - Award in Industrial Relations 2009 Pakistan Society of Human Resource Management (PSHRM) Best Place to Work Award 2008
Key Learning Statistics 2009

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

Our products make a real difference to global healthcare. GSK is on the cutting edge of discovering and developing new and innovative medicines. We are one of the worlds leading producers of prescription medicines, vaccines, and consumer healthcare products.
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Pharmaceutical Products
Our pharmaceutical products include treatment for asthma, chronic hepatitis B, depression, heart failure, GI disorders and cancers.
Vaccines
More than 1 billion doses of GSK vaccines were distributed worldwide in 2008, protecting against illnesses such as hepatitis A and B, typhoid, influenza, chickenpox, whooping cough, and tetanus.
Consumer Health Products

We bring dental health care products, over the counter medicines, and nutritional drinks to millions of people.
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Our commitment is to develop innovative products rapidly and to find new ways to help people receive the medicines they need for a better life
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AWARDS FOR EXCELLENCE
At GSK, we strive for excellence in everything that we do, and we are thrilled that a number of our peers have recognized our efforts. The Awards for Excellence look behind the headlines for evidence of the impact of a program. They are a statement of the fact that the products and ser vices GSK provides are valuable and stand up to independent scrutiny. They are testament that GSK Pakistan has shown innovation, creativity and sustained commitment to its vision, and that we do so with Respect for People , Tr ansparency and Integr ity. We are proud to be a recipient of a number of these awards.
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Best Corporate Report Award 2008

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

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

GSK received the Environment Excellence Award in 2009, a recognition by an independent authority of GSKs commitment to Environmental, Health, Safety and Sustainability.
Human Resources
At a recent award ceremony held by the Employer s Federation of Pakistan, GlaxoSmithKline Pakistan was awarded with the HRM Excellence Award 2009 in the multinational category. GSK Pakistan received the highest score on HR and Industrial Relations practices out of the 30 companies that par ticipated. The judges commented that they were impressed with GSK Pakistans approach of ensuring that their employees are provided with the best of ser vice and having achieved outstanding business results in designing and implementing innovative HR initiatives.
Consumer
Macleans was awarded the Consumer Choice Award for Best Toothpaste of the year.
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DIRECTORS PROFILES
Mr. M. Salman Burney

Mr. M. Salman Burney joined SmithKline Beecham as Director Marketing & Sales in 1992 and was appointed Managing Director of SmithKline Beecham in 1997. He has been the CEO of GlaxoSmithKline Pakistan since the SmithKline Beechams merger w i t h G l a x o We l l c o m e i n 2 0 0 1 . H e a l s o h a s R e g i o n a l m a n a g e m e n t responsibility for Iran & Afghanistan.
Mr. Tariq Iqbal Khan

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

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

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

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

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

Mr. Javed Ahmedjee is the Chief Financial Officer of the Company and also responsible for Distribution and Institutional Sales. A Fellow member of the Institute of Chartered Accountants of Pakistan possessing over 15 years post qualification experience in senior management positions in financial and manufacturing sectors. He believes in performance as a business partner, to add shareholder value, with the highest degree of integrity and consistency. With his proven capability of dealing with diverse and adver se situations, he effectively manages teams, engaging per sonnel in a constant and continuous endeavor of simplifying the operating model.
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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.
The Management Committee comprises of the Functional Heads to ensure smooth operations of the Company, strategic business planning, decision making and overall management of the Company. It also ensures adequacy of operational, administrative and financial controls.
Risk Management & Compliance Board

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

The Environment Health & Safety Committee is chaired by the respective Site Heads. It ensures operations are fully compliant with the EHS practices as outlined by regulatory control and corporate. It appraises the major EHS projects and monitors their implementation and also identifies risk conditions, organizes training programs to educate employees for EHS issues.
Vision Team
Vision team at GSK gives input for alignment of the GSK strategy and futuristic objectives. It primarily reviews line capacities at the various sites over the long term perspective focusing on capacity constraints, potential for export markets, product initiatives and new packaging requirements.
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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 Company's audited financial statements for the year ended December 31, 2009. The directors' report is prepared under section 236 of the Companies Ordinance, 1984 and clause xix of the Code of Corporate Governance. This repor t is to be submitted to the member s at Sixty Third Annual General Meeting of the Company to be held on March 30, 2010. Rs. in Operating results million Profit for the year before taxation Taxation Profit after taxation Un-appropriated profit brought forward Profit available for appropriation Appropriations: - Final dividend 2008 Rs. 7.0 per share Un-appropriated profit carried forward 1,567 (633) 934 2,284 3,218 (1,195) 2,023 December 31, 2009 and other related information are set out on pages 83 to 85. The Directors, CEO, Company Secretar y and CFO, their spouses and minor children did not carry out any trade in the shares of the Company.
Chairman / Chief Executives review
The Chairman / Chief Executive's review on pages 37 to 39 deals with: The performance of the Company during the year in comparison to last year with reasons for variances Effective cash management strategy Significant plans and decisions Future outlook, business risks and challenges The directors of the Company endorse the contents of the same.
Basic earnings per share
Basic earnings per share after taxation were Rs. 5.47 (2008: Rs.11.46).
Earnings Per Share & Price Earning Ratio 12 10 8 35 30 25
The Board of Directors is pleased to propose a final cash dividend of Rs. 5.0 per share amounting to Rs. 853.4 million. The Company achieved net sales of Rs. 14.7 billion, grew by 9.8% in 2009. Profit after tax this year was Rs. 933.9 million.
Number of Times
As at December 31, 2009, Setfirst Limited UK held 134,453,588 shares of Rs. 10 each. Subsequent to the balance sheet date, the shares held by Setfirst Limited, UK have been transferred to S.R. One International B.V., Netherlands. The ultimate parent of the company continues to be GlaxoSmithKline plc, UK.
Rupees
Holding company
20 6 15 4 10 2
10.6 17.5 9.8 16.2 9.8 19.6 8.6 20.9 11.5 6.6
Pattern of Shareholding
0 2004 2005 2006 2007 2008 2009 Earnings per share Price earning ratio
5.5 20.0
5 0
The Company shares are traded in Karachi and Lahore stock exchanges. The shareholding information as at
33
Merger of GlaxoSmithKline Pakistan Limited with GlaxoSmithKline Pharmaceuticals (Private) Limited (Formerly Bristol Myers Squibb Pakistan (Private) Limited)
Sales per Employee
9 8 7 6 Rupees in million 5 4 3 2 1
4.8
5.1
5.5
5.8
7.7
8.4
The Board of Directors of the Company has approved the merger plan with GlaxoSmithKline Pharmaceuticals (Private) Limited (Former ly Bristol Myer s Squibb Pakistan (Private) Limited). In an extraordinary general meeting of the company held on March 3, 2010, shareholder s of the company have approved the s c h e m e o f a r r a n g e m e n t s fo r a m a l g a m a t i o n o f GlaxoSmithKline Pharmaceuticals (Private) Limited (Formerly Bristol Myers Squibb Pakistan (Private) Limited) with the Company.
Corporate and social responsibility
Corporate responsibility is an integral and embedded par t of the way GSK does business and we are committed to connecting business decisions to ethical, social and environmental concerns. We are committed to playing a full par t in addressing the healthcare challenges by taking an innovative, responsible and above all, sustainable approach. We work as partners with under-served communities and are also significant donors to numerous NGOs. The Company has set up and suppor ts two community trusts/ NGOs i.e. Concern for Children Tr u s t ( C F C ) a n d Tr u s t fo r H e a l t h a n d M e d i c a l Sciences, which work in the underserved communities of Landhi and Mohammadi (Machar) Colony in Karachi. Various CSR initiatives of the year 2009 are fully covered on page 12 to page 14.
2004
2005
2006 2007
2008 2009
Employer s Federation of Pakistan. Out of the 30 companies that participated, GSK Pakistan received the highest score on HR and Industrial Relations practices. This year, stakeholder feedback was included in the performance management system which is the first step towards a 360 degree appraisal system. GSK has a fir m belief that empower ment is one of the key ingredients to its success. It means to trust people to do their job, by using good judgment, within a clearly defined and understood framework of responsibility. Our success based on this philosophy indicates that our employees have the highest level of integrity, sense of accountability and clarity regarding their role in the organization.
Diversity
Human Resource Development
As ever y year, in 2009, recr uiting, retaining and developing our employees was critical to enhancing and sustaining our performance and reputation. We continued to provide a fulfilling, healthy environment where our employees could learn, grow and develop. This year, we followed the global framework of High Performance Behaviours, that formed the basis for performance management and development activity. This enabled us to focus on developing the desired behaviours critical to achieving our strategic goals. The Company was awarded with the HRM Excellence Award 2009 in the Multinational Categor y by the
GSK regards itself as an equal oppor tunity employer and firmly believes that treating people equally is essential to being an effective organization. This is achieved by creating a diver se culture , using our recruitment and selection process and by effectively promoting the impor tance of these values to all our staff. Our flexible working policy enables employees to maintain a positive work life balance. The Mentor ing progr am gives employees an oppor tunity to learn from and be guided by a seasoned and experienced colleague. The Recruitment of a diverse workforce ensures that all people within society are well represented and given equal oppor tunity to apply at all levels. High priority is placed on the development of our key talents via the succession planning process.
34
Environment, Health and Safety (EHS)
Our sense of responsibility for the Environment, Health and Safety (EHS) is at the highest level. GSK is committed to working towards designing a workplace that minimizes work-related risks to occupational health and safety. The Company has a dedicated EHS depar tment to oversee the implementation of EHS objectives and repor ts to Executive management. As par t of our governance responsibility, we conduct EHS audits of our manufacturing sites, assessing the management of key risks and impacts and performance against our global EHS standards. GSK Pakistan's environmental targets are monitored on a continuous basis and its impacts are identified and managed in line with required standards.
in the Listing Regulations and advised to the Committee for compliance. The Committee held four meetings during the year. An independent Internal Audit function repor ting to the Board's Audit Committee reviews the financial and internal repor ting process, the system of internal control, the management of risks and the external and internal audit process. The Internal Audit function utilizes the ser vices of independent audit firms for continuous reviews of internal controls and management of risks.
The Management Committee comprises of 12 senior members who meet and discuss impor tant business plans, issues and progress made in their functions. Significant matters to be put for th in the Board are d i s c u s s e d f o r o n w a r d a p p r ov a l b y t h e B o a r d .
Statement of Ethics and Business practice
Performance with integrity is central to operating at GSK. The Board of Director s 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 at all times.
Risk Management and Compliance Board (RMCB)
The Risk Management and Compliance Board (RMCB) have been established, which comprises of the business unit heads.The RMCBs oversee management of all risks that are considered important for the business and also promote the culture of compliance in the company.The company also has a full time Compliance officer.
Board of Directors meetings and attendance
Auditors
The Board of Directors met four times in 2009, with each member attending as follows: Name Mr. M. Salman Burney Mr. Tariq Iqbal Khan Mr. Rafique Dawood Mr. Shahid Mustafa Qureshi Mr. Javed Ahmedjee Dr. Muzaffar Iqbal Dr. Iffat Yazdani Meetings attended 4 1 4 4 4 4 3
The present auditor s, Messr s A.F. Ferguson & Co. Chartered Accountants, retire and being eligible, offer themselves for re-appointment. The Board of Directors endorses recommendation of the Audit Committee for their re-appointment as auditors of the Company for the financial year ending December 31, 2010, at a fee to be mutually agreed.
Subsequent events
Leave of absence was granted to the Directors who could not attend some of the board meetings.
No material changes or commitments affecting the financial position of the Company have occurred between the end of the financial year of the Company and the date of this report.
Audit Committee
An Audit Committee has been in existence since May 2002. The committee consists of three members, of whom two are non-executive directors including the chairman of the committee. The terms of reference of the Committee have been determined by the Board of Directors in accordance with the guidelines provided
35
Value of investments of provident and gratuity funds
The Company maintains retirement benefits plans for our employees. Value of investments of provident and gratuity funds, based on their un-audited accounts as on December 31, 2009 (audit in progress) is as follows:
Investment in funds
32% 68%
d. The financial statements are prepared in accordance with International Financial Reporting Standards, as applicable in Pakistan. e. The Company maintains a sound internal control system, which gives reasonable assurance against any material misstatement or loss. The internal control s y s t e m i s r e g u l a r l y r e v i e we d . T h i s h a s b e e n formalized by the Board's Audit Committee and is updated as and when needed. f. There are no significant doubts upon the Company's ability to continue as a going concern. g. There has been no material departure from the best practices of Corporate Governance as detailed in the listing regulations. h. The key operating and financial data for the six years is set out on pages 42 to 43.
2009 Rupees 000 Provident fund Gratuity fund 1,175,338 548,591
Corporate and financial reporting framework

a. T h e f i n a n c i a l s t a t e m e n t s p r e p a r e d b y t h e management of the Company present fairly, its state of affairs, the result of its operations, cash flows and changes in equity. b. Proper books of account of the Company have been maintained. c. A p p r o p r i a t e a c c o u n t i n g p o l i c i e s h ave b e e n consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. By order of the Board
M. Salman Burney Chairman / Chief Executive Karachi March 03, 2010
Javed Ahmedjee Chief Financial Officer
36
CHAIRMAN/ CHIEF EXECUTIVES REVIEW

I am pleased to present the Annual report of the Company for the financial year ended December 31, 2009.
Overview of Economy & Market
Economic conditions in Pakistan remained challenging during 2009. The Government has taken measures to address the countr y's macro economic imbalances and curtail inflation, to lay the foundations of sustainable and broad based economic growth. The Pharmaceutical industry in Pakistan is however experiencing unprecedented challenges. The currency devaluation and inflation, coupled with restrictive pricing, has contributed to declining margins and profitability. Though the Government has given some price increases on certain products in the last quarter of the previous year, however their impact is not broad based and significant enough to improve the situation. In 2009, the market grew by approximately 15.5%. GSK Pakistan continued to retain its position as the largest research based pharmaceutical company in terms of value, prescription, and volume shares. Out of top 20 products, 9 are manufactured and sold by GlaxoSmithKline.
compared to last year. Margins have been adversely affected due to the long-standing price freeze on majority of the products since 2001, increases in raw and packaging prices both locally and internationally, the continuous weakening of the r upee against foreign currencies particularly the US Dollar and also escalation of fuel, power and utilities costs. The company absorbed these negative impacts to an extent through good sales growth, simplification and rationalization initiatives undertaken in manufacturing and commercial operations. Selling, mar keting and distribution expenses at Rs. 1673.8 million increased by 26.0%. The increase over last year mainly reflected increased investment in core and new brands and increased freight cost due to rising oil prices and sales growth. Administrative expenses at Rs. 588.8 million increased by 13.2%. The increase was less than the general level of inflation, which impacted employment cost, traveling and accommodation. Increases in training expenses for employee development and increased legal costs also contributed to expense growth.
16000 Net Sales 14000 12000 Rupees in million 10000 8000
Review of Operating Results
Total turnover for the year grew by 9.8% (Rs.1.3 billion) to Rs 14.7 billion. Excluding large government tenders, underlying sales grew by 14.9%. Within the core pharmaceutical por tfolio, there were strong performances from Antibiotics, Cardiovascular, Respirator y, Dermatology, Analgesics and Gastro Intestinal brands, with all achieving double digit growth. The Consumer Health Care business grew by 28.2% to Rs 298.6 million, with Eno and Iodex being the main growth drivers. Export sales maintained a positive trend and achieved double digit sales growth to Rs. 390.4 million. Gross margins in this year at 24.1%, declined by 4.7%
2004 2005
6000 4000 2000 0 2006 2007 2008 2009
13403
10088
10611
8867
9417
14719
37
Other operating income was recorded at Rs. 436.6 million, primarily comprising of investment income of Rs. 354.9 million. Overall, the increase in income stood at Rs. 0.3 million (excluding gain on sale of Korangi land last year). The investment income has declined by 8.9% as surplus funds reduced due to dividend payout and increase in cost of doing business. This was par tly offset by higher interest rates earned on investments. Net profit after tax for the year was Rs. 933.9 million. Excluding the impact of the land sale in 2008, the decrease in profit is to the tune of 16%.
1471 1814
Profit after tax 2000 1800 1600 1400 1200 1000 800 600 400
1665 1671 1955 934
Rupees in million
The Company continues to use strong cash flows to make the required levels of investments in business necessar y, to sustain long term growth. During this year, capital expenditure was Rs 494.2 million (2008: Rs. 475.0 million) mainly spent on expansion of warehouse, offices, plant upgradation and vehicles. The Company has surplus funds of Rs. 2,384.1 million as at December 31, 2009 showing a decline of Rs. 340.8 million as against last year mainly due to dividend payment and decrease in profitability. These funds are primarily invested in bank deposits, T-bills and PIBs. With efficient fund management strategies in place, the Company does not face any liquidity crisis as rigorous cash flow forecasting is done along with active investment management to achieve optimum returns by making efficient placements in ter m deposits. A robust r isk-aver se str ategy is followed, whereby investments are only made in government securities and high credit-rated banks. The Company has maintained its histor y of good return and payout to shareholders. The Board of Directors in its meeting held on March 03, 2010 proposed a final cash dividend of Rs. 5.0 (2008: Rs. 7.0) per share. Over the last few year s, payout as well as shareholder value has increased significantly as a result of Company's sustained business success. The Company's market capitalization has increased over the last 5 year s from Rs. 15.8 billion in 2004 to Rs. 18.6 billion as at December 31, 2009.
200 0
2004 2005 2006 2007 2008 2009
Capital Expenditure 700 600 500 Rupees in million 400 300 200 100
172 265 472 646 475 494
0 2004 2005 2006 2007 2008 2009
affordable healthcare solutions to patients. A number of new products in the area of oncology, respiratory and anti-bacterial are under registration and launch. Our operating results remain under pressure due to volatility in the rupee currency and inflation. The industry is heavily price controlled and the last across the board price increase was given in 2001. This lack of a general price increase poses a greater risk on the future profitability of the business allowing no room to counterbalance rising costs. We request the Government to take immediate steps to improve the pricing policy and to allow price increase across the board to support the industry. The Company's commitment towards improving healthcare in Pakistan par ticularly, in the area of preventive healthcare & vaccines remains integral and
Future outlook and Challenges
We h a v e m a d e g o o d p r o g r e s s i n o u r s a l e s performance, actively focusing on developing the new product pipeline and at the same time maintaining growth of mature brands to create value for our shareholder s and to provide new and
38
explicit. GSK is the world's leading developer and manufacturer of vaccines, and hopes to partner with the Gover nment in protecting people against preventable diseases. The pharmaceutical industr y in Pakistan has great potential for growth. However, its sustained success depends on a regulatory environment which is able to balance the interests of this research based industry, with the need for affordable healthcare.
Intellectual property
Intellectual proper ty is a key business asset for our Company and the effective legal protection of our intellectual proper ty is critical in ensuring a reasonable return on investment in researching and commercializing new treatments. Dur ing recent year s, Pakistan has made some progress in this regard, by updating its IPR laws to the levels required by global conventions. At a practical level however, much more needs to be done to discourage both piracy and counterfeiting. Effective implementation will protect consumers, as well as industry and will also lead to a quality and researchoriented culture which is vital for the future progress of this industry.
Acknowledgement
I would like to recognize the enormous contribution o f o u r e m p l oye e s i n a c h i e v i n g t h e C o m p a ny objectives. The GSK spirit continues to form par t of our value system that drives our success. On behalf of the Board. I would also appreciate the continuous suppor t of our valued customers and shareholders and we look forward to deliver successful results in future to the best of our abilities
M. Salman Burney Chairman / Chief Executive
Karachi March 03, 2010
39
FINANCIAL PERFORMANCE AT A GLANCE

2009 2008 Rupees in million Net Sales Gross Profit Operating Profit Profit before Taxation Taxation Profit after Taxation Dividend - cash* - per share - Rs. Paid-up Capital 14,719.1 3,545.7 1,581.1 1,566.7 632.8 933.9 853.4 5.0 1,706.7 13,403.2 3,855.6 3,077.9 3,001.0 1,045.8 1,955.2 1,621.4 9.5 1,706.7
* Represents final dividend @ Rs. 5.0 per share amounting to Rs. 853.4 million proposed by the Board of Directors subsequent to the year end.
Gross and Operationg Profit 4000 3500 3000

Rupees in million
Payout to Shareholders 1750 1500 1250 Rupees in million 1000 750 500
1092 273 1280 341
1621
2500 2000 1500 1000

3506 2148 3846 2708 3867 2651 3952 2670 3856 3078 3546 1581
612 146
874 218
853
500 0
250
0
2004 2005 2006 2007 2008 2009 Gross Profit Operating Profit
2004 2005 2006 2007 2008 2009 Cash Dividend Bonus Shares
40
STATEMENT OF VALUE ADDED

The statement below shows the amount of revenue generated by the Company during the year and the way this revenue has been distributed. 2009 Rupees 000 Revenue Generated Total revenue Revenue Distributed Bought-in-materials and Services Selling, Marketing and Distribution Expenses Administrative Expenses and Financial Charges Income tax Worker's funds and Central research fund Sales tax To Government Cash dividend* To Shareholders Retained in the Business 11,173,470 1,673,809 603,162 632,791 138,585 30,387 801,763 853,359 853,359 80,571 15,186,134 73.6 11.0 4.0 4.2 0.9 0.2 5.3 5.6 5.6 0.5 100.0 9,547,619 1,328,925 597,075 1,045,853 208,355 20,007 1,274,215 1,621,383 1,621,383 333,804 14,703,021 64.9 9.1 4.1 7.1 1.4 0.1 8.6 11.0 11.0 2.3 100.0 15,186,134 2008 Rupees 000 14,703,021
% 100.0
% 100.0
0.5%
5.6% 5.3%
4.0%
Revenue and its Disposal

Bought-in-materials & Services 73.6% Selling Marketing and Distribution Expenses 11.0% Administrative Expenses and Financial Charges 4.0% Government 5.3% Shareholders 5.6% Retained in the Business 0.5%
11.0%
73.6%
41
KEY OPERATING AND FINANCIAL DATA

2004 2005 2006 2007 2008 2009 Rupees in million
Assets employed Fixed assets - property, plant and equipment 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 EBITDA Dividend including bonus shares* Sales per employee (Rs. in '000) 1,434 407 55 3,877 5,773 149 76 225 5,548 874 4,674 5,548 8,867 3,506 2,148 2,119 648 1,471 2,306 757 4,765 1,503 192 47 5,252 6,994 159 97 256 6,738 1,092 5,646 6,738 9,417 3,846 2,708 2,695 881 1,814 2,858 1,092 5,087 1,774 96 43 5,827 7,740 66 137 203 7,537 1,365 6,172 7,537 10,088 3,867 2,651 2,632 967 1,665 2,804 1,365 5,549 2,237 347 61 5,758 8,403 23 262 285 8,118 1,707 6,411 8,118 10,611 3,952 2,670 2,659 988 1,671 2,842 1621 5,850 2,415 172 69 6,032 8,688 21 312 333 8,355 1,707 6,648 8,355 13,403 3,856 3,078 3,001 1,046 1,955 3,309 1,621 7,659 2.601 169 67 5,646 8,483 59 320 379 8,104 1,707 6,397 8,104 14,719 3,546 1,581 1,567 633 934 1,848 853 8,420
Return on Equity 30 25 Number of Days 20 15 10 5

26.5 26.9 22.1 20.6 23.4 11.5
28 24 20 16 12 8
Debtors Turnover & Inventory Turnover
70 60 50 Number of Days 40 30 20
2.2
1.9
2.7
15.4 56
50
54
63
25.0 67
3.5 69
Percentage
4 0 0 2004 2005 2006 2007 2008 2009
10 0
2004 2005 2006 Debtors Turnover
2007 2008 2009 Inventory Turnover
42
2004
2005
2006 2007 Rupees in million

1,765 (220) (869) 676 4,666 1,497 (824) (1,086) (413) 4,253
2008
2009
Cashflows Operating Activities Investing Activities Financing Activities Changes in Cash equivalents Cash & equivalents - Year end
1,788 (469) (508) 811 3,057
1,721 (179) (609) 933 3,990
(402) 572 (1,698) (1,528) 2,725
1,090 (241) (1,190) (341) 2,384
Ratios Earnings per share - Rs. 8.6 Cash dividend per share* - Rs. 7.0 Bonus shares (%) 20 Price earning ratio (times) 20.9 Market value per share - year end - Rs. 181 Market value per share - high - Rs. 236.5 Market value per share - low - Rs. 176 Break-up value per share-without surplus on revaluation - Rs. 63.5 Break-up value per share-with surplus on revaluation - Rs. 63.5 Market price to Book value with surplus (times) 2.9 Market capitalization (Rs in million) 15,817 Dividend payout (%) 51.5 Dividend yield (%) 5.0 Dividend cover ratio (times) 1.9 Return on equity (%) 26.5 Total assets turnover (times) 1.3 Fixed assets turnover (times) 6.2 Debtors turnover (days) 2.2 Creditors turnover (days) 27 Inventory turnover (days) 50 Current ratio 4.6 Acid test ratio 3.1 Gross profit margin (%) 39.5 EBITDA Margin to Sales (%) 26.0 Net margin (%) 16.6
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
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
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
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
5.5 5.0 20.0 109.3 143.8 75.0 47.5 47.5 2.3 18,649 91.3 4.6 1.1 11.5 1.3 5.7 25.0 27 67 3.2 1.6 24.1 12.6 6.3
Assets & Liabilities
7000 6000 5000 Rupees in million 4000 3000 2000
Current Ratio
6 5 4 3 2 1 Number of times
225 1896 3877 1434
256 1742 5252 1503
203 1913 5827 1774
285 2645 5758 2237
333 2656 6032 2415
379 2837 5646 2601
1000
4.6 5.1 4.4 4.3 4.1
2004
2005
2006
2007
2008
2009
0 2004 2005 2006 2007 2008 2009
3.2
Non-current Liabilities Net Current Assets
Non- current Assets Property, plant and equipment
43
BALANCE SHEET ANALYSIS

Vertical Analysis Balance Sheet (%)
2004
2005
2006
2007
2008
2009
Share Capital & Reserves Non Current Liabilities Current Liabilites Total Equity and Liabilites Non Current Assets Current Assets Total Assets
80.8 3.3 15.9 100.0 27.6 72.4 100.0
81.5 3.1 15.4 100.0 21.1 78.9 100.0
79.8 2.1 18.1 100.0 20.3 79.7 100.0
79.9 2.8 17.3 100.0 26.0 74.0 100.0
78.6 3.1 18.3 100.0 25.0 75.0 100.0
73.7 3.4 22.9 100.0 25.8 74.2 100.0
Horizontal Analysis Balance Sheet (%)
Change from preceding year

Share Capital & Reserves Non Current Liabilities Current Liabilites Total Equity and Liabilites Non Current Assets Current Assets Total Assets 21.0 (11.8) 3.8 16.5 24.4 13.8 16.5 21.4 13.8 16.5 20.4 (8.1) 31.3 20.4 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 (3.0) 13.8 30.2 3.6 6.8 2.5 3.6
44
PROFIT & LOSS ACCOUNT ANALYSIS

Vertical Analysis Profit & Loss Account (%)
2004
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 60.5 39.5 11.6 4.0 1.8 2.1 24.2 0.3 23.9 7.3 16.6
2005
100.0 59.2 40.8 9.6 3.7 2.4 3.7 28.8 0.1 28.6 9.4 19.3
2006
100.0 61.7 38.3 10.4 4.3 2.2 4.9 26.3 0.2 26.1 9.6 16.5
2007
100.0 62.8 37.2 11.4 4.6 2.1 6.0 25.1 0.1 25.0 9.3 15.7
2008
100.0 71.2 28.8 9.9 3.9 1.6 9.6 23.0 0.6 22.4 7.8 14.6
2009
100.0 75.9 24.1 11.4 4.1 0.9 3.0 10.7 0.1 10.6 4.3 6.3
Horizontal Analysis Profit & Loss Account (%)
Change from preceding 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 9.5 8.3 11.2 (3.8) (28.4) 23.8 86.1 38.0 222.2 36.9 24.1 43.4 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 9.8 17.0 (8.0) 26.0 13.3 (33.2) (65.9) (48.6) (81.8) (47.8) (39.5) (52.2)
45
We want to improve the quality of human life and contribute towards a better future for all
46
FINANCIAL STATEMENTS 2009
47
STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE FOR THE YEAR ENDED DECEMBER 31, 2009
This statement is being presented to comply with the Code of Corporate Governance contained in the listing regulations of Karachi and Lahore Stock Exchanges for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. The Company has applied the principles contained in the Code as follows: 1. The Company encourages representation of independent non-executive directors and representation of minority interests on its Board of Directors. At present the Board includes two non-executive directors one of whom represents minority shareholders' interests. The directors have confirmed that none of them is serving as a director in more than ten listed companies including this company, except for Mr. Tariq Iqbal Khan representing NIT, who has been specifically exempted by the Securities and Exchange Commission of Pakistan for holding directorship in more than ten listed companies. 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. No casual vacancy occurred in the Board of Directors during the year ended December 31, 2009. 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 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 role and responsibilities. Further, the Booklet on Code of Corporate Governance as published by the Securities and Exchange Commission of Pakistan have been circulated amongst the directors on the Board.
48
11. The directors' report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 12. The financial statements of the Company were duly endorsed by the CEO and CFO before the approval of the Board. 13. The directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding. 14. The Company has complied with all the corporate and financial reporting requirements of the Code. 15. The Audit Committee has been in existence since May 2002. It comprises three members, of whom two are non-executive directors including the chairman of the committee. 16. There exists an effective internal audit function within the Company. 17. The meetings of the audit committee were held at least once in every quarter prior to approval of interim and final results of the Company as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance. 18. The statutory auditors of the Company have confirmed that they have been given satisfactory rating under the Quality Control Review Program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan. 19. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 20. The related party transactions have been placed before the audit committee and approved by the Board of Directors alongwith pricing methods. The transactions were carried out on terms equivalent to those that prevail in the arm's length transactions. 21. We confirm all other material principles contained in the Code have been complied with.
49
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE
We have reviewed the Statement of Compliance with the Best Practices contained in the Code of Corporate Governance prepared by the Board of Directors of GlaxoSmithKline Pakistan Limited to comply with the Listing Regulation No. 35 of the Karachi and Lahore Stock Exchanges where the company is listed. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the company's compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the company personnel and review of various documents prepared by the company to comply with the Code. As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board's statement on internal controls covers all controls and the effectiveness of such internal controls. Further, Sub-Regulation (xiii a) of Listing Regulation 35 notified by Karachi and Lahore Stock Exchanges require the company to place before the board of directors for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price recording proper justification for using such alternate price mechanism. Further, all such transactions are also required to be separately placed before the audit committee. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the audit committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the company's compliance, in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the company for the year ended December 31, 2009.
A. F. Ferguson & Co. Chartered Accountants Karachi March 03, 2010
50
AUDITORS REPORT TO THE MEMBERS

We have audited the annexed balance sheet of GlaxoSmithKline Pakistan Limited as at December 31, 2009 and the related profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that: (a) in our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, 1984; (b) in our opinion: (i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied except for the change as stated in note 2.1.1 of these financial statements, with which we concur; 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, 2009 and of the profit, its cash flows and changes in equity for the year then ended; and (d) no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
A. F. Ferguson & Co. Chartered Accountants Karachi March 03, 2010 Name of Engagement Partner: Syed Fahim ul Hasan
51
BALANCE SHEET AS AT DECEMBER 31, 2009

2009 2008 Rupees 000
Note SHARE CAPITAL AND RESERVES Share capital Reserves NON-CURRENT LIABILITIES Staff retirement benefit - staff gratuity Deferred taxation CURRENT LIABILITIES Trade and other payables Taxation - provision less payments 7 5 6
3 4
1,706,718 6,397,381 8,104,099
1,706,718 6,648,173 8,354,891
58,894 320,435 379,329
20,802 312,270 333,072
2,524,426 2,524,426 2,903,755
1,867,275 70,387 1,937,662 2,270,734
CONTINGENCIES AND COMMITMENTS
11,007,854
10,625,625
52
Note NON-CURRENT ASSETS Fixed assets - property, plant and equipment 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 Accrued return Refunds due from government Other receivables Taxation - payments less provision Investments Cash and bank balances 12 13 14 15 16 17 18 11 19 11
2009 2008 Rupees 000
9 10
2,600,814 61,299 7,027 168,687 2,837,827
2,415,255 61,666 6,788 171,855 2,655,564
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
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 10,625,625
The annexed notes 1 to 38 form an integral part of these financial statements.
53
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2009
2009 2008 Rupees 000 14,719,132 (11,173,470) 3,545,662 22 23 24 25 (1,673,809) (588,814) (138,585) 436,615 1,581,069 26 (14,348) 1,566,721 27 (632,791) 933,930 13,403,224 (9,547,619) 3,855,605 (1,328,925) (520,216) (208,355) 1,279,790 3,077,899 (76,859) 3,001,040 (1,045,853) 1,955,187
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 / (loss) on available-for-sale investments Deferred tax 20 21
15,356 (5,375) 9,981
(17,259) 6,041 (11,218) 1,943,969 Rs. 11.46
Total comprehensive income Earnings per share 28
943,911 Rs. 5.47
54
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2009
2009 2008 Rupees 000
Note CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Staff gratuity paid Taxes paid Decrease / (increase) in long-term loans to employees (Increase) / decrease in long-term deposits Net cash from / (used in) 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) / from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 30 29
2,083,606 (40,384) (953,131) 367 (239) 1,090,219
633,333 (44,827) (982,457) (7,911) 20 (401,842)
(494,178) 53,573 175,000 24,172 (241,433)
(475,032) 907,993 100,000 39,200 572,161
(1,189,558) (340,772) 2,724,897 2,384,125
(1,698,167) (1,527,848) 4,252,745 2,724,897
55
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2009
Share C A P I T A L R E S E R V E Fair value reserve Capital Share Reserve premium arising on amalgamation Rupees 000
Balance at January 1, 2008 Final dividend for the year ended December 31, 2007 @ Rs 7.50 per share Interim dividend for the year ended December 31, 2008 @ Rs 2.50 per share Profit after taxation for the year ended December 31, 2008 Fair value loss on available-for-sale investments Total compehensive income for the year ended December 31, 2008 Balance at December 31, 2008 Final dividend for the year ended December 31, 2008 @ Rs 7.00 per share Profit after taxation for the year ended December 31, 2009 Fair value gain on available-for-sale investments Total compehensive income for the year ended December 31, 2009 Balance at December 31, 2009 1,706,718 1,409 375,572 (1,150) 3,999,970 2,035,122 8,117,641
General reserve
Unappropriated profit
Total
(1,280,039)
(1,280,039)
(426,680)
(426,680)
1,955,187
1,955,187
(11,218)
(11,218)
1,706,718
1,409
375,572
(11,218) (12,368)
3,999,970
1,955,187 2,283,590
1,943,969 8,354,891
(1,194,703)
(1,194,703)
933,930
933,930
9,981
9,981
1,706,718
1,409
375,572
9,981 (2,387)
3,999,970
933,930 2,022,817
943,911 8,104,099
56
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2009
1. THE COMPANY AND ITS OPERATIONS
The company is incorporated in Pakistan as a limited liability company and is listed on the Karachi and Lahore Stock Exchanges. It is engaged in manufacturing and marketing of research based ethical specialities, other pharmaceutical, animal health and consumer products.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.
2.1
Basis of preparation Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail. Critical accounting estimates and judgements The preparation of financial statements in conformity with the IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The matters involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant which have been disclosed in the relevant notes to the financial statements are: i) ii) iii) iv) v) Provision for retirement benefits Impairment of property, plant and equipment 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. 2.1.1 Changes in accounting policies and disclosures (a) New and amended standards adopted by the company The company has adopted the following new and amended IFRSs as of January 1, 2009: - IAS 1 (Revised), 'Presentation of financial statements', issued in September 2007 revises the existing IAS 1 and requires presentation of transactions with owners in the statement of changes in equity and
57
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
with non-owners in the other comprehensive income statement. The revised standard requires an entity to opt for presenting such transactions either in a single statement of comprehensive income or in an income statement and a separate statement of comprehensive income. The company has applied IAS 1 (Revised) from January 1, 2009 and elected to present one performance statement (i.e. the profit and loss account). However, since there are no non-owner changes in equity there is no impact of such revised standard on these financial statements. Comparative information has been re-presented so that it also is in conformity with the revised standard. The change in accounting policy has resulted in recognition of gains on revaluation of available-for-sale investments in other comprehensive income. Otherwise the change only impacts presentation aspects and there is no impact on earnings per share. - IFRS 7 'Financial instruments: Disclosures', introduces new disclosures relating to financial instruments. The new disclosures are included in Note 34 of these financial statements. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share. - IFRS 8 'Operating segments' replaces IAS 14 and requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The company has no reportable segments under IFRS 8. However, certain disclosures as required under IFRS 8 have been included in note 20 of these financial statements. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share. (b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the company. The following standards and amendments to existing standards have been published and are mandatory for the company's accounting periods beginning on or after January 1, 2010: Effective date for periods beginning IFRIC 17 - Distribution of non-cash assets to owners IAS 27 (Revised) - Consolidated and separate financial statements IFRS 3 (Revised) - Business combinations IAS 38 (Amendment) - Intangible assets IFRS 5 - Measurement of non-current assets (or disposal groups) classified as held-for-sale - IAS 1 (Amendment) - Presentation of financial statements - IFRS 2 (Amendments) - Group cash-settled and sharebased payment transactions July 1, 2009 July 1, 2009 July 1, 2009 April 1, 2009 April 1, 2009 April 1, 2009 April 1, 2009
2.2
Overall valuation policy These financial statements have been prepared under the historical cost convention except as otherwise disclosed in the accounting policies below.
58
2.3
Staff retirement benefits
2.3.1 Defined benefit plan The company operates approved funded gratuity schemes for all its permanent employees. Contributions to the funded gratuity schemes are based on actuarial recommendations. The latest actuarial valuations of the schemes were carried out as at December 31, 2009 using the Projected Unit Credit Method. Cumulative net unrecognised actuarial gains and losses at the beginning of the year which exceed 10% of the greater of the present value of the obligations and the fair value of respective 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 gratuity schemes. 2.3.2 Defined contribution plan The company also operates approved contributory provident funds for all its permanent employees. 2.4 Compensated absences The company provides for compensated absences of its employees on unavailed balance of leave in the period in which the leave is earned. 2.5 Provisions Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. 2.6 Taxation
2.6.1 Current The charge for current taxation is based on taxable income at the current rates of taxation after taking into account tax credits and rebates available, if any, and taxes paid under the final tax regime. 2.6.2 Deferred Deferred tax is accounted for using the balance sheet liability method on all temporary differences arising between tax bases of assets and liabilities and their carrying amounts. Deferred tax liability is generally recognised for all taxable temporary differences and deferred tax asset is recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilised. Deferred tax is charged or credited in the profit and loss account except for deferred tax arising on revaluation of available for sale investments which is recognised in other comprehensive income. 2.7 Fixed assets - property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation / amortisation and impairment losses except freehold land and capital work-in-progress which are stated at cost.
59
Depreciation is charged using the straight line method whereby the cost of an asset less estimated residual value, if not insignificant, is written off over its estimated useful life. Depreciation / amortisation on assets is charged at the normal rates from the month of addition to the month of disposal. Cost of leasehold land is amortised equally over the period of the lease. Maintenance and normal repairs are charged to income as and when incurred. Also assets costing up to Rs. 25 thousand are charged to income. Major renewals and improvements are capitalised and the assets so replaced, if any, are retired. Gains and losses on disposal of fixed assets are included in income currently. 2.8 Impairment The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount and the resulting impairment is charged to profit and loss account. 2.9 Investments Available-for-sale Securities intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in the interest rates, are classified as available-for-sale. Available-for-sale investments are initially recognised at fair value plus transaction cost and subsequently recognised at fair value. Gains and losses arising from changes in fair value are recognised in other comprehensive income. Held-to-maturity These are investments with fixed or determinable payments and fixed maturity with the company having positive intent and ability to hold to maturity. These are stated at amortised cost. 2.10 Stores and spares These are valued at lower of cost using moving average method and estimated recoverable amount. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon. Provision is made for items which are obsolete and slow moving. 2.11 Stock-in-trade These are valued at the lower of cost and net realisable value except goods-in-transit which are stated at cost. Cost is determined using first-in first-out method. Cost of raw and packing materials comprise of purchase price including directly related expenses less trade discounts. Cost of work-in-process and finished goods include cost of raw and packing materials, direct labour and related production overheads.
60
Net realisable value signifies the estimated selling price in the ordinary course of business less cost of completion and cost necessarily to be incurred in order to make the sale. 2.12 Trade debts Trade debts are valued at the invoice value. Provision is made against debts considered doubtful of recovery. Bad debts are written off when considered irrecoverable. 2.13 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise of cash and cheques in hand, balances with banks on current, savings and deposit accounts and short-term investments maturing within three months of the balance sheet date. 2.14 Foreign currency translation Foreign currency transactions are recorded into Pak Rupee using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities in foreign currency are translated into Pak Rupee at the rates of exchange prevailing at the balance sheet date. Exchange gains and losses are included in income currently. The financial statements are presented in Pak Rupee, which is the company's functional and presentation currency. 2.15 Revenue recognition Sales are recorded on despatch of goods to customers and in case of export when the goods are shipped. Returns on deposits and investments are recognised on accrual basis. 2.16 Financial assets and liabilities All financial assets and liabilities are initially measured at cost which is the fair value of the consideration given or received respectively. These are subsequently measured at fair value, amortised cost or cost as the case may be. 2.17 Dividend Dividend is recognised as a liability in the period in which it is declared.
61
2009 2008 Rupees 000
3.
SHARE CAPITAL
Authorised share capital 250,000,000 Ordinary shares of Rs. 10 each Issued, subscribed and paid-up capital Ordinary shares of Rs. 10 each 2009 5,386,825 2008 5,386,825 Shares allotted for consideration paid in cash Shares allotted for consideration other than cash Shares allotted as bonus shares 2,500,000 2,500,000
53,868
53,868
26,951,523
26,951,523
269,515
269,515
138,333,496
138,333,496
1,383,335 1,706,718
1,383,335 1,706,718
170,671,844 3.1
170,671,844
As at December 31, 2009 and 2008 Setfirst Limited, UK and its nominees held 134,453,588 shares. Subsequent to the balance sheet date, the shares held by Setfirst Limited, UK have been transferred to S.R. One International B.V., Netherlands. The ultimate parent of the company is GlaxoSmithKline plc, UK. 2009 2008 Rupees 000
4.
RESERVES
Capital reserves Share premium Reserve arising on amalgamation
1,409 375,572 376,981 (2,387) 3,999,970 2,022,817 6,397,381
1,409 375,572 376,981 (12,368) 3,999,970 2,283,590 6,648,173
Fair value reserve - note 4.1 General reserve Unappropriated profit
62
2009 2008 Rupees 000 4.1 This represents deficit arising on revaluation of available-for-sale investments as follows: Deficit on revaluation Deferred tax (3,672) 1,285 (2,387) (19,028) 6,660 (12,368)
5.
5.1
STAFF RETIREMENT BENEFIT - staff gratuity

Movement in liability Opening balance Charge for the year - note 5.5 Payments to the fund Closing balance 20,802 78,476 (40,384) 58,894 23,192 42,437 (44,827) 20,802
5.2
Balance sheet reconciliation Present value of defined benefit obligation Fair value of plan assets 726,452 (523,103) 203,349 (144,455) 58,894 641,237 (446,759) 194,478 (173,676) 20,802
Unrecognised actuarial loss
5.3
Movement in the present value of defined benefit obligation during the year is as follows: Balance at January 1 Current service cost Interest cost Actuarial (gain) / loss Benefits paid Balance at December 31 641,237 41,892 95,570 (6,008) (46,239) 726,452 574,654 37,842 57,511 23,432 (52,202) 641,237
5.4
Movement in the present value of plan assets during the year is as follows: Balance at January 1 Expected return on plan assets Actuarial gain / (loss) Employer's contributions Benefits paid Balance at December 31 446,759 66,289 15,910 40,384 (46,239) 523,103 529,756 52,916 (128,538) 44,827 (52,202) 446,759
63
2009 2008 Rupees 000 5.5 Charge for the year Current service cost Interest cost Expected return on plan assets Recognition of actuarial loss 41,892 95,570 (66,289) 7,303 78,476 5.6 5.7 Actual return / (deficit) on plan assets 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) 12.75 12.75 12.75 60 10 15 15 15 60 15 82,199 37,842 57,511 (52,916) 42,437 (75,622)
As per actuarial recommendation, the expected return on plan assets was determined by considering the expected risk adjusted returns available on the assets underlying the current investment policy. 5.8 Plan assets Plan assets are comprised of the following: - Equity and Mutual Funds - Bonds - Others 2009 % 26.93 52.40 20.67 100.00 2008 % 27.44 67.71 4.85 100.00
5.9
For the year ending December 31, 2010 expected contribution to funded gratuity schemes is Rs. 80.07 million.
5.10 Comparison for five years

2009
Fair value of plan assets Present value of defined benefit obligation Deficit Experience (gain) / loss on plan assets Experience (gain) / loss on plan liabilities 523,103 (726,452) (203,349) (15,910) (6,008)
2008
446,759 (641,237) (194,478) 128,538 23,432
2007 Rupees 000

529,756 (574,654) (44,898) (47,104) 25,082
2006
372,849 (482,634) (109,785) (8,910) 23,080
2005
240,920 (428,947) (188,027) (11,846) 11,884
64
2009 2008 Rupees 000
6.
DEFERRED TAXATION
Credit balance arising in respect of: - Accelerated tax depreciation allowances Debit balances arising in respect of: - Provision for staff gratuity - Provision for doubtful debts - Provision for slow moving and obsolete stock - Provision for slow moving and obsolete stores and spares - Provision for doubtful refunds due from government - Loss on revaluation of available-for-sale investments 360,103 17,339 4,640 9,116 1,852 5,436 1,285 39,668 320,435 344,717 6,347 1,405 6,455 5,945 5,635 6,660 32,447 312,270
7.
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 7.1 Workers Welfare Fund Central Research Fund Unclaimed dividend Payable to Provident Fund Others 878,641 149,870 53,814 26,812 150,575 7,656 910,891 174,769 5,009 9,364 1,269 53,292 15,825 38,554 8,984 39,101 2,524,426 (3,205) 84,474 81,269 81,269 (80,000) 1,269 84,473 403,213 61,643 116,077 30,616 858,467 142,256 6,597 7,871 68,052 30,315 33,409 9,462 14,824 1,867,275 7,801 116,795 124,596 282 124,878 (128,083) (3,205)
7.1
Workers' Profits Participation Fund Opening (asset) / liability Allocation for the year note 24 Interest on funds utilised in company's business note 26 Amounts paid to the Fund Closing liability / (asset)
65
8.
8.1
CONTINGENCIES AND COMMITMENTS

Contingencies Claims against company not acknowledged as debt amounted to Rs. 316.52 million (2008: Rs. 306.48 million).
8.2
Commitments Commitments for capital expenditure outstanding as at December 31, 2009 amounted to Rs. 452.42 million (December 31, 2008: Rs. 103.31 million). Note 2009 2008 Rupees 000 2,343,264 257,550 2,600,814 2,242,144 173,111 2,415,255
9.
FIXED ASSETS - property, plant and equipment

Operating assets Capital work-in-progress 9.1 9.4
9.1
Operating assets
Cost as at January 1, 2009 Additions/ (disposals)/ (write offs)* Cost as at December 31, 2009 Accumulated depreciation/ Amortisation as at January 1, 2009 8,308 30,421 185,118 Depreciation/ Amortisation for the period (on disposals)/ (on write offs)* Rupees 000 975 951 (989) 17,342 (11) Accumulated Impairment Net Book Annual rate of depreciation/ loss as at value as at depreciation/ Amortisation as December 31, December 31, Amortisation at December 31, 2009 2009 % 2009 9,283 30,383 202,449 16,669 26,581 174 17,879 19,442 548,468 2.5 to 10 2.5 2.5
Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Plant and machinery Furniture and fixtures
174 27,162 68,855 738,317
(2,361) 39,210 (29) 240,257 (104,980) 9,704 (9,410) (50) * 81,217 (61,271) (1,526) * 39,351 (2,435) (1,360) *
174 27,162 66,494 777,498
2,272,134
2,407,411
982,660
134,239 1,033,223 (83,676) 7,555 (9,117) (33) * 64,377
27,827
1,346,361
5 to 10
117,653
117,897
65,972
296
53,224
10
Vehicles
307,680
326,100
115,590
50,550 126,263 (39,662) (215) * 55,314 357,567 (2,247) (1,360) * 266,926 1,823,545 (135,702) (1,608) * 231,041 1,693,929 (96,900) (57,742) *
199,837
25
Office equipments
479,939
515,495
305,860
49
157,879
10 to 33.33
December 31, 2009
4,011,914
409,739 4,238,231 1,693,929 (180,486) (2,936) * 578,867 4,011,914 1,617,530 (148,714) (77,263) *
71,422
2,343,264
December 31, 2008
3,659,024
75,841
2,242,144
66
9.2
Reconciliation of opening and closing Net Book Value (NBV)

Cost Accumulated Impairment depreciation / loss amortisation As at January 1, 2009 NBV Cost of additions during the year Cost less Depreciation / (Charge) / NBV as at accumulated Amortisation Reversal December 31, depreciation for the year of impairment 2009 of disposals / loss on write offs* disposals during during the year the year (975) 174 17,879
Rupees 000 Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Plant and machinery Furniture and fixtures 174 27,162 8,308 174 18,854 -
68,855
30,421
18,042
20,392
(1,372)
(951)
1,373
19,442
738,317
185,118
23,645
529,554
39,210
(18)
(17,342)
(2,936)
548,468
2,272,134
982,660
34,052 1,255,422
240,257
(21,304)
(134,239)
(14,698) 20,923 (230) 36 -
1,346,361
117,653
65,972
102
51,579
9,704
(293) (17) * (21,609) (1,311) * (188) - *
(7,555)
53,224
Vehicles
307,680
115,590
192,090
81,217
(50,550)
199,837
Office equipments
479,939
305,860
174,079
39,351
(55,314)
(49)
157,879
4,011,914 1,693,929
75,841 2,242,144
409,739
(44,784) (266,926) (1,328) *
(17,913) 22,332
2,343,264
67
9.3
Details of operating assets sold The details of operating assets sold, having net book value in excess of Rs. 50,000 each are as follows: Description
Cost Accumulated depreciation
2,307 515 957 585 484 438 308 114 46 46 133 153 174 898 724 746 637 637 211 276 348 404 482 281 391 328 330 359 637 637 163 224 276 296 464 135 348 274 1,313 421
Book value
792 1,091 241 145 74 77 94 71 124 79 51 57 1,215 300 336 249 212 212 436 339 116 1,321 641 724 614 677 639 610 212 212 489 427 344 324 155 345 116 190 2,887 548
Sale proceeds
318 800 193 50 57 35 41 1 17 30 2 17 1,259 299 850 246 212 212 300 420 160 1,035 360 600 486 660 645 576 212 212 480 685 551 545 155 288 235 400 4,650 921
Mode of disposal
Tender " " " " " " " " " Tender Tender Company policy " " " " " " " " " " " " " " " " " " " " " " " " " Insurance Claim "
Particulars of purchaser
Rupees 000
Plant & Machinery 3,099 1,606 1,198 730 558 515 402 185 170 125 184 210 1,389 1,198 1,060 995 849 849 647 615 464 1,725 1,123 1,005 1,005 1,005 969 969 849 849 652 651 620 620 619 480 464 464 4,200 969 M/s. Ganatra Salvaging, B-37 SITE, Karachi " " " " " " " " " M/s. Projector Point, 4th Floor,Tawakkal Centre Saddar, Karachi Imran Ahmed, House # 219 Sector 35/B, Korangi # 4, Karachi Mr. Ghulam Sarwar - Ex - Executive Mr.Tariq Rasheed Dar - Executive Mr. Abdul Samad - Executive Mr. Pervaiz Iqbal Awan - Executive Dr. Gohar Nayab - Executive Mr. Zahid Ali Jafferi - Executive Mr. Qiaser Aziz - Ex- Employee Mr. Mushtaq Ali Ansari - Ex - Employee Mr. Badre Munir - Ex - Employee Ms. Fahim Sultana - Ex - Executive Mr. Ehtesham ul Haq - Ex - Executive Mr. Ahmed Jamal Qudsi - Ex - Executive Mr. Javed Akhtar - Ex - Executive Mr. Nasir Ali Khan - Ex - Executive Mr. Jamil Akhtar - Ex - Executive Mr. Jawed Hussain - Ex - Executive Mr. Anwer Mukhtar - Executive Mr. Ghulam Sarwar - Executive Mr. Muhammad Saeed - Ex - Executive Ms. Nida Zubair - Executive Mr. Jawad Gill - Executive Mr. Rizwan Ahmed Khokhar - Executive Mr. Najib Uddin - Executive Mr.Tariq Masood Alam - Ex - Employee Mr. Khalil Ahmed - Ex - Employee Mr. Nadir Magsi - Ex - Employee EFU General Insurance Limited "
Office Equipment Furniture & Fixture Vehicles
68
Description
Cost
Accumulated depreciation
7,494 3,090
Book value
1,500 420
Sale proceeds
2,400 825
Mode of disposal
Tender "
Particulars of purchaser
Rupees 000
8,994 3,510 M/s. Honda Quaideen, 233-A 2 P.E.C.H.S, Karachi Muhammad Asghar - House No.17, Floor No.5, Camble Street, Burns Road, Karachi Mr. Nouman Baig - 89-J, Block II, Khalid Bin Waleed Road, Karachi Mr. Faisal Abdul Aziz - C-30, Block 9, Gulshan e Iqbal, Karachi Muhammad Yousuf - 9, Block 92, Sector 11/F, New Karachi Mr. Zahid Qadri - R-536, Sector 15A/4, Buffer Zone, Karachi Mr. Sajjad Ahmed - House No. 791, Defence Phase 1, Malir Cantt., Karachi Muhammad Farooq - A-5, Al Suleman Arcade, Jacob Lines , Karachi " " " Mr. Sajid Hasan Khan - B-1, Crecsent Arcade, Sector 5K, North Karachi " " " " " Mr. Aftab Ahmed - House No. D/84, Cantt. Bazaar Area, Malir Cantt., Karachi Mr. Adnan Hassan Khan - A-908, Block 12, F.B.Area, Gulberg, Karachi " Mr. Rehan Mithani - D-87/1, Clifton 7, Karachi Mr. Zeeshan Ali Khan - 69-D, P.E.C.H.S., Block 2, Karachi 509 " Muhammad Yousuf - House no. 706 / 218, Muhalla Fatima Jinnah Colony, New Town, Karachi Mr. Intikhab Ahmad - A/115, Block No. 1, F.B.Area, Sharifabad, Karachi Mr. Mir Khatam Khan - C-30, III-N, Block II, K.B.W. Road, P.E.C.H.S. Karachi Muhammad Javed - Babar Filling Station, E-35/A, S.I.T.E., Karachi
1,172 1,059 1,035 983 849 639 609 560 560 609 609 513 509 509 464 560 509 464 509 509 509 464 464 464 464
879 215 776 737 637 394 385 420 420 415 385 385 382 382 348 420 382 348 382 382 382 301 348 348 348
293 844 259 246 212 245 224 140 140 194 224 128 127 127 116 140 127 116 127 127 127 163 116 116 116
892 977 788 769 705 402 552 506 531 530 536 355 374 336 387 526 362 356 358 360 375 421 267 402 452
" " " " " " " " " " " " " " " " " " " " " " " " "
69
2009 2008 Rupees 000 9.4 Capital work-in-progress Civil work Plant and machinery Furniture and fixtures Office equipments Advances to suppliers 103,453 106,491 7,337 24,701 15,568 257,550 33,031 124,238 937 7,081 7,824 173,111
10.
LONG-TERM LOANS TO EMPLOYEES

Reconciliation of the carrying amount of loans to executives and other employees:
2009 Executives Noninterest bearing
Balance at January 1 Disbursements Repayments Balance at December 31 Current portion included in note 15 4,166 2,772 (4,271) 2,667 (1,533) 1,134
2008 Total Executives Noninterest bearing Rupees 000

1,726 6,682 (4,242) 4,166 (2,966) 1,200
Other Employees Interest Nonbearing interest bearing

2,267 2,499 (1,658) 3,108 (118) 2,990 88,334 41,878 (39,474) 90,738 (33,563) 57,175
Other Employees Interest Nonbearing interest bearing

624 2,462 (819) 2,267 (1,312) 955 84,948 46,577 (43,191) 88,334 (28,823) 59,511
Total
94,767 47,149 (45,403) 96,513 (35,214) 61,299
87,298 55,721 (48,252) 94,767 (33,101) 61,666
10.1 These loans have been given in accordance with the terms of employment for purchase of house, motor car, motor cycle, computer and for the purpose of staff welfare and are repayable in 12 to 60 equal monthly installments depending upon the type of the loan. These loans are interest free except certain loans which carry interest ranging from 5% to 8% per annum (2008: 5% to 8% per annum). All loans are secured against the retirement fund balances. The maximum aggregate amount of loans due from executives at the end of any month during the year was Rs. 4.75 million (2008: Rs. 5.06 million). Note 2009 2008 Rupees 000
11.
INVESTMENTS
Available-for-sale Pakistan Investment Bonds Held-to-maturity Treasury bills Less: short term 11.2 644,889 813,576 644,889 168,687 327,366 155,511 171,855 11.1 168,687 327,366
70
11.1 These are held by company's banker for safe custody. The yield on these bonds is 12.25% per annum and these bonds will mature in May 2011. 11.2 These are held by company's banker for safe custody. The yield on these bills is 12.42% per annum and these bills will mature in January 2010. 2009 2008 Rupees 000
12.
STORES AND SPARES

Stores and spares Less: Provision for slow moving and obsolete items - note 12.1 134,529 5,290 129,239 133,071 16,987 116,084
12.1 Stores and spares of Rs. 11.78 million (2008: Nil) have been written off against the provision during the year. 2009 2008 Rupees 000
13.
STOCK-IN-TRADE
Raw and packing materials including in transit Rs. 401.9 million (2008: Rs. 542.3 million) Work-in-progress Finished goods including in transit Rs. 143.0 million (2008: Rs. 84.66 million) Less: Provision for slow moving, obsolete and damaged items - note 13.3
1,550,739 245,411
1,763,245 201,425
2,452,874 4,249,024 187,184 4,061,840
1,659,565 3,624,235 130,181 3,494,054
13.1 Stock-in-trade includes Rs. 50.31 million (2008: Rs. 40.73 million) and Rs. 106.47 million (2008: Rs. 113.41 million) held with Pharmatec Pakistan (Private) Limited and Al-Ghazi Distributors (Private) Limited respectively. 13.2 The above balances include items costing Rs. 196 million (2008: Rs. 353 million) valued at net realisable value of Rs. 159 million (2008: Rs. 317 million). 13.3 Stocks of Rs. 32.76 million (2008: Rs. 37.92 million) have been written off against the provision during the year.
71
2009 2008 Rupees 000
14.
TRADE DEBTS
Considered good GSK Trading Services Limited - Associated company Others Considered doubtful Less: Provision for doubtful debts 11,542 985,373 15,760 1,012,675 15,760 996,915 5,076 1,011,892 4,604 1,021,572 4,604 1,016,968
14.1 The maximum aggregate amount due from the related party at the end of any month during the year was Rs. 14.75 million (2008: Rs. 12.53 million). 14.2 Trade debts of Rs. 0.44 million (2008: Rs. 0.12 million) have been written off against the provision during the year. Note 2009 2008 Rupees 000
15.
LOANS AND ADVANCES - considered good

Loans due from employees - note 10 Advances to employees Advances to suppliers 35,214 25,373 30,728 91,315 57,238 16,816 13,700 87,754 33,101 20,206 65,935 119,242 53,762 21,139 18,476 93,377
16.
TRADE DEPOSITS AND PREPAYMENTS

Trade deposits Prepayments Margins held with banks
17.
REFUNDS DUE FROM GOVERNMENT

Custom duty and sales tax considered good considered doubtful Less: Provision for doubtful receivables 15,436 18,465 33,901 18,465 15,436 15,468 18,465 33,933 18,465 15,468
18.
OTHER RECEIVABLES
Due from related parties - Associated companies - Pension Fund - Workers' Profits Participation Fund Claims recoverable from suppliers Others 18.1 18.2 7.1 82,355 31,212 113,567 7,956 7,633 129,156 57,470 83,712 3,205 144,387 2,917 6,560 153,864
72
2009 2008 Rupees 000 18.1 Due from associated companies GlaxoSmithKline Services Unlimited, UK GlaxoSmithKline Export Limited, UK GlaxoSmithKline Pharmaceuticals (Private) Limited, Pakistan GlaxoSmithKline Limited, Bangladesh GSK Services Corporation, UK GlaxoSmithKline Limited Biologicals, Belgium SB R&D Upper Merion, USA 18,429 14,051 41,437 8,377 61 82,355 36,185 8,377 12,606 302 57,470
18.2 This represents amount receivable from pension fund on discontinuation of the pension scheme in 2007. The pension fund will be wound up after the assets of the Fund have been realised and the liabilities have been settled. 18.3 The maximum aggregate amount due from related parties at the end of any month during the year was Rs. 113.57 million (2008: Rs. 144.39 million). 2009 2008 Rupees 000
19.
CASH AND BANK BALANCES

With banks on deposit accounts on PLS savings accounts on current accounts Cash and cheques in hand 1,545,001 130,384 59,074 4,777 1,739,236 2,630,000 50,502 40,800 3,595 2,724,897
19.1 At December 31, 2009 the rates of mark-up on PLS savings accounts and on term deposit accounts were 5% to 5.5% (2008: 5%) and 10.82% to 11.35% (2008: 10% to 15%) per annum respectively. 2009 2008 Rupees 000
20.
NET SALES
Gross sales Local Export Less: Commissions, returns, discounts and rebates Sales tax 14,669,361 390,370 15,059,731 310,212 30,387 14,719,132 13,397,423 289,640 13,687,063 263,832 20,007 13,403,224 (2008:
20.1 Sales values of pharmaceutical and consumer products amount to Rs. 14.42 billion and Rs. 0.30 billion Rs. 13.17 billion and Rs. 0.23 billion) respectively.
73
20.2 Sales of major product categories i.e. antibiotics, vaccines and dermatologicals during the year amounted to Rs. 5.99 billion, Rs. 1.55 billion and Rs. 1.31 billion (2008: Rs. 5.03 billion, Rs. 1.86 billion and Rs. 1.13 billion) respectively. 20.3 The company sells its products through a network of three distribution channels involving various distributors/ sub-distributors and also directly to Government and other institutions. Sales to only one distributor exceed 10 percent of the net sales during the year, amounting to Rs. 1.5 billion (2008: Rs. 1.38 billion). 2009 2008 Rupees 000
21.
COST OF SALES
Raw and packing materials consumed Manufacturing charges to third party Stores and spares consumed Salaries, wages and other benefits - note 21.1 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 Other expenses Opening stock of work-in-process Closing stock of work-in-process Cost of goods manufactured Opening stock of finished goods Purchase of finished goods Provision for slow moving, obsolete and damaged stock - finished goods Closing stock of finished goods Cost of samples shown under selling, marketing and distribution expenses - sales promotion 7,108,891 136,211 31,814 887,668 238,002 4,191 157,754 48,995 94,139 127 11,647 9,723 167,483 17,913 13,857 80 72,184 29,378 7,699 7,366 20,535 9,065,657 201,425 (245,411) 9,021,671 1,659,566 2,989,569 75,901 13,746,707 (2,452,874) (120,363) 11,173,470 4,912,391 115,585 20,166 827,758 218,633 2,421 152,256 38,146 96,987 1,567 9,294 10,835 141,214 14,541 18,569 805 62,648 25,738 8,093 4,597 21,221 6,703,465 118,537 (201,425) 6,620,577 1,250,190 3,344,404 59,674 11,274,845 (1,659,565) (67,661) 9,547,619
74
21.1 Salaries, wages and other benefits include Rs. 38.04 million and Rs. 22.54 million (2008: Rs. 22.44 million and Rs. 21.19 million) in respect of defined benefit plan and contributory provident fund respectively.
2009 2008 Rupees 000
22.
SELLING, MARKETING AND DISTRIBUTION EXPENSES

Salaries, wages and other benefits - note 22.1 & 22.2 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 Other expenses 612,538 470,436 118,682 163,783 120,831 31,298 34,164 21,513 14,814 13,417 11,600 10,796 9,448 9,370 7,944 2,581 1,013 1,060 18,521 1,673,809 484,198 374,776 70,059 128,507 104,079 28,339 33,611 15,775 10,419 15,172 1,824 12,711 8,562 7,532 7,682 5,912 880 1,107 17,780 1,328,925
22.1 Salaries, wages and other benefits include Rs. 27.85 million and Rs. 16.61 million (2008: Rs. 16.17 million and Rs. 15.17 million) in respect of defined benefit plan and contributory provident fund respectively. 22.2 Salaries, wages and other benefits include staff severance cost of Rs. 29 million (2008: Nil). 2009 2008 Rupees 000
23.
ADMINISTRATIVE EXPENSES
Salaries, wages and other benefits - note 23.1 & 23.2 Depreciation / amortisation Communication Training expenses Travelling and entertainment - note 23.3 Legal and professional charges Repairs and maintenance Donations - note 23.4 Printing and stationery Auditors remuneration - note 23.5 Vehicle running Security expenses Publication and subscriptions Rent, rates and taxes Insurance Canteen expenses Other expenses - note 23.6 301,647 68,145 33,567 28,529 14,264 28,181 19,317 14,572 13,086 11,784 11,390 11,209 8,418 5,817 4,199 4,171 10,518 588,814 239,959 61,488 27,082 16,397 18,980 15,743 33,787 22,452 12,641 11,312 14,568 8,376 7,863 8,985 4,935 4,406 11,242 520,216
75
23.1 Salaries, wages and other benefits include Rs. 12.59 million and Rs. 7.67 million (2008: Rs. 3.83 million and Rs. 6.58 million) in respect of defined benefit plan and contributory provident fund respectively. 23.2 Salaries, wages and other benefits include staff severance cost of Rs. 12.6 million (2008: Nil). 23.3 These are net of recovery from related party of Rs. 1.80 million (2008: Rs. 1.39 million). 23.4 Donations Donations include a sum of Rs. 386 thousand (2008: Rs. 440 thousand) paid to Concern for Children Trust, B/63, Estate Avenue, S.I.T.E, Karachi in which Mr. Muhammad Salman Burney, Chairman / Chief Executive and Mr. Shahid Mustafa Qureshi, Director, are the trustees. 2009 2008 Rupees 000 23.5 Auditors' remuneration Audit fee Fee for review of half yearly financial statements, special certifications and others Taxation services Out-of-pocket expenses 3,000 5,110 2,774 900 11,784 23.6 These are net of recovery from related party of Rs. 75.50 million (2008: Rs. 71.59 million). 2009 2008 Rupees 000 2,750 3,260 4,491 811 11,312
24.
OTHER OPERATING EXPENSES

Workers' Profits Participation Fund - note 7.1 Workers' Welfare Fund Central Research Fund 84,474 38,286 15,825 138,585 116,795 61,246 30,314 208,355
25.
OTHER OPERATING INCOME

Income from financial assets Return on PIBs Return on Treasury Bills Income on savings and deposit accounts Income from non-financial assets Gain on disposal of operating assets Others Scrap sales Insurance commission Service fee on clinical trial studies Others 22,296 75,616 256,976 354,888 29,793 17,768 16,056 6,975 11,135 436,615 37,619 7,056 344,761 389,436 857,078 15,816 12,761 3,418 1,281 1,279,790
76
2009 2008 Rupees 000
26.
FINANCIAL CHARGES
Exchange loss - net Bank charges Interest on Workers' Profits Participation Fund note 7.1 Amortisation of premium on investments 3,329 11,019 14,348 67,400 8,749 282 428 76,859
27.
TAXATION
Current - for the year - prior years Deferred
670,000 (40,000) 2,791 632,791
990,000 55,853 1,045,853
27.1 Relationship between tax expense and accounting profit Profit before taxation Tax at the applicable rate of 35% Tax effect of exempt income Reversal of prior years provision Tax effect of other than temporary differences Effect of final tax regime 1,566,721 548,352 (40,000) 21,186 103,253 632,791 3,001,040 1,050,364 (295,210) 58,657 232,042 1,045,853
28.
EARNINGS PER SHARE

Profit after taxation Weighted average number of outstanding shares Basic earnings per share 933,930 170,672 Rs. 5.47 1,955,187 170,672 Rs. 11.46
28.1 A diluted earnings per share has not been presented as the company did not have any convertible instruments in issue as at December 31, 2009 and 2008 which would have any effect on the earnings per share if the option to convert is exercised.
77
2009 2008 Rupees 000
29.
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 gratuity Amortisation of (discount) / premium 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 in trade and other payables (13,155) (567,786) 20,053 27,927 5,623 57,218 32 24,708 (445,380) 652,006 206,626 2,083,606 (8,885) (1,216,879) (900,121) (38,203) (9,029) 27,674 (570) 224,207 (1,921,806) 160,349 (1,761,457) 633,333 266,926 (22,296) 17,913 (29,793) 78,476 (967) 310,259 1,876,980 231,041 (37,619) 14,541 (857,078) 42,437 428 (606,250) 2,394,790 1,566,721 3,001,040
30.
CASH AND CASH EQUIVALENTS

Cash and bank balances - note 19 Short term investments - Treasury bills - note 11 1,739,236 644,889 2,384,125 2,724,897 2,724,897
78
31.
REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amount charged in these financial statements for remuneration of the Chief Executive, Directors and Executives are as follows:
Chief Executive 2009
Managerial remuneration Bonus and SARs Retirement benefits House rent Utilities Medical expenses Others Number of person (s) 13,040 15,156 3,010 4,854 1,079 102 938 38,179 1
Directors 2009 2008 Rupees 000

10,345 10,279 1,919 4,210 936 137 517 28,343 4
Executives 2009
161,004 72,344 40,548 65,376 14,528 4,964 5,912 364,676 146
2008
11,091 16,467 1,880 4,125 917 29 698 35,207 1
2008
144,703 43,430 24,882 54,593 12,132 3,957 3,243 286,940 127
14,555 10,461 3,651 5,887 1,308 182 713 36,757 3
In addition to the above, fee to two non-executive Directors during the year amounted to Rs. 60 thousand (2008: Rs. 52.5 thousand). The Chief Executive, Executive Directors and certain executives are also provided with free use of company maintained cars and certain items of fixtures and household furniture in accordance with the company policy. Bonus includes Share Appreciation Rights (SARs) and other share options to be settled in cash (subject to tax), payable to Chief Executive, Directors and certain executives, amounting to Rs. 5.42 million, Rs. 3.53 million and Rs. 9.59 million (2008: Rs. 4.24 million, Rs. 4.66 million and Rs. 4.68 million) respectively. These are granted every year and are payable on completion of qualifying period of service. They are linked with the share value of ultimate parent company, GlaxoSmithKline plc, UK.
2009 Rupees 000 2008
32.
TRANSACTIONS WITH RELATED PARTIES

Relationship Holding Company: Associated companies: Nature of transactions Dividend paid a. b. c. d. e. f. g. Royalty paid Purchase of goods Sale of goods Recovery of expenses from related parties Service to associated company Service fee on clinical trial studies Donations 941,175 134,166 4,454,339 99,038 82,850 35,895 6,975 386 125,303 87,689 52,500 129,605 13,656 246 1,344,536 96,577 3,766,212 68,884 73,568 3,418 540 85,377 77,212 240,000 106,722 8,539 1,703
Staff retirement funds: Key management personnel:
a. Expense charged for retirement benefit plans b. Payments to retirement benefit plans c. Receipts from retirement benefit plans a. Salaries and other employee benefits b. Post employment benefits c. Sale of assets
79
32.1 The related parties balances as at December 31, 2009 are included in the respective notes to the financial statements. These are settled in the ordinary course of business. The receivables and payables are mainly unsecured in nature and bear no interest.
33.
RUNNING FINANCE UNDER MARK-UP ARRANGEMENTS

The facilities for running finance available from various banks amounted to Rs. 560 million (2008: Rs. 560 million). The rate of mark-up ranges from one month KIBOR plus 1.75% to three month KIBOR plus 1.70% (2008: from 6% to three month KIBOR plus 0.5%). The arrangements are secured by way of paripassu charge against hypothecation of company's stock-in-trade and book debts. The facilities for export refinance available from various banks amounted to Rs. 10 million (2008: Rs 10 million). These facilities carry mark-up at 1% (2008: 1%) above the State Bank of Pakistan Export Refinance rate per annum. The facilities for opening letters of credit and guarantees as at December 31, 2009 amounted to Rs. 2.38 billion (2008: Rs. 2.17 billion) of which unutilised balances at the year end amounted to Rs. 1.46 billion (2008: Rs. 1.49 billion).
34.
FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

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 Maturity up to after one one year year
Financial assets Loans and advances Deposits Trade debts Accrued return on investments and bank deposits Other receivables Cash and bank balances Investments PIBs Treasury Bills December 31, 2009 December 31, 2008 Financial liabilities Trade and other payables December 31, 2009 December 31, 2008 On balance sheet date gap December 31, 2009 December 31, 2008 118 1,675,385 644,889 2,320,392 2,837,325 2,990 168,687 171,677 172,810
34.1 Financial assets and liabilities
Non-interest bearing Total Maturity Maturity after up to one one year year Rupees 000
3,108 60,469 57,238 996,915 21,503 129,156 63,851 1,329,132 1,396,645 58,309 7,027 65,336 67,499 118,778 64,265 996,915
Total
Total
121,886 64,265 996,915
1,675,385 168,687 644,889 2,492,069 3,010,135
21,503 21,503 129,156 129,156 63,851 1,739,236 168,687 644,889 1,394,468 3,886,537 1,464,144 4,474,279
2,271,127 2,271,127 1,618,781
2,271,127 2,271,127 2,271,127 2,271,127 1,618,781 1,618,781
2,320,392 2,837,325
171,677 172,810
2,492,069 3,010,135
(941,995) (222,136)
65,336 67,499
(876,659) 1,615,410 (154,637) 2,855,498
The effective mark-up rates for the financial assets and liabilities are mentioned in respective notes to the financial statements.
80
34.2 Financial Risk Management (a) Market risk (i) Interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in the market interest rates. As at December 31, 2009, the company's interest bearing financial assets amounted to Rs. 2.5 billion and if interest rates on these net assets had been 300 basis points higher / lower with all other variables held constant, post-tax profit for the year and equity would have been higher / lower by Rs. 45 million and Rs. 41 million respectively. Therefore, the management believes that the company is not materially exposed to interest rate changes. (ii) Currency risk Foreign currency risk arises mainly where receivables and payables exist in foreign currency due to transactions with foreign undertakings. Net payables exposed to foreign currency risk as at December 31, 2009 amount to Rs. 662 million (2008: Rs. 465 million). The liability is mainly denominated in US Dollars and at December 31, 2009, if the Pakistan Rupee had weakened / strengthened by 5% against the US Dollar with all other variables held constant, post-tax profit for the year would have been higher / lower by Rs. 19 million. (b) Credit risk Credit risk represents the accounting loss that would be recognised at the reporting date if counterparts failed to perform as contracted. The analysis of maximum exposure to credit risk resulting from each class of financial assets is as follows:
2009 Rupees 000 2008
Trade debts Loans, advances and other receivables Investments Bank balances
996,915 336,810 813,576 1,734,459 3,881,760
1,016,968 405,048 327,366 2,721,302 4,470,684
Trade debts of the company are not exposed to significant credit risk as the company trades with credit worthy third parties. Trade debts of Rs. 220.91 million are past due of which Rs. 15.76 million have been impaired. Past due but not impaired balances include Rs. 12.59 million outstanding for more than three months. Deposits, loans, advances and other receivables include loans and advances recoverable from employees that are secured against their retirement benefits. Investments represent Pakistan Investment Bonds (PIBs) and treasury bills. PIBs are backed by the Government of Pakistan and therefore have very low credit risk. The treasury bills are of short term nature and therefore have a low credit risk.
81
Bank balances represent low credit risk as they are placed with banks having good credit rating assigned by credit rating agencies. (c) Liquidity risk Liquidity risk reflects the company's inability in raising funds to meet commitments. The company manages liquidity risk by maintaining sufficient cash and balances with banks in deposit accounts and the availability of financing through banking arrangements. As at December 31, 2009 there is no maturity mismatch between financial assets and liabilities that expose the company to liquidity risk.
35.
CAPITAL RISK MANAGEMENT

The company's objectives when managing capital are to safeguard the company's ability to continue as a going concern so that it can continue to provide adequate returns for shareholders and benefits for other stakeholders and to maintain an optimal return on capital employed. The current capital structure of the company is equity based with no financing through borrowings.
36.
DIVIDEND
The Board of Directors in its meeting held on March 03, 2010 proposed a cash dividend of Rs. 5 per share (2008: Rs. 7 per share) amounting to Rs. 0.85 billion (2008: Rs. 1.19 billion).
37.
SIGNIFICANT EVENT
In an extraordinary general meeting of the company held on March 03, 2010 the shareholders of the company have approved the scheme of arrangements for amalgamation of GlaxoSmithKline Pharmaceuticals (Private) Limited (Formerly Bristol Myers Squibb Pakistan (Private) Limited) with the company.
38.
DATE OF AUTHORISATION FOR ISSUE

These financial statements were approved and authorised for issue on March 03, 2010 by the Board of Directors of the company.
82
Form 34 PATTERN OF SHAREHOLDING

NUMBER OF SHAREHOLDERS 999 1,258 894 1,109 267 105 56 35 12 9 7 14 7 4 10 2 1 5 2 1 1 2 2 1 1 2 3 1 1 1 1 1 1 1 1 1 1 1 1 1 4,822 SHARESHOLDING 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 140001 155001 195001 200001 255001 260001 305001 415001 480001 605001 665001 705001 5945001 6230001 6415001 134450001 To 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 100000 110000 120000 130000 145000 160000 200000 205000 260000 265000 310000 420000 485000 610000 670000 710000 5950000 6235000 6420000 134455000 45,344 381,370 619,130 2,596,069 1,871,636 1,287,607 973,574 802,122 325,309 300,037 266,630 591,381 334,632 212,354 587,665 121,919 65,812 362,906 156,356 80,351 95,706 213,929 235,438 125,310 143,150 313,772 595,347 200,157 259,557 261,400 309,743 417,118 484,672 606,947 666,545 707,976 5,945,881 6,233,421 6,419,983 134,453,588 170,671,844 TOTAL SHARES HELD
83
CATEGORIES OF SHAREHOLDERS
a) Sr. No. 1 2 3 4 5 6 7 8 Categories of Shareholders Individuals Investment Companies Insurance Companies Joint Stock Companies Financial Institutions Associated Company Central Depository Company (b) Others (see below) Number of Shareholders 2,181 4 1 11 2 1 2,617 5 4,822 Others: i Mohsin Trust ii The Al-Malik Charitable Trust iii Securities Exchange Commission of Pakistan iv Punjabi Saudagar Co-operative Society v The Anjuman Wazifa Sadat-o-Momineen Pakistan 1 1 1 1 1 5 b) Sr. No. 1 2 3 4 5 6 7 8 Categories of Account holders and Sub-Account holders as per Central Depository Company of Pakistan as at December 31, 2009 Categories of Shareholders Individuals Investment Companies Insurance Companies Joint Stock Companies Financial Institutions Modarabas Foreign Companies Others (see below) Number of Shareholders 2,498 23 12 59 9 3 4 9 2,617 Others: i The Aga Khan University Foundation ii The Pakistan Memon Educational & Welfare Society iii Trustees Kandawala Trust iv Trustees Saeeda Amin WAKF v Trustees Mohammad Amin WAKF Estate vi Managing Committee Karachi Zorthosti Banu Mandal vii Trustees Mrs. Khorshed H. Dinshaw & Mr. Hosh viii Trustees D.N.E. Dinshaw Charity Trust ix Centre for Development of Social Service 1 1 1 1 1 1 1 1 1 9 Shares Held 7,049,550 2,027,481 7,575,179 420,143 13,985,592 34,012 72,796 335,240 31,499,993 23,200 41,897 44,657 45,000 75,000 18,956 35,437 48,093 3,000 335,240 Percentage (%) 4.13 1.19 4.44 0.25 8.19 0.02 0.04 0.20 18.46 0.01 0.03 0.03 0.03 0.04 0.01 0.02 0.03 0.00 0.20 Shares Held 4,661,135 2,139 1 19,863 4,762 134,453,588 31,499,993 30,363 170,671,844 17,283 2,718 1 218 10,143 30,363 Percentage (%) 2.73 0.00 0.00 0.01 0.00 78.78 18.46 0.02 100.00 0.01 0.00 0.00 0.00 0.01 0.02
84
SHAREHOLDING INFORMATION
Categories of Shareholders Holding Company: Setfirst Limited U.K. 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 : Setfirst Limited U.K.
2% 8%
Number of Shareholder
No. of Shares Held
134,453,588
1 1
320 12,653,429
1 1 1 1 1 5
3,125 3 1 1 335 4,378
53
11,048,213
134,453,588
4%
Distribution of Shares
Holding Company Individuals Insurance Companies Financial Institutions Others 79% 7% 4% 8% 2%
7%
79%
85
NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the SIXTY-THIRD Annual General Meeting of the Shareholders of the Company will be held at the Beach Luxury Hotel, Karachi at 11:00 a.m. on Tuesday, March 30, 2010 to transact the following business: 1. (a) (b) 2. 3. To receive and adopt the Repor t of the Director s and the Accounts for the year ended December 31, 2009 and the Auditors' Report thereon; To approve the payment of a dividend.
To appoint Auditors and fix their remuneration. To approve an increase in the authorised share capital of GlaxoSmithKline Pakistan Limited to Rs. 5,000,000,000 by the creation of 250 million ordinary shares of Rs.10/= each.
By Order of the Board
Shahid Mustafa Qureshi Director / Secretary
Notes: 1. 2. The Share Transfer Books of the Company will be closed from March 23, 2010 to March 30, 2010 (both days inclusive) for the purpose of determining the entitlement for the payment of Dividend. 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. The shareholders are requested to notify the Share Registrars of the Company if there is any change in their address.
3.
86
4.
CDC Account Holders will further have to follow the under mentioned guidelines as laid down in Circular No. 1 of 2000 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan. For Attending the Meeting: 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. 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. For Appointing Proxies: 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. The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. The proxy shall produce his/her original CNIC or original passport at the time of the meeting. 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.
A. i)
ii)
B. i)
ii) iii) iv) v)
87
CONTACT DETAILS
Karachi
35, Dockyard Road, West Wharf, Karachi - 74000 Tel: (92-21) 32315478 - 82 Fax: (92 - 21) 32311120 UAN: 111-475-725 F-268, S.I.T.E. Near Labour Square, Karachi - 75700 Tel: (92 - 21) 32570665 - 69 Fax: (92 - 21) 32572613
Sukkur
Plot No. 77/80, Block B, Friends Cooperative Housing Society, Akhuwat Nagar, Airport Road. Tel: (92 - 71) 5630668, 5630144 Fax: (92 - 71) 5630755
Multan
Islam-ud-din House, Mehmood Kot, Bosan Road. Tel: (92 - 61) 6222061-63 Fax: (92 - 61) 6222064
Lahore
18.5 Km., Ferozepur Road, P.O.Box No. 244 Tel: (92 - 42) 5811931 - 35 Fax: (92 - 42) 5820821
Lahore
Cordeiro House, Plot No. 27, Kot Lakhpat Industrial Estate, Kot Lakhpat. Tel: (92 - 42) 5111061- 64 Fax: (92 - 42) 5111065
DISTRIBUTION / SALES OFFICE Karachi

F-268, S.I.T.E., Near Labour Square, Karachi - 75700 Tel: (92 - 21) 32564355 - 65 Fax: (92 - 21) 32570119 94, Deh Landhi, Karachi - 75120 Tel: (92 - 21) 35015040 - 44 Fax: (92 -21) 35015515
Islamabad
Aleem House, Plot No. 409, Sector I-9, Industrial Area. Tel: (92 - 51) 4435701 - 03 Fax: (92 - 51) 4433706
Peshawar
D Souza House, Nasirpur, Near Abid Flour Mills, G. T. Road. Tel: (92 - 91) 2261451-52 Fax: (92 - 91) 2261457
88

Annual Report2009

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Annual Report2009

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THE HOPE OF MILLIONS

50 Review Report to the Members on Statement

86 Notice of Annual General Meeting

Mr. Rafique Dawood Mr. Shahid Mustafa Qureshi

Legal and Regulatory Affairs Director

Dr. Muzaffar Iqbal

Mr. Javed Ahmedjee Dr. Iffat Yazdani

Mr. Pervaiz Iqbal Awan

Mr. Maqbool ur Rehman Mr. Sohail Matin Dr. Atif Mirza

Mr. Tariq Iqbal Khan Mr. M. Salman Burney

Dr. Z. U. Khan Haji Muhammad Hanif

Ms. Fariha Salahuddin

Chief Financial Officer

VISION & MISSION

GlaxoSmithKline s vision is exciting:

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

Grow a diversified global business

Deliver more products of value

Simplify the operating model

Create a culture of individual empowerment

Our Ethical Compass Always Points to Fair Practice

VALUES & BEHAVIOURS

BEST PEOPLE BEST PLACE BEST WORK

John K. Smith opens a drugstore in Philadelphia

Thomas Beecham launches Beechams pills in England

Burroughs Wellcome & Company was founded

SmithKline & Co. acquires French, Richards & Company

SmithKline & French becomes research focused

THE WORLD OF GSK

GSK employs over

99,000 people in 114 countries

prescription medicines and vaccines

Our global HIV/AIDS education and prevention initiative supports programs in

BUILDING PATHWAYS OF HOPE

GSK PAKISTAN CSR INITIATIVES

HEALTH & SOCIAL DEVELOPMENT

GSK GLOBAL CSR INITIATIVES

GSK PAKISTAN SUCCESS STORIES

PRODUCT LAUNCHES 2009

Augmentin Infant Drops: Another Welcome Addition to the Augmentin Family

Axitra All Star!

Launch of Bactroban 5gm Cream & Ointment

HIGHLIGHTS OF THE YEAR FINANCE AND LOGISTICS

RESEARCH AND DEVELOPMENT

ENVIRONMENT HEALTH & SAFETY (EHS)

GLOBAL MANUFACTURING & SUPPLY (GMS)

QUALITY MANAGEMENT SYSTEM (QMS)

Simplification & Standardization

HUMAN RESOURCE DEVELOPMENT

The Spirit of GSK

LEARN GROW BE INSPIRED

Best Place, Best People & Best Work

Key Learning Statistics 2009

OUR FLAGSHIP PRODUCTS

Consumer Health Products

AWARDS FOR EXCELLENCE

Best Corporate Report Award 2008

Corporate Social Responsibility (CSR)

Best Performance Award Environment

Mr. M. Salman Burney

Mr. Tariq Iqbal Khan

Mr. Rafique Dawood

Mr. Shahid Mustafa Qureshi