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Inspiring Lives
At GSK we strive to achieve the best results and maximize impact by providing value
to our customers. Our people are inspired by our vision of a happier, healthier world
and work towards achieving it with passion and enthusiasm. We believe that each
life we touch through quality healthcare products and various corporate social
responsibility initiatives inspires them to
01 Corporate Information 42 Vertical Analysis
03 Vision & Mission 43 Horizontal Analysis
04 Values & Behaviours 44 Financial Statements 2011
05 Strategic Priorities 46 Statement of Compliance with the Code
06 Ethical Conduct of Corporate Governance
07 History of GSK 48 Review Report to the Members on
09 Touching hearts. Inspiring lives. Statement of Compliance with Best
14 The World of GSK Practices of Code of Corporate
15 GSK Pharma Launches 2011 Governance
16 Stiefel & Medical Affairs 49 Auditors' Report to the Members
17 GSK Consumer Healthcare 50 Balance Sheet
18 Quality Management System 52 Profit and Loss Account
20 Environment, Health & Safety 53 Cash Flow Statement
21 Journey Towards Sustainability 54 Statement of Changes in Equity
22 Our Flagship Products 55 Notes to and forming part of the
24 Growing People to Grow the Business Financial Statements
28 Directors' Profiles 83 Pattern of Shareholding
30 Board & Management Committees 84 Categories of Shareholders
31 Directors’ Report to Shareholders 85 Shareholding Information
35 Chairman/Chief Executive's Review 86 Notice of Annual General Meeting
38 Financial Performance at a Glance 88 Factories and Distribution / Sales Offices
39 Statement of Value Added 89 Proxy Form
40 Key Operating and Financial Data
Corporate Information
Board of Directors Management Committee Company Secretary
Mr. M. Salman Burney Mr. M. Salman Burney Mr. Shahid Mustafa Qureshi
Chairman / Chief Executive Chairman / Chief Executive
Chief Financial Officer
Mr. Rafique Dawood Dr. Muzaffar Iqbal Mr. Yahya Zakaria
Non-Executive Director Technical Director
Bankers
Mr. Husain Lawai Mr. Shahid Mustafa Qureshi Citibank NA
Non-Executive Director Legal, Corporate Affairs, Standard Chartered Bank
Industrial Relations, (Pakistan) Limited
Mr. Mehmood Mandviwalla Administration & Regulatory HSBC Bank Middle East Limited
Non-Executive Director Affairs Director/ Company Habib Bank Limited
Secretary
Dr. Muzaffar Iqbal
Technical Director Auditors
Mr. Yahya Zakaria
A. F. Ferguson & Co.
Director Finance
Mr. Shahid Mustafa Qureshi Chartered Accountants
Legal, Corporate Affairs, Industrial Ms. Erum S. Rahim
Relations, Administration & Director Marketing and Business Legal Advisors
Regulatory Affairs Director/ Development Rizvi, Isa, Afridi & Angell
Company Secretary Mandviwalla & Zafar
Mr. Maqbool ur Rehman Orr, Dignam & Co.
Ms. Erum S. Rahim Sales Director Surridge & Beecheno
Director Marketing and Business Vellani & Vellani
Development Mr. Pervaiz I. Awan
Sales Director Registered Office
Mr. Maqbool ur Rehman 35 - Dockyard Road, West Wharf,
Sales Director Mr. Sohail Matin Karachi - 74000.
Country Manager - Consumer Tel: 92-21-111-475-725
Mr. Yahya Zakaria Healthcare (111-GSK-PAK)
Director Finance Fax: 92-21-32314898, 32311122
Dr. Atif Mirza Website: www.gsk.com.pk
Ms. Fariha Salahuddin Director Medical Services
Director Human Resources
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Mr. Husain Lawai

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Mr. M. Salman Burney

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Member

Mr. Mehmood Mandviwalla

Member

01
Vision
GlaxoSmithKline’s vision is inspiring:

“The opportunity to make a difference to the lives of billions of people”

At GSK we perform in unison, by following our value system and ethical guidelines as a
source of guidance and inspiration, which helps us achieve our vision.

Each and every member of the GSK family plays a vital role in improving the quality of
human life. GSK’s growth and development can be attributed to the contribution of the
skills, talents and ideas of its people.

GSK follows its core values of transparency, integrity, respect for people and patient focus.
We are proud of our commitment that enables us to enhance the quality of peoples’ lives
and helps us to provide them with quality products.

Mission
GlaxoSmithKline’s quest is to improve the quality of human life by enabling people to

At GSK our mission acts as an underlying principle to whatever we do. We follow a

legacy of great science and innovative healthcare that helps people around the
world live healthier and fulfilled lives, every single day.

03
 Our Values Our Behaviours
Respect for people GSK fosters a dynamic learning culture, which
thrives on innovation and flexibility. We do this so
We believe that respecting each other is the key to that we can provide the best customer-centric
progress and growth for everyone: our business, health solutions by adapting to the changing needs
employees and customers. Therefore, the culture of the healthcare market. Therefore, our work is
at GSK celebrates diversity and achieving goals embodied by six behaviours:
with team work and cooperation.
Flexible thinking
Patient focused
We explore multiple options for problem-solving.
Our commitment to our purpose of improving the Enable and drive change
lives of billions ensures that all our efforts, be it
research, manufacturing or distribution are geared Our ideas are executed to realize benefit for
towards improving patient access to quality health customers and business growth.
solutions.
Continuous improvement
Transparency
We not only excel in what we do, but find
We are committed to building and streamlining innovative improvements to current practices.
existing systems to eliminate any possibility of
unfair practices. This has been possible only Customer driven
because of our employees, who are honest and
Our philosophy of improving the lives of billions of
fair in everything they do and take personal
people is at the heart of everything we do.
responsibility for all their actions.
Developing people
Integrity
Empowered employees take initiatives and provide
Our guiding principles go beyond complying with creative solutions to challenges.
legal and ethical regulations. Each member of the
GSK family takes pride in making decisions which Building relationships
are not only profitable but are morally sound, each
has the sincere intent of benefiting the patients, Trust and openness inculcated in everything we do.
which has helped us foster long-term relationships. It helps us to foster long-lasting partnerships.

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04
Strategic Priorities
By focusing our business around our five strategic priorities, we are 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.

Deliver more products of value

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

Simplify the operating model

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

Create a culture of individual empowerment

Empowerment is key to achieving our goals and we ensure that our
employees receive the tools and inspiration they need to make decisions
with confidence and accountability.

Building trust
We see building trust as a fundamental platform. Essentially, without trust,
we don’t have a business.

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05
 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 relationships with customers and fellow employees that 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 report 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 investigation 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, training

and communication on ethical behaviour and legal compliance relevant to
their duties for the company.

The company maintains policies regarding prevention of corrupt Longer Do

practices & maintenance of standards of documentation.
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06
History of GSK
In 2001, Glaxo Wellcome and SmithKline Beecham merged to form GlaxoSmithKline,
to become one of the largest pharmaceutical companies in the world.

The path to today’s leading research-based pharmaceutical company started with

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

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

1830 - John K. Smith opens 1842 - Thomas Beecham 1880 - Burroughs Wellcome
a drugstore in Philadelphia launches Beecham’s pills in & Company was founded
England

1891 - SmithKline & Co. 1906 - Glaxo is registered by 1929 - SmithKline & French
acquires French, Richards & Joseph Nathan & Company as becomes research focused
Company a trademark for dried milk

1989 - SmithKline & Beecham 1995 - Glaxo & Wellcome 2001 - GlaxoSmithKline
merge merge

07
 D r e am Smile Mo
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Touching hearts. Inspiring lives.
GSK is devoted to excellence and aims to conduct business practices
aligned with our values of commitment to transparency, respect for
people, demonstration of integrity and patient focus. Our operations are
led by our values and principles where we put patients first in our
decision making to ascertain that we help them to “Do More, Feel Better
and Live Longer”.

In accordance with GSK's core philosophy, we invest in community

partnership programmes that seek to improve access to medicines and
healthcare around the world and create opportunities in education
and economic development.

At GSK, corporate citizenship is reflected in the way that work progresses

at various levels. As a research based company, we find it essential to
embrace ethical practices, employ sound marketing plans and give
priority to environmental sustainability and community development.

09
 GSK at the heart of the Community
GSK aspires for a real difference to communities where we collaborate with partners to solve
healthcare challenges in an innovative manner. We are investing in developing world healthcare
infrastructure and in 2011 we have set up new partnerships with AMREF, Save the Children and
Care International to deliver future investments.

Our programmes include:

PULSE:

The PULSE Volunteer Partnership programme is an

integral part of GSK's commitment to serving
communities around the world by empowering
employees to volunteer their professional expertise
towards sustainable change.

Launched in April 2009, PULSE is an initiative that

empowers employees to make a sustainable
difference for communities and patients in need.
Employees are given an opportunity to use their
professional skills and knowledge during a three or
six month immersion experience within a non-
profit or non-governmental organization (PULSE
Partner). Through this experience, volunteers
address a clear partner need whilst developing their Eliminating Lymphatic Filariasis (LF):
own leadership capabilities.
We work in partnership to eliminate LF, one of the
So far, PULSE has placed nearly 200 Volunteers world's most disabling diseases, through the
from 26 countries working with 58 Partners in 39 Global Alliance to Eliminate Lymphatic Filariasis.
countries. Over 556 million Albendazole treatments have
been donated to 26 countries.

Expansion of our Albendazole Donation:

We announced in 2010 that we would expand our

donation of Albendazole to enable treatment of
school-aged children in Africa against intestinal
worms from 2012 onward.

Disaster Response:

We donate cash and urgently needed medicines to

people affected by emergencies and natural
disasters.

African Malaria Partnership: In 2011, Thailand was hit by the worst ever floods
in 50 years while Cambodia encountered the worst
We are working with Save the Children and other flooding in over a decade. Under such adverse
partners to improve access to treatment and circumstances, GSK partnered with different NGOs
prevention of malaria in Sub-Saharan Africa. This to donate urgently needed medical supplies, food,
programme works through education of water filters and hygiene kits amongst stranded
communities and training to help the community flood victims.
heath volunteers diagnose cases of severe malaria.

10
Our work with the Community in Pakistan
GlaxoSmithKline Pakistan adopts the spirit of corporate citizenship and every member of the
GSK family endeavours to support various programmes ranging from healthcare, education,
social development to relief efforts in Pakistan.

Center of Nursing Excellence: GSK also donated generously to support CFC's

flood relief efforts by providing blankets and
The Center of Nursing Excellence was established in medicines free of cost for the medical camps set up
2008 to produce teachers for existing schools of in remote locations in the province of Sindh.
nursing in Pakistan with a GSK approved donation
of £ 250,000 to be provided over a period of 3
years with the plan to ultimately make the project
self sustainable.

Flood Relief Efforts, 2011:

The 2011 floods in Pakistan caused severe damage

Currently, the sixth batch of students is undergoing in the province of Sindh and differed from last
thorough training and approximately 150 students year's catastrophe as the extent of the damage
have graduated through the programme, was primarily limited to one province affecting
significantly improving the standard of nursing close to 9 million people.
education in Pakistan as it is estimated that a single
well trained nursing teacher could eventually
impact the care of 40,000 patients each year by
teaching an average of 100 new nurses.

Concern for Children Trust:

Concern for Children has engaged in community

driven development projects and sustainable
development in Machar Colony Karachi, a coastal
community at the perimeter of the metropolis since
its inception in 1997. Their programmes have been
divided into 2 thematic areas, Health and
Education.

With GSK's support, CFC established the Child

Health Clinic (MCH) in 1999 which is located in the
busiest area of Machar Colony.

11
 Donation of Essential Items:

Having assessed the needs of the flood victims,

GSK Pakistan sought to serve 2 of their basic
requirements, food and essential medicines.

GSK Pakistan partnered with agencies having

logistical capability like Pakistan Navy, Air Force
and Pakistan Medical Association. GSK also
supported NGOs with grass root capability in their
flood relief efforts such as the Muslim Aid and
Janum Network.

Employee Initiative:

GSK employees depicted their true sense of

empathy for the flood victims and just like last year Shining an Orange Day light on Pakistan's Youth:
they stepped up to help the flood affectees
reconstruct their lives by personally delivering The Annual Orange Day is a GSK initiative that
essential relief items in remote flood affected areas allows employees to take one fully paid day to
like MirPurKhas, TandoAllahYar and Umerkot. volunteer for a chosen community project,
organization or cause which they support.
With winter fast approaching, employees also Employees, supported by GSK, give their time and
donated in kind items with over 13 cartons of energy to help and support their local community.
donations such as bedding and warm clothes for This not only benefits local non-profit organizations
the flood affectees which were donated to Edhi but is also very rewarding and creates memorable
home. team building opportunities.

This year, GSK Pakistan decided to take the

opportunity to inform the youth of the country
about the various career opportunities available for
them. Through this event, we focused on
“Pakistan's tomorrow” by engaging with around
200 senior students from underprivileged schools
like Teach for Pakistan and SOS Childrens’
Village.

Corporate Donation to TDRP:

GSK also donated £ 25,000 to the Thardeep Rural

Development Programme, an NGO dedicated to
rural development in Sindh for 13 years. The
donation was based on a thorough analysis of the
needs of the flood victims and was hence divided
equally between food ration bags and warm
clothes/blankets.

12
Staying true to its spirit of helping the community see it” and it was indeed heartening to get a
to Do More, Feel Better and Live Longer, GSK glimpse into the students' insight about the future
Pakistan organized the Orange Day 2011 on 19th of our country.
December. This year, the purpose of the event was
to do something meaningful for the children by
providing them information which will guide them
in creating a prosperous future for themselves. The
event was divided into 2 broad sections, whereby
the first half of the event was an informative career
counseling session. Individuals from various walks
of life were invited to speak at the event in order to
inspire the students to follow their dreams and
make the right career choice. There were internal
speakers from within GSK who spoke about their
professions and represented doctors, pharmacists,
marketers, financiers, teachers and graphic
designers. In order to make the event more exciting
for the students, several external speakers and
renowned individuals from the following fields
were also invited to the event: journalism, culinary,
music and navy. This event provided students the
opportunity to learn about several career options The amount of enthusiasm and energy depicted by
and the way to achieve success in them. the GSK volunteers before, during and after the
event was overwhelming. All volunteers took time
off to get involved and their efforts translated into
hundreds of bright smiles on the faces of our
guests.

A fun filled painting activity was also arranged for

the students which provided them the opportunity
to represent their inner most thoughts about the
future of Pakistan using colors, creativity and their
imagination. GSK volunteers were there
throughout the activity, helping the students to put
their thoughts down on to the canvases and a large
beautiful wall containing the ideas of Pakistan's
youth about its future was created. The theme of
the painting activity was “Pakistan's tomorrow-As I

13
 Discover the world of GSK

Augmentin became the first ever

GSK is ranked No. 1
3 billion product in
in terms of Value
Pakistan during 2011

GSK is ranked No.

1 GSK is ranked No.
1
in terms of Volume in terms of Prescription

GSK has 8 products in the GSK has 10 products in the

top 20 products in terms top 20 products in terms
of Value of Volume

GSK has 6 products in the Approx. 600,000

top 20 products in terms prescriptions are written

everyday for GSK products
of Prescription in Pakistan

Approx. 4.3 million

Approx. 10 million GSK
tablets are consumed each teaspoons of GSK products
are consumed each day in Pakistan
day in Pakistan (1 teaspoon = 5 ml)

Source: IMS PKPI Q3, 2011 and IMS MIP S1, 2011

14
GSK Pharma Launches 2011
GlaxoSmithKline Pakistan is proud to have launched 5 new products in the year 2011. All these
products satisfy specific patient needs and tremendous time and effort has been devoted in
ensuring maximization of opportunity and provision of patient benefit.

Votrient (Pazopanib) is part of a new era of

cancer treatment molecules called Targeted Cell
Therapy, which is different because it only targets
and affects cancerous cells, unlike traditional
chemotherapy which targets healthy cells as well.

Synflorix, a revolutionary award winning new

generation pneumococcal conjugate vaccine
provides broad coverage against the dreaded
Invasive Pneumococcal Disease (IPD) like
Pneumonia, Meningitis, Sepsis and Acute Otitis
Media (AOM).

2011 marked another landmark in the illustrious

history of GSK Pakistan, heralding a new era in
the treatment of Urological disease. GSK took a
single step forward towards Benign Prostatic
Hyperplasia Management (BPH) as Duodart
was launched in Pakistan.

Avamys (Fluticasone Furoate) is a novel Intra Nasal

CorticoSteriod (INCS) launched in Pakistan in 2011
for the long lasting treatment of nasal and ocular
symptoms of Allergic Rhinitis in an easy to use and
innovative device.

FixVal (Cefixime), a third generation Oral

Cephalosporin for the treatment of Lower
Respiratory Tract Infection, Typhoid and
Gastroenteritis was launched in 2011 as a brand
for one of the fastest growing molecules in the
pharmaceutical industry. FixVal was launched
under the Value Health banner that provides
access to quality medicines for patients.

15
 Stiefel
For more than 160 years, Stiefel has remained a driven, pioneering force in the pursuit of
tomorrow’s skin health solutions. Today, Stiefel, a GSK company since 2008, is a specialized
business unit within GlaxoSmithKline and is focused exclusively on skin health. It has
broadened its portfolio in both prescription medications and signature skin care dermatology
products by leveraging the R&D facilities and commercial focus of GSK, hence fostering
greater capabilities to treat even more skin conditions.

Stiefel Pakistan continues its mission to triple the consumer business, double the prescription
business and to be the number 1 dermatology company in Pakistan.

Medical Affairs
In 2011 GSK Medical Affairs created a therapeutic area wise team to conduct Scientific
Engagement activities for the exchange of information between GSK and external
communities in accordance with our global initiative to drive a value-based culture.

In the year 2011, Study Accountable Persons (SAPs) were identified at country level to fully
empower for quality actions while WISDOM (Worldwide Integrated System for Drugs &
Medical information) was launched to increase GSK’s efficiency in alignment with global
processes of providing medical information to healthcare professionals.

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GSK Consumer Healthcare

Sensodyne Mega Re-launch

Marking the brand’s 50th anniversary, GSK

CHC announced the re-launch of Sensodyne,
the leading toothpaste for dentine sensitivity, in Launch of Junior Horlicks
Pakistan in 2011.
GSK launched Junior Horlicks for children aged
2 to 5 in 2011. It is heartening to note that
Junior Horlicks has been extremely well received
by both Consumers (Kids) and Customers
(Moms), and the brand has performed
extremely well on all parameters since its
launch.

Horlicks Wins Brands of The Year Award!

Parodontax launched in Pakistan
Horlicks made GlaxoSmithKline Pakistan proud
when it became the recipient of the prestigious A new toothpaste to help prevent bleeding
'Brands of the Year Award'. Horlicks was gums called “Parodontax” was launched by
nominated for the award in the Nutritional GSK in 2011. Parodontax is a brand which is
Supplements Category and was identified more than 70 years old, is well known for its
through Consumer Research as the brand of effectiveness and herbal ingredients to treat
choice for consumers. The brand received a Gingivitis and Periodontitis.
rating of A+ by the Brands Awards Council
Survey*.

*Brands Foundation has the legal mandate to conduct brands

audit, qualitative study, quantitative survey, market analysis &
brands rating in Pakistan in order to arrive at the 'Brands of
The Year' award winners.

17
 Quality Management System (QMS)

Through technical and personal mastery of all our processes

and systems we will, by first intent, confidently deliver:

The right products to patients and customers at the right time

and cost.

Our Focus is on:

Quality Foundation – Product focus for patient benefit

Quality People – Developing our people

Quality Future – Building future capability

Technical and R&D Interfaces

Emerging Markets and Acquisitions

Empowerment and Leadership

Compliance

Efficiency and Capability

Quality Management System

Quality Management System provides GSK with a practical approach for moving towards
a proactive quality culture whilst maintaining and improving compliance. QMS is subject
to continuous review to meet the changing needs of the business that includes:

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Alignment of site quality activities with

direction set through GMS Quality Intent
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and GMS Quality Initiatives

Initiatives to align QMS with Operational

Excellence; embed OE in all processes
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18
 Maintain visual displays for Key Performance
Indicators

Projects driven through technology transfer

validation (including product, process, cleaning
and computer validation)

Lab Efficiency Project - Flow of process for testing

all the products and raw materials (Flow Star)

Develop alternate sources to ensure continued

supply

Install Electronic Verification System for primary and

secondary components to avoid material mix up

Developments at GSK:

Rationalization of bulk sample size for testing of

certain injectable - an initiative to enhance
improvement in yield / batch leading to financial
benefits and reduction of sampling waste

Reduction in microbial limit test of topical ointments

from every batch to validation batches only based
on retrospective data and risk analysis - a process
improvement initiative that resulted in prompt
availability of products to commercial

Lean documentation through harmonization -

packaging component specification sheets
merged as per the materials classification to
simplify the process flow and improve process
efficiency

Development of system statistical calculation of

microbiological assay - an automation initiative
progressed to improve process efficiency and
ensure method reliability

19
 Environment, Health & Safety

To create a no injury and no illness culture, Near-

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To avoid any injury due to moving parts, an

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ambitious programme of physical guarding and

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Lock Out Tag Out (LOTO) was launched with the
aim of Zero Access to any hazardous condition.
Engineering teams worked hard and brought a
step change in machinery safety standards at all

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Annual Environment Excellence Award

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GSK received the “Annual Environment Excellence

Award” from the National Forum for Environment
and Health, an independent NGO advocating
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environmental-friendly practices, healthcare

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GSK is committed to continuous improvement in

energy and resource consumption as part of
sustainability initiatives. We have achieved 6%
reduction in energy consumption and 3%
reduction in water consumption at our operations
despite increased manufacturing volumes. All the
sites have waste water treatment facilities meeting
the National Environmental Quality Standards of
EPA Pakistan.

20
A Journey towards Sustainability
GSK has globally shifted its Energy Reduction
target from Units Consumption to Carbon
Dioxide Emissions.

Fast paced advancement and development in

technology is the most common practice,
currently followed by leading organizations
throughout the world, however fact remains that
resources are scarce. Energy is one of the most
vital resources that drives the world.

Energy Conservation and Environment Protection

have been the prime targets to achieve for the
sustainability of the business and betterment of
the society at GSK Pakistan.

Energy targets are now measured in terms of

Carbon Dioxide emissions every year by each site.

At GSK Pakistan, projects like Energy Efficient

Utilities Equipment, Automation of Power Controls
and moving towards energy efficient process
substitutes have caused more than 10% reduction
in CO2 emissions.

The encouraging aspect is that savings in energy

consumption are not just attained from investments
in these projects, but also from energy conscious
behaviour cultivation at floor level. With same pace
of projects, initiatives and positive behaviour in the
team, a sustainable, environment friendly growth of
business is promised by GSK Pakistan through
reduction in CO2 emissions.

21
 Our Flagship Products - Our Pride

22
23
 Growing People to Grow the Business
GSK employees are a talented and assorted workforce, making GSK a dynamic place to
work. We enable our employees to be creative, resulting in innovative solutions for our
customers and the local community. Our success, therefore, is shaped by our people.
On the path to growth, empowerment and teamwork, GSK endeavours to fully employ the
skills, abilities and energies of every employee. We strongly believe that our efforts flourish
when we are working together and moving forward in one direction.

Our diverse human resource gains strength as we nurture our talent with world-class
training and development, meaningful assignments, and networking opportunities.

HR Transformation

At GSK, the Human Resource function does not simply perform activities, instead it aims to
build organizational capability. In order to redesign, reengineer and upgrade HR as a critical
contributor to business success, a One-HR model has been launched for all businesses across
GSK Pakistan, Iran & Afghanistan.

Moreover, to educate Business Managers on HR Transformation and the new ways of

working, HR Transformation awareness sessions were conducted across Pakistan.

By accomplishing transformation successfully with simplified processes, GSK envisions HR

to be center stage as the business faces new changes and challenges.

GSK Pakistan Community Web Page

GSK proudly launched, for the very first time, its Community Web Page which went live in
2011. Whether it be announcements of new hires, promotions, product launches or sales
trends for the year, the GSK family is now able to stay connected and updated with GSK
initiatives.

Respect at Work Roll Out

At GSK we are committed to ensuring a workplace free of bullying and harassment. This
commitment is based, in part, on the need to ensure that our company complies with the
respective laws. However, we are also committed to providing a pleasant working
environment for all employees and encouraging good working relationships
between employees.

In order to ensure standards are maintained, HR and Compliance joined hands and visited
various locations in 2011 to roll out “Respect at Work” initiative.

We also expect that our employees must ensure that they do not encourage harassment.
For that matter, all employees were provided with contact and process details in case such
a situation arises.

Exporting Talent

GSK encourages its employees to take on assignments within GSK's Global Network, to gain
exposure and the know-how to benefit themselves and GSK.

24
Employee Development

At GSK, all employees must adhere to defined Code of Conduct and Ethical Policies. This is
ensured through initial training of all new employees and refresher sessions for the existing
ones. All employees must undergo mandatory training programmes on privacy, appropriate
use of technology, ethics and Code of Conduct.

Apart from these policy awareness initiatives, we have a high focus on on-the-job training for
ongoing development of our employees. This includes giving and receiving feedback from
colleagues, peers and line managers to increase self-awareness and thus ensure self
development.

At GSK Pakistan we ensure that our employees are aware of our values, aligned with our
strategies, motivated to achieve their goals and engaged to do their very best.

l Better Live
M ore Fee Lo
Do ng e
e r rD
ng o
Lo M
e

or
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e
er

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tt

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Be

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25
 “At GSK there is continuous focus on growth
and development of each and every employee.
Working to help identify and develop yearly
development plans with regular 360 degree
More Feel Be
feedback, participation in cross functional Do tte
and cross country projects, opportunities to r L
gain leadership experience - all these tailored

ive
to individual employee assessments - are

Lo
inherently what helps GSK retain the best

ng e
employees and run a strong successful
business.”

r Do More F
“At GSK hard work is always rewarded,
innovation appreciated and initiative

e
encouraged! I have had seven years of

el
development and growth opportunity at
GSK managing various portfolios in Sales
Dr.Rabia Shah Training, Marketing and Medical which has
Manager, Marketing added to my professional and personal life.
Initiatives & Excellence This diverse experience has motivated me to
go an extra mile with the assurance that GSK
is, beyond doubt, interested in grooming and
rewarding its employees.”

“My career at GSK began as an HR Trainee

and during that time my effort and hard work
was immediately recognized. A year and a
half later, I am now the Assistant Manager HR
Compliance at GSK with potential for growth
and progression. During this time, I have
always been groomed by my seniors to work Dr.Asma Kamran
independently and to shoulder responsibility Medical Manager,
very early on which ensured immense learning Internal Medicine
for me. As an employee at GSK, I am proud to
say that the development opportunities at
GSK are unparalleled.”

“I have found GSK to be an ideal place

for personal development. Every new
Sehrish Ahmad day brings with it greater job enrichment
Assistant Manager, along with more opportunities to excel.
HR Compliance The increasingly collaborative structure
with cross-border teams has rendered a
More Feel

unique corporate exposure even as I

continue to work locally.”
o
rD
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on o
Mo
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eel Better Liv

Talal Ahmed
Manager, Planning &
Budgeting Pharma

26
 “It is an honour for me to be a part of the GSK
o More Feel
family. GSK is a company which gives its employees
D the opportunity to outshine and reach their
g er maximum potential by empowering and
on equipping them with apt knowledge via
L

continuous training and improvement. GSK also

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ensures that its employees are consistently

recognized for their contributions both locally and
eel Better

globally. This kind of recognition leads to a high

sense of citizenship and commitment towards the
achievement of success for the organization.”
M ore F
o D

Ayesha Muharram
Country Compliance,
“I started off my career with GSK 10 years ago Officer
and I have come a long way because in this tenure
countless opportunities have come along,
providing me the chance to hold five different
positions. I have managed to self develop and
help others as well through in-house as well as
local and international trainings.

It would be right to say that I still see a long road

ahead of me at GSK with new challenges and
many opportunities.”

“As a female employed in the profession of

Sales, I believe that I could not have opted for
Babar Ali Bozdar an organization better than GSK Pakistan. The
Manager, QA Compliance reason for that is, GSK always seeks to provide
GMS F268 a sense of security to its employees. At GSK, I
feel that my present and future are both
More Feel

protected by the organization with respect to

the benefits that we receive in return of our
efforts. I am fortunate to be part of an
organization in which employees feel
empowered to achieve their developmental
o

goals.”
rD e
ng

o Do
iveL Mo
L re Fee etter
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Nadia Bano
Product Specialist,
Oncology

27
 Directors’ Profiles
Mr. Maqbool ur Rehman
Mr. Maqbool ur Rehman joined SK&F in 1975 as a Medical Representative.
He has worked throughout the country in the capacity of First Line Sales
Manager, Second Line Sales Manager and subsequently National Sales
Manager followed by Business Unit Head. Currently, he is working as
Director Sales for Business Unit ll, Afghanistan Business and Animal Health
Division. Mr. Maqbool ur Rehman has done his MBA in Marketing and has
been part of teams that have achieved historical landmarks like Augmentin’s
first ever billion and Amoxil’s 1.5 billion milestone within the industry. He
has also been the proud recipient of GSK’s Presidential Award. He has in-
depth understanding of industry dynamics and geo-economic
influences along with expertise in the healthcare business.

Mr. Mehmood Mandviwalla

Mr. Mehmood Mandviwalla is the Senior Partner of the law firm,
Mandviwalla & Zafar. He obtained his LLB (Hons) from the London
School of Economics and Political Science and was declared a
Barrister from the Hon'ble Society of Lincoln’s Inn. He has been in
commercial law practice for over 27 years. He is on the Board of
Directors of Pak Oman Microfinance Bank Limited and Karachi
Garment City. He is also a member of the Board of Governors of the
British Overseas School and Trustee of ICI Pension Fund.

Mr. M. Salman Burney

Salman Burney is the VP/GM for GSK Pakistan, Iran and
Afghanistan. He joined the company in 1992 as Director
Marketing & Sales and was appointed MD, SmithKline Beecham
in 1997 with additional responsibility for Iran and the Caspian
Region. He held the position of VP/GM for GSK in Pakistan at
the time of GSK’s integration and is currently responsible for the
GSK pharmaceutical business in Pakistan, Iran & Afghanistan.
He has a degree in Economics from Trinity College, University of
Cambridge, UK and began his career with ICI Pakistan in Sales &
Marketing within various roles in Pakistan, African/Eastern
Region at ICI plc, London and as General Manager of ICI’s
Agrochemicals & Seeds Business.
Salman Burney has been the President of Pakistan’s Foreign
Investors Chamber and as Chair of the MNC Pharma Association
has led the industry interface with government on various issues.

Erum Shakir Rahim

Erum Shakir Rahim started her career in the media and worked in
advertising and journalism. She joined SmithKline Beecham in
1992 as Creative Services Manager and has since held various
roles within the organization across the Consumer Healthcare
and Pharmaceutical side of the business. In 2006, she was
appointed Director Business Development and is currently
working in the capacity of Director Marketing and Business
Development, GlaxoSmithKline Pakistan, a position that she has
held since 2007. She is a member of the Board of Directors at
GSK Pakistan and is also a Trustee for Concern for Children and
Trust for Health and Medical Sciences.

Mr. Shahid Mustafa Qureshi

Mr. Shahid Mustafa Qureshi holds Masters degrees in Law and
Public Administration from renowned universities and is a Director
and Company Secretary at GlaxoSmithKline Pakistan Limited. He is
also responsible for Legal, Corporate Affairs, Industrial Relations,
Administration and Regulatory Functions of the company.
Mr. Qureshi has over 30 years of experience in multifunctional areas
of business, both overseas and in Pakistan.

28
 Dr. Muzaffar Iqbal
Dr. Muzaffar Iqbal joined Glaxo in 1987, and after having worked at
various positions, was appointed Technical Director GlaxoWellcome in
1998. He had the opportunity to look after GMS Sri Lanka and GMS
Chittagong and he currently is Technical Director GSK, responsible for
manufacturing and supply functions in Pakistan. Before joining Glaxo,
he worked as Research Associate at Case Western Reserve University,
Cleveland, Ohio, USA for two years and as a Senior Research Associate
at Washington University, St. Louis, Missouri, USA for two years. He
has a PhD degree in Chemistry and an MS degree in Manufacturing
Leaders Programme from Cambridge University, UK. He is a Certified
Facilitator from Senn-Delaney Leadership Consulting Group Inc., USA
for Leadership Edge Programme.

Mr. Husain Lawai

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

Mr. Yahya Zakaria

Yahya Zakaria is a fellow member of the Institute of Chartered
Accountants of Pakistan who has previously served in a management
position under assurance & advisory services at A. F. Ferguson & Co.
Yahya has been associated with GSK Pakistan for seven years and is
presently working as Director Finance. During this period, he has
overseen several simplification initiatives and business combinations
while playing key business partnering roles with Supply Chain, Legal
and Treasury to ensure business stability and delivery of greater
shareholder value. In order to proactively meet new initiatives, he has
also been extensively involved with the company’s regional and
corporate teams.

Fariha Salahuddin
Fariha has worked in various capacities at ABN AMRO, Unilever and
Citibank. She is currently working at GlaxoSmithKline, as VP HR for
Middle East and Africa. Prior to this role, she was leading a Talent
Development project for Emerging Markets and Asia Pacific based in
Singapore. She has held the position of Director Human Resources
Pakistan, Iran & Afghanistan and has also worked on the Global GSK
Employer Brand Project in London. She is also a Member of the Board
of Governors at Pakistan Society for Training and Development and a
Trustee for Concern for Children Trust and the Trust for Health and
Medical Sciences.

Mr. Rafique Dawood

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

29
 Board & Management Committees
Audit Committee Environment Health & Safety Committee

The Audit Committee assists the Board in the The Environment Health & Safety Committee is
effective discharge of its responsibilities for chaired by the respective Site Heads. It ensures
corporate governance and financial reporting. The operations are fully compliant with the EHS
Audit Committee comprises of four members of practices as outlined by regulatory control and
which three are non-executive directors. The corporate. It appraises the major EHS projects and
committee meets at least four times a year. It monitors their implementation, identifies risk
reviews the internal control systems including conditions and organizes training programs to
financial and operational controls, accounting educate employees for EHS issues.
systems and reporting structure to ensure that they
are adequate and effective. Vision Team

Management Committee The Vision team at GSK gives input for alignment
of the GSK strategy and futuristic objectives. It
The Management Committee comprises of the primarily reviews line capacities at the various sites
Functional Heads to ensure smooth operations of over the long term perspective focusing on capacity
the Company, strategic business planning, decision constraints, potential for export markets, product
making and overall management of the Company. It initiatives and new packaging requirements.
also ensures adequacy of operational, administrative
and financial controls.

Risk Management & Compliance Board

The Risk Management & Compliance Board

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

30
Directors’ Report to Shareholders
The Board of Directors of GlaxoSmithKline Pakistan The directors of the Company endorse the contents
Limited is pleased to present the annual report and of the same.
the Company's audited financial statements for the
year ended December 31, 2011. Basic Earnings per Share

The Directors' Report is prepared under section 236 Basic Earnings per Share after taxation were Rs. 4.77
of the Companies Ordinance, 1984 and clause xix (2010: Rs.4.42).
of the Code of Corporate Governance. This report
is to be submitted to the members at the Sixty Fifth
Earnings Per Share & Price Earning Ratio
Annual General Meeting of the Company to be held
on April 06, 2012.
12 25
Operating results
Rs. in million
10
Profit for the year before taxation 2,237 20
Taxation (1,096)
Profit after taxation 1,141
Un-appropriated profit brought forward 2,223 8

Number of Times
Profit available for appropriation 3,364 15
Appropriations:
Rupees

- Final dividend 2010 Rs. 4.00 per share (832) 6

Un-appropriated profit carried forward 2,532
10
The Board of Directors is pleased to propose a final 4
cash dividend of Rs. 4.0 per share amounting to
Rs. 957 million and issue of 10 bonus shares for every 5
100 shares held (10%). 2
16.2

19.6

11.5

20.9

20.0

14.0
Net sales grew by 15% during the year to Rs. 21.8
9.8

9.8

6.6

5.2

4.4

4.8
billion. Profit after tax in this year was Rs 1.1 billion. 0 0
2006 2007 2008 2009 2010 2011

Holding Company
Earnings Per Share Price Earning Ratio
As at December 31, 2011, S.R. One International
B.V., Netherlands held 184,207,825 shares of Rs. 10 Corporate Social Responsibility (CSR)
each. The ultimate parent of the Company continues
to be GlaxoSmithKline plc, UK. GlaxoSmithKline's commitment to a responsible,
value based business underlies everything we do.
Pattern of Shareholding Aligned with this principle, Corporate Social
Responsibility is a key part of the way we work.
The Company shares are traded in Karachi and Lahore Our CSR philosophy is targeted towards programmes
stock exchanges. The shareholding information as that focus primarily on health and education and
at December 31, 2011 and other related information make a lasting difference to the communities in
is set out on pages 83 to 85. which GSK operates.

The Directors, CEO, Company Secretary and CFO, GSK participated wholeheartedly in the 2011 flood
their spouses and minor children did not carry out relief efforts just like last year whereby both the
any trade in the shares of the Company. company as well as the staff donated generously
and employees travelled to remote locations in order
Chairman / Chief Executive's review to personally donate relief items.

The Chairman / Chief Executive's review on pages - The Annual Orange Day is another depiction of the
35 to 37 deals with: spirit of volunteering prevalent in employees at GSK.
• Performance of the Company during the year in Through the Orange Day, GSK has been working
comparison to last year along with reasons for with underprivileged children in our community. This
variances. year employees from across the organization
• Effective cash management strategy. participated in a career counseling session for students
• Significant plans and decisions. from underprivileged schools.
• Future outlook, business risks and challenges.

31
 We continue to engage in various projects year round In the year 2011, plans were actively implemented to
ranging from humanitarian aid to education and align all employees on the shop floor with safe working
healthcare with the aim to support those that make practices by reinforcing the culture of reporting through
a real difference and are mentioned in more detail the Near-Miss-Reporting initiative.
from page 9 to 13.
GSK has focused on continuous improvement in energy
Human Resource Development and resource consumption as part of its sustainability
initiatives. We are proud to announce that we have
GSK focuses on providing the best development achieved 6% reduction in energy and 3% reduction
opportunities to its employees, ensuring a well in water consumption at our operations despite
rounded and developed workforce equipped with increased manufacturing volumes.
innovative ideas.
Statement of Ethics and Business Practices
We encourage team building initiatives outside the
workplace which refine the employees' problem solving Performance with integrity is central to our operations
capabilities. at GSK. The Board of Directors of the Company has
adopted a statement of ethics and business practices.All
In 2011, GSK Pakistan executed the Respect at Work employees are informed and aware of this statement
plan which focused on building a congenial working and are required to observe these rules of conduct in
environment with focus on reporting of harassment, relation to business and regulations.
bullying and grievance at work.
Election of Directors
In an effort to inculcate the strategic priority,
'Simplification of the Operating Model', GSK At the 64th Annual General Meeting of the Company
successfully implemented HR transformation, creating held at the Beach Luxury Hotel, Karachi on April 20,
a more embedded HR function. 2011, the following ten Directors were elected in
accordance with the provisions of Section 178 (1) of
Sales per Employee the Companies Ordinance, 1984:
12
Mr. M. Salman Burney
Mr. Shahid Mustafa Qureshi
Dr. Muzaffar Iqbal
10
Mr. Yahya Zakaria
Mr. Rafique Dawood
Mr. Husain Lawai
8 Mr. Mehmoood Mandviwalla
Mr. Maqbool-ur-Rehman
Rupees in Million

Ms. Erum S. Rahim

6 Ms. Fariha Salahuddin

Board of Directors' Meetings and Attendance

4
The Board of Directors met four times in 2011; each
member’s attendance at these meetings is listed below:
2
Name Meetings attended
10.9

Mr. M. Salman Burney 4

7.7

9.4
5.5

5.8

9.6

0
2006 2007 2008 2009 2010 2011 Mr. Husain Lawai 3
Mr. Rafique Dawood 4
Environment, Health and Safety (EHS) Mr. Shahid Mustafa Qureshi 4
Mr. Javed Ahmedjee 1
GSK is committed to the maintenance of the standards Mr. Yahya Zakaria* 3
of Environment, Health and Safety (EHS) at the highest Dr. Muzaffar Iqbal 4
level. The company has a dedicated EHS department Dr. Iffat Yazdani 1
to oversee the implementation of EHS requirements. Mr. Mehmoood Mandviwalla 2
As part of our governance responsibility, GSK conducts Mr. Maqbool-ur-Rehman 1
EHS audits of all manufacturing sites, assessing the Ms. Erum S. Rahim 2
management of key risks and their impact on business Ms. Fariha Salahuddin 0
and performance against our global EHS standards.
*Mr. Yahya Zakaria was appointed as Director with
In 2011, GSK received the “Annual Environment effect from April 20, 2011.
Excellence Award” from the National Forum for
Environment and Health, an independent NGO
advocating environment-friendly practices, healthcare
and safety.

32
Leave of absence was granted to the Directors who Subsequent Events
could not attend some of the board meetings.
No material changes or commitments affecting the
The Board would like to record its appreciation and financial position of the Company have occurred
gratitude to Dr. Iffat Yazdani and Mr. Javed Ahmedjee between the end of the financial year of the Company
for serving on the board and for their input and and the date of this report.
contribution over this period. The Board would also
like to welcome Mr. Mehmood Mandviwalla, Mr. Value of Investments of Provident, Gratuity and
Yahya Zakaria, Mr. Maqbool-ur-Rehman, Ms. Erum Pension Funds
S. Rahim and Ms. Fariha Salahuddin and looks
forward to their contribution. The Company maintains retirement benefits plans
for its employees. Value of investments of provident,
Audit Committee gratuity and pension funds based on un-audited
accounts as of December 31, 2011 (audit in progress)
An Audit Committee has been in existence since May was as follows:
2002. The Committee consists of four members, of
whom three are non-executive directors including
the chairman of the committee. The terms of
reference of this Committee have been determined
in accordance with the guidelines provided in the
Listing Regulations and advised to the Committee 63%
for compliance. The Committee held four meetings
during the year.
32%
An independent Internal Audit function reporting to
the Board's Audit Committee reviews the financial
and internal reporting process, the system of internal 5%
control, the management of risks and the external
and internal audit process. The Internal Audit function
also utilizes the services of independent audit firms
for continuous review of internal controls and
management of risks. 2011
Rupees ‘ 000
Management Committee
Provident funds 1,546,526
The Management Committee comprises of 9 senior
members who meet and discuss important business Gratuity Funds 791,041
plans, issues and progress made in their functions.
Significant matters to be put forth in the Board are Pension Fund 115,076
discussed for onward approval.
Corporate and Financial Reporting Framework
Risk Management
a . The financial statements, prepared by the
A Risk Management and Compliance Board (RMCB) management of the Company present fairly its
has been established comprising of the business unit state of affairs, the result of its operations, cash
heads. The RMCB actively oversees review and flows and changes in equity.
management of all risks that are considered significant
for each respective business unit. Every business unit b. Proper books of accounts of the Company have
periodically reviews the significant risks facing its been maintained.
segment of the business including identification of
operational risks, legal compliance risks as well as c. Appropriate accounting policies have been
risks to the achievement of strategic goals and consistently applied in preparation of financial
objectives. The Company also has a nominated statements and accounting estimates are based
Compliance Officer. on reasonable and prudent judgment.

Auditors d. The financial statements are prepared in

accordance with International Financial Reporting
The present auditors, Messrs A.F. Ferguson & Co. Standards, as applicable in Pakistan.
Chartered Accountants, retire and being eligible,
offer themselves for re-appointment. The Board of e. The Company maintains a sound internal control
Directors endorses recommendation of the Audit system which gives reasonable assurance against
Committee for its re-appointment as the Auditors any material misstatement or loss. The internal
of the Company for the financial year ending control system is regularly reviewed. This has been
December 31, 2012, at a fee to be mutually agreed formalized by the Board's Audit Committee and
upon. is updated as and when needed.

33
 f. There are no significant doubts upon the h. The key operating and financial data for the six
Company's ability to continue as a going concern. years is set out on pages 40 to 41.

g. There has been no material departure from the

best practices of Corporate Governance as
detailed in the listing regulations.

By order of the Board

M. Salman Burney Yahya Zakaria

Chairman / Chief Executive Chief Financial Officer

Karachi
March 08, 2012

34
Chairman/Chief Executive’s Review
I am pleased to present the Annual report of your Net Sales
Company for the financial year ended December 25000
31, 2011.

Overview of Economy & Market

20000
Pakistan's economy remained under stress during
the year due to various inter nal & exter nal
challenges. Domestic political turbulence
including devolution which resulted in the 15000
abolition of the Health Ministry, energy shortages

Rupees in Million
and the effects of the global recession negatively
i m p a c t e d t h e e c o n o m y. T h e i n d u s t r y a l s o
10000
continued to be adversely affected by further
erosion of margins due to high inflationary
pressures, the devaluation of rupee and an
excessively restrictive pricing regime. Though the 5000
Government allowed some limited price increases
on certain products during the year, the impact
was marginal and not in line with the overall cost
10088

10611

13403

16754

18916

21750
increases borne by companies in the industry. 0
Although several internal initiatives have helped 2006 2007 2008 2009 2010 2011

the company reduce the impact of increasing

costs, the need for a price adjustment to off-set The Consumer Healthcare Business continued to
inflation and a balanced and less restrictive progress with strong sales growth of 33%,
pricing policy is now urgently needed to avoid a achieving overall sales of Rs 2.4 billion for the
crisis in this industry. y e a r. P a n a d o l , S e n s o d y n e , H o r l i c k s a n d
Aquafresh remained the main growth
On the positive site, the year 2011 saw a number contributors. The Sensodyne & Horlicks ranges
of significant milestone achievements. Sales of saw new line introductions and launches during
your company surpassed the Rs 20 billion mark the year which should deliver strong growth in
during the year and your Company continued to the future.
retain its position as the leading pharmaceutical
company in Pakistan in terms of value, Export sales also achieved double digit growth
prescription and volume share. This year also during the year with sales of Rs 727 million
saw Augmentin becoming the first represented by major export markets such as
pharmaceutical brand in the country to cross the Afghanistan and Srilanka.
Rs 3 billion mark in terms of sales. Out of top 20
leading products in the Pharmaceutical industry, Gross margins for this year at 27% improved
8 are manufactured and sold by your Company, marginally from last year due to an improved
which is a singular achievement. product mix. Margins have been adversely
challenged and affected due to the long-standing
Business Review price freeze on majority of the products since
2001, increases in costs of raw and packaging
Your company continued to achieve good sales materials both locally and internationally, the
growth during the year and despite challenging continuous depreciation in rupee exchange rate
marketing conditions outlined earlier, the sales and a significant escalation in fuel, power and
growth trend over the years was successfully utilities costs.
maintained. Underlying Pharma sales growth was
recorded at 13%. Within the Pharmaceutical Selling, marketing and distribution expenses at Rs
business, the Antibiotics, Cardiovascular, CNS 2.8 billion increased by 21%. This increase mainly
portfolio, Dermatology, Gastro-Intestinal, reflected investment in developing our consumer
Haematinics and Oncology segments achieved brands to ensure this segment of our business
robust double digit growth. The momentum of grows to its potential, coupled with overall
legacy brands was also maintained alongside the inflation and increased freight costs due to rising
smooth and successful launch of new brands and sales volume. Administrative expenses for the
new SKUs. year increased from last year due to the one off
cost of severances paid to outgoing employees at

35
 a closing site due to transfer of operations to term investments. The Company maintains strong
other factories. Excluding restructuring costs, relationships with its banks and constantly
administrative expenses remained at the same evaluates cash management and trade solutions
level due to the benefits of the integrations over to improve its investment and banking operations.
the last two years.
Capital Expenditure
Other operating income for the year increased by 900
Rs 64 million showing a growth of 16% over last
year. The higher income was made possible
800
t h ro u g h t h e e ff i c i e n t m a n a g e m e n t o f y o u r
Company's funds and better returns on short-term
investments / bank deposits, coupled with gains 700
on disposal of operating assets.
600
Net profit after tax for the year was Rs. 1.14 billion
compared to Rs. 1.06 billion in 2010.

Rupees in Million
500

400
Profit after tax
2000
300

200

1500 100

472

646

475

515

790

835
Rupees in Million

0
2006 2007 2008 2009 2010 2011

1000 Dividends

Maintaining a history of providing good returns

and payouts to its shareholders, the Board of
Directors of your company, in its meeting held on
500 March 08, 2012, proposed a cash dividend of Rs.
4.0 (2010: Rs. 4.0) per share and also issue of 10
bonus shares for every 100 shares held (2010: 15
bonus shares for every 100 shares held).
1665

1671

1955

1041

1057

1141

0
2006 2007 2008 2009 2010 2011 Future outlook and Challenges

Cash Flows & Capital Expenditure Yo u r c o m p a n y h a s m a d e g o o d p r o g r e s s i n

achieving sales growth over the years by not only
Cash flows from operations decreased this year challenging the operating environment to grow
primarily due to integration activities and stock our existing portfolio of products but also by
build up required to support product transfers launching new innovative research based
between manufacturing sites as well as dividend products. The company's objective of ensuring
payouts and higher effective tax rates. Capital sustained availability of these new and existing
expenditure during this year at Rs 835 million p ro d u c t s e n a b l e s t h e c o m m u n i t y a c c e s s t o
(2010: Rs. 790 million) was mainly spent on plant valuable and cost effective treatment options. A
up-gradations and integrations, capacity number of new and innovative research based
expansion, warehousing and purchase of vehicles. pharmaceutical products are under registration
Surplus funds as at December 31, 2011 stood at and launch.
Rs 2.3 billion, decreasing by Rs 1.2 billion from the
previous year. I n t h e C o n s u m e r H e a l t h C a re B u s i n e s s , t h e
company plans to invest further in developing our
The company invests its surplus funds aiming to leading and competitive brands to ensure that the
maintain a risk averse optimum interest yielding business segment grows to potential.
portfolio. Effective liquidity management is in
place through prudent cash management The pharmaceutical industry is operating in an
strategies and active investment management in environment where all major input costs are now
bank deposits, treasury bills and PIBs. Liquidity risk subject to inflationary trends and are now being
is managed by maintaining sufficient cash and seriously impacted by the consistent devaluation
balances with banks in deposit accounts and short of the currency and in particular higher energy

36
and employment costs. The industry is not able Over the years Pakistan has made some progress
to continually absorb all these costs. As is being in this regard, by updating its IPR laws to the
consistently highlighted by the Company at levels required by global conventions but many
various forums, the absence and delay in gaps remain. At a practical level much more
announcing a general price increase now poses a needs to be done to discourage both piracy and
risk on the sustainability of many products. We counterfeiting. Effective implementation will
request the Government to take immediate steps protect both consumers and the industry and also
to approve the pricing policy and allow a price lead to a quality and research-oriented culture
increase across the board to urgently support this which is vital for the future progress of this
industry and ensure the availability of numerous industry.
drugs which are at risk.
Acknowledgment
The recent setup of a national Drug Regulatory
Agency is a step that your Company, together This is a resilient company because of a talented,
with the industry, feels is a much needed move in passionate and committed team that is
the right direction. The urgent need now is for committed to do more, outperform our
the Agency to play its part in streamlining the competition and achieve good results despite the
registration and pricing process and focus efforts many challenges in the operating environment.
to improve quality standards.
On behalf of the Board; I would like to express my
The pharmaceutical industry in Pakistan has great gratitude to all team members, our valued
potential for growth. However, its sustained c u s t o m e r s a n d o u r s h a re h o l d e r s f o r t h e i r
success depends on a regulatory environment continuous support and look forward to
which is able to balance the need for affordable delivering results for all our stakeholders in the
healthcare with the essential commercial interests future.
of this research based industry.

Intellectual property

Intellectual property is a key business asset for our

company and the effective legal protection of our M. Salman Burney
intellectual property is critical in ensuring a Chairman / Chief Executive
reasonable return on investment in research and
commercialization of new treatments. Karachi
March 08, 2012

37
 Financial Performance at a Glance

2011 2010
Rupees in million

Net Sales 21,750 18,916

Gross Profit 5,818 4,853
Operating Profit 2,273 1,952
Profit before Taxation 2,237 1,931
Taxation 1,096 874
Profit after Taxation 1,141 1,057

Dividend - cash* 957.1 832.2

- per share - Rs. 4.0 4.0
Issue of bonus shares* 239.3 312.1
Paid-up Capital 2,392.7 1,964.1

* Represents final cash dividend @ Rs 4.0 per share and also issue of bonus shares @ 10% proposed by the Board
of Directors subsequent to the year end.

Gross and Operating Profit Payout to Shareholders

6000 2000

5000

1500
4000
Rupees in Million

Rupees in Million

3000 1000

2000
500

1000
3867
2651

3952
2670

3856
3078

4239
1751

4853
1952

5818

2273

1092

1280

1621
273

341

853

832

312

957
239
0

0 0
2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011

Gross Profit Operating Profit Cash Dividend Bonus Shares

38
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.
2011 2010
Rs. ‘000 % Rs. ‘000 %

Revenue Generated
Total revenue 22,337,669 100.0 19,381,633 100.0

Revenue Distributed
Bought-in -materials and Services 14,763,699 66.1 13,030,513 67.2
Selling, Marketing and Distribution Expenses 1,982,381 8.9 1,533,503 7.9
Administrative Expenses and Financial Charges 647,212 2.9 471,097 2.4

Income tax 1,095,972 4.9 874,341 4.5

Worker's funds and Central Research Fund 194,066 0.8 171,143 0.9
Sales tax 125,595 0.6 67,746 0.3
To Government 1,415,633 6.3 1,113,230 5.7

Salaries,Wages and other benefits 2,372,683 10.6 2,150,226 11.1

To Employees 2,372,683 10.6 2,150,226 11.1

Donations 15,145 0.1 25,681 0.1

To Society 15,145 0.1 25,681 0.1

Cash dividend* 957,077 4.3 832,240 4.3

To Shareholders 957,077 4.3 832,240 4.3

Retained in the Business 183,839 0.8 225,143 1.3

22,337,669 100.0 19,381,633 100.0

* Represents final cash dividend @ Rs 4 per share proposed by the Board of Directors subsequent to the year end.

Revenue and its Disposal

8.9% Bought-in-materials & Services 66.1%
66.1% Selling Marketing and Distribution Expenses 8.9%
2.9% Administrative Expenses and Financial Charges 2.9%
Government 6.3%
6.3% Employees 10.6%
Society 0.1%
10 Shareholders 4.3%
.6% Retained in the Business 0.8%
0.
4.3
0.8

1%
%
%

39
 Key Operating and Financial Data
2006 2007 2008 2009 2010 2011
Rupees in million
Assets employed
Fixed assets - property, plant and equipment 1,774 2,237 2,415 3,830 4,190 4,771
Goodwill - - - 956 956 956
Investments 96 347 172 169 - -
Long-term loans and deposits 43 61 69 73 85 94
Net current assets 5,827 5,758 6,032 6,057 6,101 5,736
7,740 8,403 8,688 11,085 11,332 11,557
Less: Non-current liabilities
Staff retirement benefits - Staff gratuity 66 23 21 73 115 20
Deferred taxation 137 262 312 418 417 428
203 285 333 491 532 448
Net assets employed 7,537 8,118 8,355 10,594 10,800 11,109

Financed by
Issued, subscribed and paid-up capital 1,365 1,707 1,707 1,707 1,964 2,393
Reserves 6,172 6,411 6,648 8,887 8,836 8,716
Shareholders' Equity 7,537 8,118 8,355 10,594 10,800 11,109

Turnover and profit

Net sales 10,088 10,611 13,403 16,754 18,916 21,750
Gross profit 3,867 3,952 3,856 4,239 4,853 5,818
Operating profit 2,651 2,670 3,078 1,751 1,952 2,273
Profit before taxation 2,632 2,659 3,001 1,706 1,932 2,237
Taxation 967 988 1,046 665 874 1,096
Profit after taxation 1,665 1,671 1,955 1,041 1,058 1,141
EBITDA 2,804 2,842 3,309 2,061 2,324 2,599
Cash Dividend including bonus shares* 1,365 1,621 1,621 853 1,144 1,196
Sales per employee (Rs. in '000) 5,549 5,850 7,659 9,585 9,388 10,853

Return on Equity Debtors Turnover & Inventory Turnover

30 30 80

70
25 25
60
Number of Days Inventory
Number of Days Debtors

20 20
50
Percentage

15 15 40

30
10 10
20

5 5
10
15.4

25.5

15.7
22.1

20.6

23.4

10.3
9.8

9.8

5.4
3.5
2.7

63

69

56

66

68

67

0 0 0
2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011

Debtors Turnover Inventory Turnover

40
 2006 2007 2008 2009 2010 2011
Rupees in million
Cashflows
Operating Activities 1,765 1,497 (402) 1,348 2,433 127
Investing Activities (220) (824) 572 (262) (739) (558)
Financing Activities (869) (1,086) (1,698) (1,189) (849) (782)
Changes in Cash equivalents 676 (413) (1,528) (103) 845 (1,213)
Cash & Cash equivalents - Year end 4,666 4,253 2,725 2,693 3,538 2,326

Ratios
Earnings per share Rs. 9.8 9.8 11.5 5.2 4.4 4.8
Cash dividend per share* Rs. 8.0 7.5 9.5 5.0 4.0 4.0
Bonus shares* % 25 25 - - 15 10
Price earning ratio Times 16.2 19.6 6.6 20.9 20.0 14.1
Market value per share - year end Rs. 157.9 192.4 75.9 109.3 88.2 67.1
Market value per share - high Rs. 215.8 210.0 200.0 143.8 89.5 68.0
Market value per share - low Rs. 148.0 151.1 75.9 75.0 86.3 67.0
Break-up value per share Rs. 55.2 47.6 48.9 50.9 51.9 46.4
Break-up value per share-with surplus
on revaluation Rs. 55.2 47.6 48.9 50.9 51.9 46.4
Market price to Book value with surplus Times 2.9 4.0 1.6 2.1 1.7 1.4
Market capitalization Rs.in million 21,559 32,837 12,961 18,649 17,321 16,050
Dividend payout % 82.0 97.0 83.0 91.3 108.1 104.8
Dividend yield % 6.6 5.2 12.5 4.6 6.2 7.5
Dividend cover ratio Times 1.2 1.0 1.2 1.1 0.9 1.0
Return on equity % 22.1 20.6 23.4 9.8 9.8 10.3
Total assets turnover Times 1.1 1.0 1.3 1.2 1.3 1.4
Fixed assets turnover Times 5.7 4.7 5.5 4.4 4.5 4.6
Debtors turnover Days 2.7 3.5 15.4 25.5 15.7 5.4
Creditors turnover Days 25 25 17 33 34 30
Inventory turnover Days 63 69 56 66 68 67
Current ratio 4.4 4.3 4.1 2.8 2.7 2.4
Acid test ratio 3.1 3.0 2.3 1.5 1.5 1.0
Gross profit % 38.3 37.2 28.8 25.3 25.7 26.8
EBITDA Margin to Sales % 27.8 26.8 24.7 12.3 12.3 12.0
Net profit % 16.5 15.7 14.6 6.2 5.6 5.2

* Represents final cash dividend @ Rs 4.0 per share and also issue of bonus shares @ 10% proposed by the Board of
Directors subsequent to the year end.

Assets & Liabilities Current Ratio

8000 6

7000
5
6101
6057
6032
5827

5821
5758

5736

6000
5231
5028

Number of Times

4
4771
Rupees in Million

5000
4190
3830

4000 3
2656

3000
2645

2415
2237

2
1913

1774

2000

1
1000
532
491

448
333
285
203

4.4

4.3

4.1

2.8

2.7

2.4

0 0
2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011

Non-current Liabilities Non-current Assets

Net Current Assets Property, Plant and Equipment

41
 Vertical Analysis

Balance Sheet Analysis (%)

2006 2007 2008 2009 2010 2011

Share Capital and Reserves 79.8 79.9 78.6 73.4 72.5 72.0
Non Current Liabilities 2.1 2.8 3.1 3.4 3.6 2.9
Current Liabilities 18.1 17.3 18.3 23.2 23.9 25.1
Total Equity and Liabilities 100.0 100.0 100.0 100.0 100.0 100.0
Non Current Assets 20.3 26.0 25.0 34.8 35.1 37.7
Current Assets 79.7 74.0 75.0 65.2 64.9 62.3
Total Assets 100.0 100.0 100.0 100.0 100.0 100.0

Profit and Loss Account Analysis (%)

Net sales 100.0 100.0 100.0 100.0 100.0 100.0

Cost of sales 61.7 62.8 71.2 74.7 74.3 73.2
Gross profit 38.3 37.2 28.8 25.3 25.7 26.8
Selling, marketing and distribution expenses 10.4 11.4 9.9 11.6 12.2 12.8
Administrative expenses 4.3 4.6 3.9 5.1 4.4 4.7
Other operating expenses 2.2 2.1 1.6 0.9 0.9 0.9
Other operating income 4.9 6.0 9.6 2.8 2.1 2.1
Operating profit 26.3 25.1 23.0 10.5 10.3 10.5
Financial charges 0.2 0.1 0.6 0.3 0.1 0.2
Profit before taxation 26.1 25.0 22.4 10.2 10.2 10.3
Taxation 9.6 9.3 7.8 4.0 4.6 5.0
Profit after taxation 16.5 15.7 14.6 6.2 5.6 5.3

42
Horizontal Analysis
Balance Sheet Analysis (%)
Change from preceding year

2006 2007 2008 2009 2010 2011

Share Capital and Reserves 11.9 7.7 2.9 26.8 1.9 2.9
Non Current Liabilities (20.7) 40.4 16.8 47.4 8.4 (15.7)
Current Liabilities 33.8 3.5 10.0 72.7 6.4 9.0
Total Equity and Liabilities 14.2 7.6 4.5 35.8 3.2 3.7
Non Current Assets 9.8 38.3 0.4 89.3 4.0 11.3
Current Assets 15.4 (0.1) 6.0 18.0 2.7 (0.5)
Total Assets 14.2 7.6 4.5 35.8 3.2 3.7

Profit and Loss Account Analysis (%)

Change from preceding year

Net sales 7.1 5.2 26.3 25.0 12.9 15.0

Cost of sales 11.7 7.0 43.4 31.1 12.4 13.3
Gross profit 0.5 2.2 (2.4) 10.0 14.5 19.9
Selling, marketing and distribution expenses 16.7 15.0 9.7 46.7 18.1 21.2
Administrative expenses 20.7 11.4 6.8 63.7 (2.9) 23.8
Other operating expenses (1.3) 0.9 (7.1) (26.9) 12.5 13.4
Other operating income 41.7 28.8 100.3 (63.8) (14.2) 16.2
Operating profit (2.1) 0.7 15.3 (43.1) 11.5 16.5
Financial charges 46.2 (36.8) 541.7 (41.6) (55.6) 82.4
Profit before taxation (2.3) 1.0 12.9 (43.2) 13.2 15.8
Taxation 9.8 2.2 5.9 (36.4) 31.4 25.3
Profit after taxation (8.2) 0.4 17.0 (46.8) 1.6 7.9

43
 Statement of Compliance with the Code of Corporate Governance
for the year ended December 31, 2011
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 three non-executive
directors one of whom represents minority shareholders' interests.

2. The directors have confirmed that none of them is serving as a director in more than ten listed
companies including this company.

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

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

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

6. One casual vacancy occurred in the Board of Directors during the year ended December 31, 2011.

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

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

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

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
was circulated amongst the directors on the Board.

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 four members, of whom
three are non-executive directors including the chairman of the committee.

46
16. The Board has outsourced the internal audit function to Ernst & Young Ford Rhodes Sidat Hyder who are
considered suitably qualified and experienced for the purpose and are conversant with the policies and
procedures of the company and they are involved in the internal audit function on a full time basis.

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

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

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

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

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

Karachi M. Salman Burney

March 08, 2012 Chairman / Chief Executive

47
 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 pricing 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, 2011.

A. F. Ferguson & Co.

Chartered Accountants

Karachi
March 13, 2012

48
Auditors' Report to the Members
We have audited the annexed balance sheet of GlaxoSmithKline Pakistan Limited as at December 31, 2011
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;

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

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

(c) in our opinion and to the best of our information and according to the explanations given to us, the
balance sheet, profit and loss account, cash flow statement and statement of changes in equity
together with the notes forming part thereof conform with approved accounting standards as
applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the
manner so required and respectively give a true and fair view of the state of the company's affairs
as at December 31, 2011 and of the profit, its cash flows and changes in equity for the year then
ended; and

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

A. F. Ferguson & Co.

Chartered Accountants
Karachi

Dated: March 13, 2012

Name of Engagement Partner: Syed Fahim ul Hasan

49
 Balance Sheet
as at December 31, 2011
Note 2011 2010
Rupees '000

SHARE CAPITAL AND RESERVES

Share capital 3 2,392,691 1,964,118

Reserves 4 8,715,881 8,835,696

11,108,572 10,799,814
NON-CURRENT LIABILITIES

Staff retirement benefits 5 19,706 115,240

Deferred taxation 6 428,296 416,452
448,002 531,692
CURRENT LIABILITIES

Trade and other payables 7 3,663,772 3,429,292

Provisions 8 217,239 131,001
3,881,011 3,560,293
4,329,013 4,091,985
CONTINGENCIES AND COMMITMENTS 9

15,437,585 14,891,799

M. Salman Burney Yahya Zakaria

Chairman / Chief Executive Chief Financial Officer

50
 Note 2011 2010
Rupees '000

NON-CURRENT ASSETS

Fixed assets - property, plant

and equipment 10 4,771,175 4,189,996

Intangible 11 955,742 955,742

Long-term loans to employees 12 82,005 73,590

Long-term deposits 11,780 11,871

5,820,702 5,231,199
CURRENT ASSETS

Stores and spares 13 159,268 150,632

Stock-in-trade 14 5,602,526 4,312,535
Trade debts 15 343,404 295,762
Loans and advances 16 163,378 144,267
Trade deposits and prepayments 17 54,657 96,234
Interest accrued 30,372 19,443
Refunds due from government 18 17,104 17,534
Other receivables 19 319,800 290,056
Taxation - payments less provision 600,742 623,410
Investments 20 196,706 901,955
Cash and bank balances 21 2,128,926 2,808,772
9,616,883 9,660,600
15,437,585 14,891,799

The annexed notes 1 to 41 form an integral part of these financial statements.

M. Salman Burney Yahya Zakaria

Chairman / Chief Executive Chief Financial Officer

51
 Profit and Loss Account
For the year ended December 31, 2011
Note 2011 2010
Rupees '000

Net sales 22 21,750,147 18,916,191

Cost of sales 23 (15,931,728) (14,063,242)

Gross profit 5,818,419 4,852,949

Selling, marketing and distribution expenses 24 (2,790,373) (2,301,516)

Administrative expenses 25 (1,022,493) (826,236)

Other operating expenses 26 (194,066) (171,143)

Other operating income 27 461,927 397,696

Operating profit 2,273,414 1,951,750

Financial charges 28 (36,526) (20,026)

Profit before taxation 2,236,888 1,931,724

Taxation 29 (1,095,972) (874,341)

Profit after taxation 1,140,916 1,057,383

Other comprehensive income

Fair value gain on

available-for-sale investments - 3,544

Reversal of deficit on revaluation of

available-for-sale investments 128 -

Deferred tax thereon (45) (1,240)

83 2,304

Total comprehensive income 1,140,999 1,059,687

Earnings per share 30 Rs.4.77 Rs. 4.42

The annexed notes 1 to 41 form an integral part of these financial statements.

M. Salman Burney Yahya Zakaria

Chairman / Chief Executive Chief Financial Officer

52
 Cash Flow Statement
For the year ended December 31, 2011
Note 2011 2010
Rupees '000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 31 1,402,378 3,647,883

Financial charges paid - (2,369)
Staff retirement benefits paid (205,481) (53,016)
Taxes paid (1,061,460) (1,147,359)
Increase in long-term loans to employees (8,415) (12,291)
Decrease in long-term deposits 91 476
Net cash generated from operating activities 127,113 2,433,324

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed capital expenditure (834,597) (789,884)

Proceeds from sale of operating assets 93,840 34,278
Investments encashed 175,000 -
Return on investments - PIBs 7,945 16,275
Net cash used in investing activities (557,812) (739,331)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid (782,165) (849,019)

Net (decrease) / increase in cash and cash equivalents (1,212,864) 844,974

Cash and cash equivalents at beginning of the year 3,538,496 2,693,522

Cash and cash equivalents at end of the year 32 2,325,632 3,538,496

The annexed notes 1 to 41 form an integral part of these financial statements.

M. Salman Burney Yahya Zakaria

Chairman / Chief Executive Chief Financial Officer

53
 Statement of Changes in Equity
For the year ended December 31, 2011
Share C A P I T A L R E S E R V ES Fair General Unappropriated Total
capital Share Reserve Issue of Issue of value reserve profit
premium arising on shares bonus reserve
amalgamation shares
Rupees '000

Balance at January 1, 2010 1,706,718 1,409 2,491,076 373,883 - (2,387) 3,999,970 2,022,817 10,593,486

Final dividend for the year ended

December 31, 2009 @ Rs. 5 per share - - - - - - - (853,359) (853,359)

Issuance of 25,740,000 ordinary shares

to the qualifying shareholders of
former GlaxoSmithKline Pharmaceuticals
(Private) Limited 257,400 - - (257,400) - - - - -

Profit after taxation for the year ended

December 31, 2010 - - - - - - - 1,057,383 1,057,383

Profit of former Stiefel Laboratories Pakistan

(Private) Limited for the period prior
to effective date of legal amalgamation
transferred to capital reserve - - 3,843 - - - - (3,843) -

Fair value gain on

available-for-sale investments - - - - - 2,304 - - 2,304

Total comprehensive income for the year

ended December 31, 2010 - - 3,843 - - 2,304 - 1,053,540 1,059,687

Balance at December 31, 2010 1,964,118 1,409 2,494,919 116,483 - (83) 3,999,970 2,222,998 10,799,814

Final dividend for the year ended

December 31, 2010 @ Rs. 4 per share - - - - - - - (832,241) (832,241)

Transferred to reserve for

issue of bonus shares - (1,409) (310,681) - 312,090 - - - -

Issuance of 11,648,312 ordinary shares

to the qualifying shareholders of
former Stiefel Laboratories Pakistan
(Private) Limited 116,483 - - (116,483) - - - - -

Bonus shares issued during the period

in the ratio of 15 shares for every
100 shares held 312,090 - - - (312,090) - - - -

Profit after taxation for the year ended

ended December 31, 2011 - - - - - - - 1,140,916 1,140,916

Reversal of deficit on revaluation of

available-for-sale investments - - - - - 83 - - 83

Total comprehensive income for the year

ended December 31, 2011 - - - - - 83 - 1,140,916 1,140,999

Balance at December 31, 2011 2,392,691 - 2,184,238 - - - 3,999,970 2,531,673 11,108,572

The annexed notes 1 to 41 form an integral part of these financial statements.

M. Salman Burney Yahya Zakaria

Chairman / Chief Executive Chief Financial Officer

54
Notes to and Forming Part of the Financial Statements
For the year ended December 31, 2011
1. THE COMPANY AND ITS OPERATIONS

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

The company is a subsidiary of S.R. One International B.V., Netherlands, whereas its ultimate parent company
is GlaxoSmithKline plc, UK.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

2.1 Basis of preparation

Statement of compliance

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

Critical accounting estimates and judgements

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

i) Provision for retirement benefits

ii) Impairment of non-current assets
iii) Provision for obsolete and slow moving stock
iv) Provision for doubtful receivables
v) Taxation

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

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

2.2 Standards, interpretations and amendments to published approved accounting standards that are
considered relevant, but not yet effective

IAS 19 (Amendment) - 'Employee benefits' is applicable for the accounting periods beginning on or after
1 January 2013. It eliminates the corridor approach and recognises all actuarial gains and losses in other
comprehensive income as they occur, immediately recognises all past service costs and replaces interest cost
and expected return on plan assets with a net interest amount that is calculated by applying the discount
rate to the net defined benefit liability / asset.

There are certain other new and amended standards and interpretations that have been published
and are mandatory for accounting periods beginning on or after January 1, 2012 but are considered
not to be relevant or will not have any significant effect on the company's operations and are, therefore,
not detailed in these financial statements.

55
 Notes to and Forming Part of the Financial Statements
2.3 Overall valuation policy

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

2.4 Staff retirement benefits

2.4.1 The company operates following defined benefit plans:

- Approved funded gratuity schemes for its permanent employees; and

- Approved funded pension scheme only for management employees of former GlaxoSmithKline
Pharmaceuticals (Private) Limited.

Contributions to the gratuity and pension schemes are based on actuarial recommendations. The
latest actuarial valuations of the schemes were carried out as at December 31, 2011 using the
Projected Unit Credit Method.

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

Retirement benefits are payable to employees on completion of prescribed qualifying period of

service under the schemes.

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

2.5 Compensated absences

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

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 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.

2.8 Fixed assets - property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation / amortisation and
accumulated impairment.

56
 Depreciation is charged using the straight line method whereby the carrying value of an asset less
estimated residual value, if not insignificant, is written off over its estimated remaining useful life.
Depreciation / amortisation on assets is charged from the month of addition to the month of
disposal. Cost of leasehold lands is amortised over the period of the lease.

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

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

2.9 Impairment

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

Impairment is reversed only if there has been a change in estimates used to determine recoverable
amounts and only to the extent that the revised recoverable amount does not exceed the carrying
values that would have existed, had no impairments been recognised, except impairment of goodwill
which is not reversed.

2.10 Goodwill

Goodwill represents excess of consideration transferred over the fair value of the interest acquired in
the net assets of an entity. After initial recognition, it is carried at cost less accumulated impairment,
if any.

Cash-generating units to which goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the
other non financial assets of the unit. Impairment tests are based on risk-adjusted future cash flows
discounted using appropriate discount rates. These future cash flows are based on business forecasts
and are therefore inherently judgemental. Future events could cause the assumptions used in these
impairment tests, as set out in note 11, ‘Intangible’, to change with a consequent adverse effect on
the future results of the company.

2.11 Stores and spares

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

2.12 Stock-in-trade

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

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

2.13 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.

57
 Notes to and Forming Part of the Financial Statements
2.14 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.

2.15 Cash and cash equivalents

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

2.16 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 Rupees, which is the company's functional and
presentation currency.

2.17 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.

2.18 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.

2.19 Dividend

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

2.20 Share based payments

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

2.21 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker who is responsible for allocating resources and assessing
performance of the operating segments.

58
 2011 2010
3. SHARE CAPITAL Rupees ’000

Authorised share capital

2011 2010

500,000,000 500,000,000 Ordinary shares of Rs. 10 each 5,000,000 5,000,000

Issued, subscribed and paid-up capital

Ordinary shares of
Rs. 10 each
2011 2010

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

consideration paid in cash 53,868 53,868

64,339,835 52,691,523 Shares allotted for

consideration other than cash 643,398 526,915

169,542,519 138,333,496 Shares allotted as bonus

shares 1,695,425 1,383,335

239,269,179 196,411,844 2,392,691 1,964,118

3.1 As at December 31, 2011 S.R. One International B.V., Netherlands and its nominee held 184,207,825 shares
(2010: 160,180,718 shares).

3.2 During the year the company issued 11,648,312 ordinary shares to the qualifying shareholders of
former Stiefel Laboratories Pakistan (Private) Limited and bonus shares in the ratio of 15 shares for
every 100 shares held.
2011 2010
4. RESERVES Rupees ’000

Capital reserves
Share premium - 1,409
Reserve arising on amalgamation 2,184,238 2,494,919
Issue of shares - 116,483
2,184,238 2,612,811

Fair value reserve - note 4.1 - (83)

General reserve 3,999,970 3,999,970
Unappropriated profit 2,531,673 2,222,998

8,715,881 8,835,696

4.1 This represented deficit arising on revaluation of available-for-sale investments as follows:

2011 2010
Rupees ’000

Deficit on revaluation - (128)

Deferred tax thereon - 45

- (83)

59
 Notes to and Forming Part of the Financial Statements

Gratuity funds Pension fund

2011 2010 2011 2010
Rupees ’000 Rupees ’000
5. STAFF RETIREMENT BENEFITS

5.1 Movement in liability / (asset)

Opening balance 115,240 72,885 (18,855) (13,467)

Charge / (reversal) for the year - note 5.5 109,947 95,371 (4,559) (5,388)
Payments to the fund (205,481) (53,016) - -
Closing balance 19,706 115,240 (23,414) (18,855)

5.2 Balance sheet reconciliation

Present value of defined benefit

obligation - note 5.3 1,057,028 940,478 83,544 67,850
Fair value of plan assets - note 5.4 (843,122) (635,425) (118,656) (111,558)
213,906 305,053 (35,112) (43,708)

Unrecognised actuarial (loss) / gain (194,200) (189,813) 11,698 24,853

19,706 115,240 (23,414) (18,855)

5.3 Movement in the present value of defined

benefit obligation during the year is as follows:

Balance at January 1 940,478 883,550 67,850 58,593

Current service cost 57,881 55,976 2,570 2,343
Interest cost 136,836 109,927 9,827 8,203
Actuarial loss 1,698 19,796 8,020 1,246
Benefits paid (79,865) (128,771) (4,723) (2,535)
Balance at December 31 1,057,028 940,478 83,544 67,850

5.4 Movement in the fair value of plan assets

during the year is as follows:

Balance at January 1 635,425 641,827 111,558 100,610

Expected return on plan assets 94,104 81,486 15,978 14,085
Actuarial loss (12,023) (12,133) (4,157) (602)
Employer's contributions 205,481 53,016 - -
Benefits paid (79,865) (128,771) (4,723) (2,535)
Balance at December 31 843,122 635,425 118,656 111,558

5.5 Charge / (reversal) for the year

Current service cost 57,881 55,976 2,570 2,343

Interest cost 136,836 109,927 9,827 8,203
Expected return on plan assets (94,104) (81,486) (15,978) (14,085)
Recognition of actuarial loss / (gain) 9,334 10,954 (978) (1,849)
109,947 95,371 (4,559) (5,388)

5.6 Actual return on plan assets 82,081 69,353 11,821 13,483

60
 Gratuity funds Pension fund
2011 2010 2011 2010
5.7 Principal actuarial assumptions

Expected return on plan assets

(% per annum) 13.00 14.50 13.00 14.50
Expected rate of increase in salaries
(% per annum) 13.00 14.50 13.00 14.50
Discount factor used (% per annum) 13.00 14.50 13.00 14.50
Retirement age (years) 60 60 60 60
Average remaining working life of
employees (years) 9 - 12 10 - 13 13 14

Expected return on plan assets has been determined considering the expected risk adjusted returns
available on the assets underlying the current investment policy.

Gratuity funds Pension fund

2011 2010 2011 2010
% % % %
5.8 Plan assets

Plan assets are comprised of the following:

- Equity and mutual funds 13.71 16.11 - -
- Bonds 80.11 52.21 96.98 95.06
- Others 6.18 31.68 3.02 4.94
100.00 100.00 100.00 100.00

5.9 For the year ending December 31, 2012 expected contribution to funded gratuity schemes is
Rs. 64.59 million. No contribution is expected to be paid to funded pension scheme.

5.10 Comparison for five years

Gratuity funds
2011 2010 2009 2008 2007
Rupees '000

Fair value of plan assets 843,122 635,425 641,827 446,759 529,756

Present value of defined
benefit obligation (1,057,028) (940,478) (883,550) (641,237) (574,654)
Deficit (213,906) (305,053) (241,723) (194,478) (44,898)

Experience (loss) / gain on

plan assets (12,023) (12,133) 5,380 128,538 (47,104)
Experience loss / (gain) on
plan liabilities 1,698 19,796 (6,992) 23,432 25,082

Pension fund

Fair value of plan assets 118,656 111,558 100,610

Present value of defined
benefit obligation (83,544) (67,850) (58,593)
Surplus 35,112 43,708 42,017

Experience (loss) / gain on

plan assets (4,157) (602) (6,488)
Experience loss / (gain) on
plan liabilities 8,020 1,246 4,812

61
 Notes to and Forming Part of the Financial Statements
5.11 Information given in note 5 is primarily based on actuarial advice.
2011 2010
Rupees ‘000
6. DEFERRED TAXATION

Credit balance arising in respect of accelerated

tax depreciation allowances 491,072 481,094
Debit balances arising in respect of:
- Provision for retirement benefits 6,637 29,736
- Provision for doubtful debts and refunds
due from goverment 22,232 14,579
- Provision for slow moving & obsolete stock
and store & spares 33,907 20,282
- Loss on revalustion of
available-for-sale investments - 45
62,776 64,642
428,296 416,452
7. TRADE AND OTHER PAYABLES

Creditors
- Associated companies 944,927 932,909
- Others 278,098 297,963
Bills payable
- Associated companies 36,986 41,242
- Others 18,283 33,086
Royalty and technical assistance fee payable
- Associated company 291,138 247,136
- Others 84,901 79,346
Accrued liabilities - note 7.1 1,578,647 1,429,335
Advances from customers 128,837 185,682
Contractors' earnest / retention money 19,124 11,836
Taxes deducted at source and payable to
statutory authorities 51,623 15,919
Workers' Profits Participation Fund - note 7.2 12,557 24,119
Workers’ Welfare Fund 54,804 53,635
Central Research Fund 41,580 19,512
Unclaimed dividend 46,325 42,894
Dividend payable 46,645 -
Others 29,297 14,678
3,663,772 3,429,292

7.1 This includes liability for share based compensation amounting to Rs. 75.12 million (2010: Rs. 53.45 million).

2011 2010
Rupees ‘000
7.2 Workers' Profits Participation Fund

Opening liability 24,119 10,102

Allocation for the year – note 26 121,588 105,150
145,707 115,252
Interest on funds utilised in company's
business – note 28 834 136
146,541 115,388
Amount paid to the Fund (133,984) (91,269)
Closing liability 12,557 24,119

8. PROVISIONS

Balance as at January 1 131,001 236,934

Charge for the year 386,835 257,218
Payments during the year (300,597) (363,151)
Balance as at December 31 217,239 131,001

62
8.1 Provisions include restructuring costs recognised due to planned restructuring of former GlaxoSmithKline
Pharmaceuticals (Private) Limited and former Stiefel Laboratories Pakistan (Private) Limited, consequent
to amalgamation with the company and also the closure of Lahore factory. The full amount is expected
to be utilised in the coming year. The company is developing a strategy for utilisation and disposal of the
Sundar lndustrial Estate and Lahore factory manufacturing sites and facilities.

9. CONTINGENCIES AND COMMITMENTS

9.1 Contingencies
2011 2010
Rupees '000

(a) Claims against the company not

acknowledged as debt 111,592 310,822

(b) Income Tax

(i) In prior years, while finalising the company’s assessments for the years 1999-2000 through
2002-2003 (accounting years ended December 31, 1998 through 2001) the Assessing Officer (AO)
had made additions to income raising tax demands of Rs. 73.6 million. Such additions were made on
the contention that the company had allegedly paid excessive amount for importing certain raw
materials. Upon company's appeal, the Commissioner of Inland Revenue (Appeals) (CIRA) had
maintained the addition to income for assessment years 1999-2000 and 2000-2001 (accounting years
ended December 31, 1998 and 1999) while the additions made in assessment years 2001-2002 and
2002-2003 (accounting years ended December 31, 2000 and 2001) were deleted. In respect of
assessment years 1999-2000 and 2000-2001 the company, and in respect of assessment years
2001-2002 and 2002-2003, the department, filed respective appeals with the Income Tax Appellate
Tribunal (ITAT). In 2008, all the above assessments were set aside by ITAT for fresh consideration by the
AO. In 2010, AO passed assessment orders for the above years in which additions of same amount as
described above were made.The company has filed appeals against the orders of AO with CIRA.

(ii) In prior years, while finalising the assessment of former Smith Kline & French of Pakistan Limited for
the assessment year 2002-2003 (accounting year ended December 31, 2001), the Assessing Officer
(AO) had made addition to income raising tax demands of Rs. 4.03 million. Such addition was made
on the contention that the company had allegedly paid excessive amount for importing certain raw
materials. Upon company's appeal, the CIRA had maintained the addition to income against which the
company filed an appeal with the ITAT.

In 2008, the above assessment was set aside by ITAT for fresh consideration by the AO. In 2010, AO
passed assessment order for the above year in which addition of same amount as described above was
made. The company has filed appeal against the order of AO with CIRA.

(iii) In 2010, while amending the assessments of the company for the tax years 2005, 2006, 2007 and
2008 (accounting years ended December 31, 2004, 2005, 2006 and 2007) the Assessing Officer (AO)
had made additions to income raising tax demands totalling Rs. 151.15 million. Such additions were
made on the contention that the company had allegedly paid excessive amounts for importing certain
raw materials and in respect of royalty. The company has filed appeals with CIRA in respect of above
tax years.

(iv) In prior years, while finalising the assessments of former GlaxoSmithKline Pharmaceuticals (Private)
Limited (GSKPPL) formerly Bristol-Myers Squibb Pakistan (Private) Limited for assessment years 1989-
1990 through 2002-2003 (accounting years ended December 31, 1989 through 2002) the Assessing
Officer (AO) made additions to income raising tax demands of Rs. 314.10 million on the contention
that the company had allegedly paid excessive amounts for importing certain raw materials. CIRA
also maintained the additions. On GSKPPL's appeals, the additions made by the AO were deleted by
ITAT. Later, the department filed appeals against the decision of ITAT in the High Court of Sindh (the
High Court).

63
 Notes to and Forming Part of the Financial Statements
In October 2007, the High Court awarded its verdict for the assessment years 1989-1990 and 1990-
1991 in favour of the tax department confirming tax demands of Rs. 11.99 million. However, the
decisions in respect of the department's appeals for the assessment years 1991-1992 through 2002-
2003 are still pending in the High Court for which the net aggregate tax liability, if such cases are
decided against the company, will be Rs. 302.11 million.

The company had filed an appeal in the Supreme Court of Pakistan against the above decision of the
High Court in respect of assessment years 1989-1990 and 1990-1991 and a leave to appeal had been
granted to the company. The company through its legal counsel had also filed review petition before
the High Court in this regard.

The management is confident that the ultimate decisions in the above cases will be in favour of the company,
hence provision has not been made in respect of the aforementioned additional tax demands.
9.2 Commitments
Commitments for capital expenditure outstanding as at December 31, 2011 amounted to Rs. 924.70
million (2010: Rs. 607.81 million).
2011 2010
Note Rupees ‘000
1 0. FIXED ASSETS - property, plant
and equipment

Operating assets 10.1 3,503,311 3,367,436

Capital work-in-progress 10.3 1,267,864 822,560
4,771,175 4,189,996
10.1 Operating assets
Lands Buildings Plant & Furniture Vehicles Office TOTAL
Freehold Leasehold On freehold On machinery & fixtures Equiptment
land leasehold
land
Rupees '000
Net carrying value basis
Year ended December 31, 2011
Opening net book value (NBV) 174 369,403 16,319 886,458 1,543,278 102,214 269,951 179,639 3,367,436
Additions (at cost) - - - 35,072 363,855 7,832 130,877 40,049 577,685
Disposals (at NBV) - - - - (212) - (48,117) - (48,329)
Depreciation charge - (5,348) (785) (27,451) (194,214) (11,889) (71,038) (50,448) (361,173)
Impairment (charge) / reversal - - (12,854) 5,729 (31,195) 7,027 (9) (1,006) (45,064)
12,756
Closing net book value 174 364,055 2,680 899,808 1,681,512 105,184 281,664 168,234 3,503,311

Gross carrying value basis

At December 31, 2011
Cost 174 385,452 66,599 1,181,585 3,172,343 190,218 439,863 632,159 6,068,393
Accumulated depreciation - (21,397) (32,003) (260,925) (1,418,377) (84,090) (158,190) (462,052) (2,437,034)
Impairment Loss - - (31,916) (20,852) (72,454) (944) (9) (1,873) (128,048)
Net book value 174 364,055 2,680 899,808 1,681,512 105,184 281,664 168,234 3,503,311

Net carrying value basis

Year ended December 31, 2010
Opening net book value (NBV) 174 376,169 19,442 878,715 1,627,035 82,048 243,479 180,248 3,407,310
Additions (at cost) - - 105 32,983 139,148 31,002 126,779 59,585 389,602
Disposals (at NBV) - - - (6) (9,219) (200) (31,118) (339) (40,882)
Depreciation charge - (6,766) (835) (25,234) (200,254) (10,519) (69,189) (59,037) (371,834)
Impairment (charge) / reversal - - (2,393) - (14,925) (173) - (818) (18,309)
1,493 56 1,549
Closing net book value 174 369,403 16,319 886,458 1,543,278 102,214 269,951 179,639 3,367,436

Gross carrying value basis

At December 31, 2010
Cost 174 385,452 66,599 1,146,513 2,811,132 182,386 436,340 592,215 5,620,811
Accumulated depreciation - (16,049) (31,218) (233,474) (1,226,595) (72,201) (166,389) (411,709) (2,157,635)
Impairment Loss - - (19,062) (26,581) (41,259) (7,971) - (867) (95,740)
Net book value 174 369,403 16,319 886,458 1,543,278 102,214 269,951 179,639 3,367,436

Depreciation rate
% per annum - 2.5 to 10 2.5 2.5 5 to 10 10 25 10 to 33.33

64
10.1.1 Leasehold land includes land at Sundar lndustrial Estate, Lahore, with a net book value of Rs. 18.45
million (2010: Rs. 18.45 million) on provisional allotment from Punjab Industrial Estates Development
and Management Company.

10.1.2 Operating assets include assets having cost of Rs. 16.53 million and net book value of NIL held with
Roomi Enterprises (Private) Limited.

10.2 Details of operating assets sold

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

Vehicles 5,812 3,312 2,500 3,600 Company Mr. Anis Shah, Ex-Executive
Policy
" 4,725 2,436 2,289 2,700 " Mr. Javed Ahmedjee, Ex-Director
" 4,500 2,672 1,828 2,250 " Mr. Muied Ahmed, Ex-Executive
" 1,849 491 1,358 1,109 " Mr. Zafarullah Khan, Ex-Executive
" 1,450 249 1,201 - " Mr. Tasneem ur Rehman (late),
Ex-Executive
" 1,426 290 1,136 1,350 " Dr. Farhan Qureshi, Ex-Executive
" 1,429 549 880 1,285 " Mr. Muhammad Khalid, Ex-Executive
" 1,066 316 750 320 " Mr. Wajid Ali, Ex-Executive
" 999 250 749 879 " Ms. Maria Bukhari, Executive
" 1,039 292 747 905 " Ms. Amal Iqbal, Ex-Employee
" 1,043 318 725 950 " Mr. Umer Farooq Hashmi, Executive
" 1,043 318 725 272 " Mr. Afzal Siddiqui, Executive
" 1,043 318 725 282 " Ms. Ruby Shaikh, Executive
" 1,389 716 673 1,193 " Dr. Tariq Farooq, Executive
" 1,389 716 673 1,179 " Syed Ahmed Nadeem, Executive
" 1,389 716 673 1,035 " Mr. Rizwan Ahmed Khokhar, Executive
" 830 182 648 736 " Dr. Ali Masood, Executive
" 815 216 599 750 " Dr. Farhan Qureshi,Ex-Executive
" 1,580 1,001 579 380 " Mr. Shamshad Anis Hashmi, Ex-Employee
" 886 336 550 288 " Mr. Najam ur Rehman, Executive
" 1,319 783 536 791 " Mr. Muhammad Hanif, Executive
" 1,127 601 526 360 " Mr. Umair Butt, Ex-Executive
" 1,526 1,001 525 916 " Mr. Yahya Zakaria, Director
" 815 331 484 666 " Mr. Zain Ismail, Executive
" 647 192 455 388 " Mr. Rana M Saeed, Ex-Employee
" 1,309 982 327 327 " Ms. Iffat Yazdani, Executive
" 496 196 300 400 " Mr. Anwer Hassan, Ex-Employee
" 491 191 300 320 " Mr. Malik Tanveer Haider, Ex-Employee
" 491 191 300 350 " Mr. Abdul Waheed, Ex-Employee
" 496 196 300 365 " Mr. Muhammad Imran, Ex-Employee
" 504 204 300 154 " Mr. Haroon Hamid Faizi, Ex-Employee
" 496 196 300 85 " Mr. Sohail Bhatti, Ex-Employee
" 499 199 300 190 " Mr. Tariq Masood, Employee
" 496 196 300 320 " Mr. Zakaullah, Ex-Employee
" 491 191 300 330 " Mr. Muhammad Younus, Employee
" 969 681 288 412 " Mr. Ahmed Modan, Ex-Executive
" 1,125 844 281 281 " Mr. Muhammad Ali, Executive
" 1,005 754 251 630 " Mr. Wajid Ali Qureshi, Executive
" 1,005 754 251 402 " Mr. Khalid Sethi, Executive
" 1,003 752 251 251 " Mr. Abid M. Ather, Executive
" 1,003 752 251 950 " Mr. Rizwan Mahmood, Ex-Executive
" 563 317 246 440 " Mr. Fazal ur Rehman, Employee

65
 Notes to and Forming Part of the Financial Statements
Description Cost Accumulated Book Sale Mode of Particulars of purchaser
depreciation value proceeds disposal
Rupees ' 000

" 969 727 242 364 Company Mr. Tanveer Aslam, Ex-Executive
Policy "
" 969 727 242 388 " Mr. Bacha Said, Executive
" 969 727 242 242 " Mr. Muhammad Ilyas, Ex-Executive
" 925 694 231 284 " Mr. Zakir Hussain, Ex-Executive
" 920 690 230 340 " Mr. Naeem Akhtar, Ex-Executive
" 879 659 220 220 " Mr. Siraj Ashraf, Executive
" 651 468 183 391 " Mr. Muzammil Munawar, Executive
" 619 454 165 200 " Mr. Zahid Hussain, Ex-Executive
" 647 485 162 259 " Mr. Imtiaz Hussain, Executive
" 620 465 155 - " Mr. Tayyab Javed (Late), Ex-Employee
" 620 465 155 678 " Mr. Muhammad Imran Khan, Executive
" 620 465 155 248 " Mr. Muhammad A. Saeed, Executive
" 620 465 155 155 " Mr. Fahim Syed, Executive
" 620 465 155 155 " Mr. Abdul Rashid, Executive
" 620 465 155 248 " Mr. Syed Shujat Ali, Executive
" 620 465 155 248 " Mr. Shakeel Abbas, Executive
" 620 465 155 248 " Mr. Abid Subhan, Executive
" 620 465 155 248 " Mr. Badi ur Rehman, Executive
" 1,384 303 1,081 1,384 Insurance EFU General Insurance Limited
Claim "
" 1,039 211 828 1,049 " "
" 674 116 558 674 " "
" 652 417 235 712 " "
" 473 325 148 558 " "
" 480 360 120 523 "
" 1,043 191 852 983 Tender Mr. Muhammad Tariq Ajmeri,
69 K, P.E.C.H.S Karachi
" 4,396 3,796 600 1,435 " "
" 491 191 300 335 " "
" 1,049 295 754 990 " Mr. Zahid Qadri, House # R-536 15
A-4, Bufferzone Karachi.
" 464 348 116 428 " "
" 1,043 196 847 981 " Mr. Zahoor Ahmed, Mandviwalla
Chamber Old Queens Road Karachi.
" 620 465 155 605 " "
" 993 744 249 958 " Ms. Sabiha Pervaiz, 78/2, Phase IV,
DHA, Karachi
" 674 190 484 719 " Mr. Adnan, B-508, Block 8, F. B.
Area, Karachi
" 649 213 436 711 " "
" 775 363 412 768 " Mr. Abdul Razzak, B-11, Gulshan e
Karim, SUPARCO, Karachi
" 464 348 116 446 " "
" 1,109 710 399 812 " Mr. Aijaz Baig, H.No. 4-E-6/8,
Nazimabad, Karachi
" 725 385 340 761 " Mr. Abdul Wahid, J-38, Rifah e Aam
Society, Malir Halt, Karachi
" 1,238 929 309 1,013 " Mr. Farrukh Amjad Shah,R-25, Sector
5/L, North Karachi
" 886 665 221 933 " "
" 804 603 201 587 " "
" 647 384 263 746 " Mr. Waseem Mirza, A-32, Block
10/A,Gulshan e Iqbal, Karachi
" 804 603 201 567 " "
" 480 315 165 532 " "
" 464 348 116 456 " "
" 464 348 116 466 " "

66
Description Cost Accumulated Book Sale Mode of Particulars of purchaser
depreciation value proceeds disposal
Rupees ' 000
Vehicles 464 348 116 486 Tender Mr. Waseem Mirza, A-32, Block
10/A,Gulshan e Iqbal, Karachi
" 464 348 116 505 " "
" 464 348 116 506 " "
" 464 348 116 501 " "
" 464 348 116 513 " "
" 720 461 259 751 " Mr. Asif Mehmood, C-15, Block Q,
North Nazimabad Karachi
" 1,019 764 255 878 " Mr. Muhammad Shafiq, House # 803,
Block 14 F.B. Area, Karachi
" 1,012 759 253 618 " Mr. M. Alam,Office #11, KDA Apartment,
Block A, North Nazimabad, Karachi
" 509 382 127 393 " "
" 464 348 116 365 " "
" 1,003 752 251 817 " Mr. Wali Ahmed Khan, D-8, Block B,
North Nazimabad,Karachi
" 1,003 752 251 905 " Mr. Amir Qureshi, B-7, Wajid Square,
Block 16, Gulshan e Iqbal, Karachi
" 620 465 155 682 " Mr. M. P. Mirza, 78/2, First Commercial
Street, Phase IV, DHA, Karachi
" 620 465 155 685 " "
" 905 368 537 762 " Mr. Syed Ahmed Ali, 5/5, 5/C,
Nazimabad, Karachi
" 979 734 245 997 " Mr. Faisal Ghayur, 135/2, St #. 10,
Khayaban e Muslim, Phase VI, DHA,
Karachi
" 652 418 234 680 " Mr. Zeeshan Ali Khan, 125-H, Block
2, P.E.C.H.S., Karachi
" 652 418 234 728 " "
" 647 424 223 652 " Waqar Enterprises, D-8, Block B,
North Nazimabad, Karachi
" 864 648 216 943 " Ms. Shumaila Sajid, 78/2, Phase IV,
DHA, Karachi
" 849 637 212 917 " Mr. Ovais, Prime 2/109, Flat # 8,
BMCHS, Karachi
" 647 455 192 737 " Mr. Muhammad Zakir Ayub, 301,
Fatima Mansion Shoe Market Karachi.
" 615 452 163 676 " Mr. Rizwan Ahmed, 11/2/1, Street #
32, Phase V, DHA, Karachi
" 620 465 155 726 " Mr. S.M. Amir Zaidi, 3-B, 7/6,
Nazimabad, Karachi
" 620 465 155 685 " "
" 620 465 155 646 " Mrs. Nadia Nadeem, Gulshan Luxury
Apartment, Block 13 -B,Gulshan-e-Iqbal
Karachi
" 615 461 154 685 " Mr. Malik M. Jawaid, Karim Apartments,
M. A. Jinnah Road, Karachi
" 615 461 154 700 " "
" 464 348 116 316 " Mr. Jawad Ahmed, A-26, Rufi Gardens,
Block 13-D/2, Gulshan-e-Iqbal, Karachi
" 464 348 116 446 " "
" 464 348 116 412 " Mr. Asif Ibrahim, 3/29, Muslimabad,
Khalid Bin Walid Road, Karachi
" 464 348 116 416 " "
" 464 348 116 505 " "
" 464 348 116 413 " Mr. S.M. Ali Warsi, A-162/12, Gulberg,
F.B. Area, Karachi
" 464 348 116 421 " Mr. Danial Akhter, D-35, Block 8,
Clifton, Karachi
" 464 348 116 421 " "
" 464 348 116 422 " Mr. Amin Hirani, A-21, Anarkali
Apartment, Block 7, F.B.Area, Karachi
" 464 348 116 431 " Mr. Muhammad Imran, 708, PIB
Colony, Near Press Quarters, Karachi
" 464 348 116 446 " "
" 351 287 64 363 " Mr.Sultan Hassan Khan, A-908, Block
12, F.B. Area Karachi

67
 Notes to and Forming Part of the Financial Statements
2011 2010
Rupees ’000
10.3 Capital work-in-progress

Civil work 770,995 324,180

Plant and machinery 405,051 417,687
Furniture and fixtures 17,236 17,655
Office equipments 52,435 75,460
Advances to suppliers 54,726 20,157
1,300,443 855,139

Provision for impairment (32,579) (32,579)

1,267,864 822,560

10.3.1 Capital work-in-progress includes Rs. 561.09 million and Rs.159.32 million for up-gradation and extension of
manufacturing facility at korangi factory, Karachi and partially constructed site at Sundar Industrial Estate,
Lahore respectively
2011 2010
Rupees ’000

11. INTANGIBLE

Goodwill 955,742 955,742

Goodwill is allocated to cash generating unit to which it relates, which is tested for impairment in line with
note 2.9.

The recoverable amount of cash generating unit is the higher of value in use or fair value less cost to sell.
Value in use is calculated as the net present value of the projected cash flows discounted at risk-adjusted
discount rate.

Details relating to the discounted cash flow model used in the impairment test are as follows:

Former GlaxoSmithKline Pharmaceuticals

(Private) Limited
(formerly Bristol-Myers Squibb Pakistan
(Private) Limited)

Valuation basis Value in use

Key assumptions Sales growth rates

Discount rate

Determination of assumptions Growth rates are internal forecasts based on

both internal and external market information
and past performance.

Cost reflects past experience, adjusted for inflation

and expected changes.

Discount rate is primarily based on weighted

average cost of capital.

Termainal growth rate 4%

Period of specific projected 5 years
cash flows
Discount rate 16%

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

68
12. LONG-TERM LOANS TO EMPLOYEES

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

2011 2010
Executives Other employees Executives Other Employees
Non- Interest Non- Total Non- Interest Non- Total
Interest bearing Interest Interest bearing Interest
bearing bearing bearing bearing
Rupees ‘000

Balance at January 1 5,555 2,975 109,354 117,884 2,667 3,108 90,738 96,513
Disbursements 4,606 2,880 77,607 85,093 6,044 1,315 71,404 78,763
Repayments (6,239) (2,766) (63,445) (72,450) (3,156) (1,448) (52,788) (57,392)
Balance at December 31 3,922 3,089 123,516 130,527 5,555 2,975 109,354 117,884
Current portion included in note 16 (3,868) (1,767) (42,887) (48,522) (2,371) (1,651) (40,272) (44,294)
54 1,322 80,629 82,005 3,184 1,324 69,082 73,590

12.1 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 (2010: 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. 8.9 million (2010: Rs. 5.64 million).

2011 2010
Rupees ’000
13. STORES AND SPARES

Stores and spares 173,706 158,378

Provision for slow moving
and obsolete items - note 13.1 (14,438) (7,746)
159,268 150,632

13.1 Stores and spares of Rs. 649 thousand (2010: Rs. 520 thousand) have been written off against
provision during the year.

2011 2010
Rupees ’000
14. STOCK-IN-TRADE

Raw and packing materials including

in transit Rs. 625.18 million
(2010: Rs. 323.86 million) 2,072,078 1,590,899

Work-in-progress 591,080 394,146

Finished goods including

in transit Rs. 303.15 million
(2010: Rs. 310.63 million) 3,203,386 2,609,148
5,866,544 4,594,193
Less: Provision for slow moving, obsolete and
damaged items - note 14.3 (264,018) (281,658)

5,602,526 4,312,535

69
 Notes to and Forming Part of the Financial Statements
14.1 Stock-in-trade includes Rs. 84.95 million (2010: Rs. 40.10 million), Rs. 148.94 million (2010:
Rs. 79.73 million), Rs. 103.83 million (2010: Nil) and Rs. 57.31 million (2010: Rs. 47.14 million) held
with Pharmatec Pakistan (Private) Limited, Vikor Enterprises (Private) Limited, Roomi Enterprises
(Private) Limited and Akhai Pharmaceuticals (Private) Limited, respectively.

14.2 Stock-in-trade includes items costing Rs. 1.42 billion (2010: Rs. 899.90 million) valued at net
realisable value of Rs. 1.25 billion (2010: Rs. 762.84 million).

14.3 Stocks of Rs. 102.185 million (2010: Rs. 91.128 million) have been written off against provision
during the year.
2011 2010
Rupees ’000
15. TRADE DEBTS

GlaxoSmithKline Trading Services Limited

- Associated company 28,710 15,580
Others 314,694 280,182

Considered doubtful 47,547 29,741

390,951 325,503

Provision for doubtful debts (47,547) (29,741)

343,404 295,762

15.1 The maximum aggregate amount due from the related party at the end of any month during the
year was Rs. 35.41 million (2010: Rs. 18.83 million).

15.2 Trade debts of Rs. 497 thousand (2010: Rs. 1.15 million) have been written off against provision
during the year.
2011 2010
Rupees ’000
16. LOANS AND ADVANCES - considered good

Loans due from employees - note 12 48,522 44,294

Advances to employees 38,951 27,244
Advances to suppliers 75,905 72,729

163,378 144,267

17. TRADE DEPOSITS AND PREPAYMENTS

Trade deposits 43,866 69,591

Prepayments 2,765 23,738
Margins held with banks 8,026 2,905

54,657 96,234
18. REFUNDS DUE FROM GOVERNMENT

Custom duty and sales tax

- considered good 17,104 17,534
- considered doubtful 18,464 18,464
35,568 35,998
Provision for doubtful receivables (18,464) (18,464)
17,104 17,534

70
 2011 2010
Rupees ’000
19. OTHER RECEIVABLES

Due from related parties

- Associated companies - note 19.1 202,825 214,858
- BMS Pakistan (Private) Limited
management staff pension fund - note 5.1 23,414 18,855
226,239 233,713
Claims recoverable from suppliers
- Associated companies - note 19.2 64,054 10,821
- Others 10,610 2,801
Receivable against sale of fixed assets 4,977 6,636
Others 13,920 36,085
319,800 290,056
19.1 Due from associated companies

GlaxoSmithKline Services Unlimited, UK 6,597 57,266

GlaxoSmithKline Export Limited, UK 43,736 15,235
GlaxoSmithKline Limited, Bangladesh 8,377 8,377
Glaxo Operations UK Limited, UK 14 -
GlaxoSmithKline Investment Co. Limited, China 413 -
Stiefel Laboratories (Pte) Limited, Singapore 133,396 128,614
GlaxoSmithKline S.A.E., Egypt 1,212 -
GlaxoSmithKline Pharmaceuticals Limited, India 3,438 -
Stiefel Laboratories Limited, US 5,642 5,366

202,825 214,858

19.2 Claims recoverable from associated companies

GlaxoSmithKline Trading Services Limited 7,049 7,049

GlaxoSmithKline Biologicals S.A. 57,005 3,772
64,054 10,821

19.3 The maximum aggregate amount due from related parties at the end of any month during the year
was Rs. 309.03 million (2010: Rs. 214.86 million).
Note 2011 2010
Rupees ’000
20. INVESTMENTS

Available-for-sale
Pakistan Investment Bonds - 172,231

Held-to-maturity
Treasury bill 20.1 196,706 729,724
196,706 901,955

20.1 This is held by company's banker for safe custody. The yield on this bill is 11.65% per annum
(2010: 13.12% to 13.16% per annum) and this bill will mature in February 2012.

71
 Notes to and Forming Part of the Financial Statements

2011 2010
Rupees ’000
21. CASH AND BANK BALANCES

With banks
on deposit accounts 1,800,000 2,475,000
on PLS savings accounts 236,689 254,580
on current accounts 79,305 74,176
Cash and cheques in hand 12,932 5,016
2,128,926 2,808,772

21.1 At December 31, 2011 the rates of mark-up on PLS savings accounts and on term deposit accounts
were 5.00% to 7.00% (2010: 5.00% to 6.50%) per annum and 9.00% to 12.10% (2010: 11.30%
to 12.05%) per annum respectively.
2011 2010
Rupees ’000
22. NET SALES

Manufactured goods
Gross sales
Local 18,723,707 16,391,285
Export 712,959 585,963
19,436,666 16,977,248
Less: Commissions, returns, discounts and rebates 190,337 165,176
Sales tax 77,479 47,295
19,168,850 16,764,777
Trading goods
Gross sales
Local 2,775,318 2,320,634
Export 14,353 8,754
2,789,671 2,329,388
Less: Commissions, returns, discounts and rebates 160,258 157,523
Sales tax 48,116 20,451
2,581,297 2,151,414
21,750,147 18,916,191

22.1 Sales of major product categories i.e. antibiotics, dermatologicals and consumer during the year
amounted to Rs. 9.02 billion, Rs. 2.79 billion and Rs. 2.36 billion (2010: Rs. 7.92 billion,
Rs. 2.47 billion and Rs. 1.77 billion) respectively.

22.2 Company sells its products through a network of distribution channels involving various distributors
/ sub-distributors and also directly to government and other institutions. Sales to one distributor
(2010: one distributor) exceed 10 percent of the net sales during the year, amounting to
Rs. 2.35 billion (2010: Rs. 1.94 billion).

72
 2011 2010
Rupees ’000
23. COST OF SALES

Raw and packing materials consumed 11,015,437 8,931,872

Manufacturing charges to third parties - note 23.1 318,769 201,508
Stores and spares consumed 39,731 41,658
Salaries, wages and other benefits - note 23.2 1,168,029 1,032,729
Fuel and power 384,753 367,376
Rent, rates and taxes 6,317 2,702
Royalty and technical assistance fee 223,106 154,028
Insurance 80,114 66,865
Publication and subscriptions 4,670 2,913
Repairs and maintenance 173,646 125,375
Training expenses 927 3,038
Travelling and entertainment 16,882 11,154
Vehicle running 16,999 14,524
Depreciation / amortisation 249,526 254,859
Impairment charge 32,308 18,309
Provision for slow moving and obsolete stock - raw
and packing materials 53,819 91,794
Provision for slow moving and obsolete
stores and spares 7,341 2,426
Canteen expenses 102,880 77,077
Laboratory expenses 37,981 33,686
Communication and stationery 13,975 10,673
Security expenses 12,784 12,532
Stock written off 6,307 30,803
Other expenses 42,168 29,991
14,008,469 11,517,892

Opening stock of work-in-process 393,719 301,517

Closing stock of work-in-process (577,804) (393,719)
Cost of goods manufactured 13,824,384 11,425,690
Opening stock of finished goods 1,549,994 1,580,625
15,374,378 13,006,315

Closing stock of finished goods (2,149,817) (1,549,994)

Cost of samples shown under selling, marketing
and distribution expenses - sales promotion (116,251) (104,696)
13,108,310 11,351,625

Trading goods

Opening stock of finished goods 811,763 1,037,019

Purchase of finished goods 2,854,738 2,500,151
3,666,501 3,537,170

Closing stock of finished goods (830,085) (811,763)

Cost of samples shown under selling, marketing
and distribution expenses - sales promotion (12,998) (13,790)
2,823,418 2,711,617
15,931,728 14,063,242

73
 Notes to and Forming Part of the Financial Statements
23.1 This includes Rs. 20 million paid for facility up-gradation purposes in terms of a litigation compromise.

23.2 Salaries, wages and other benefits include Rs. 47.20 million and Rs. 32.02 million (2010: Rs. 42.79
million and Rs. 28.80 million) in respect of defined benefit plans and contributory provident fund
respectively.
2011 2010
Rupees ’000
24. SELLING, MARKETING AND DISTRIBUTION EXPENSES

Salaries, wages and other benefits - note 24.1 807,992 768,013

Sales promotion 888,024 693,572
Advertising 323,369 172,787
Handling, freight and transportation 281,303 227,529
Travelling and entertainment 185,219 166,151
Depreciation / amortisation 47,988 44,340
Vehicle running 46,174 42,093
Publication and subscriptions 29,633 20,408
Fuel and power 19,842 23,461
Communication 21,880 20,100
Provision for doubtful debts 18,303 14,066
Repairs and maintenance 22,381 24,132
Insurance 22,329 14,396
Printing and stationery 11,703 13,174
Security expenses 10,143 9,259
Rent, rates and taxes 8,906 9,900
Canteen expenses 1,251 1,716
Training expenses 6,204 4,173
Other expenses 37,729 32,246

2,790,373 2,301,516

24.1 Salaries, wages and other benefits include Rs. 42.46 million and Rs. 26.68 million (2010: Rs. 35.5
million and Rs. 24.15 million) in respect of defined benefit plans and contributory provident fund
respectively.
2011 2010
Rupees ’000
25. ADMINISTRATIVE EXPENSES

Salaries, wages and other benefits - note 25.1 396,662 349,484

Depreciation 63,659 72,938
Communication 32,393 37,644
Training expenses 7,551 12,062
Travelling and entertainment - note 25.2 16,160 23,632
Legal and professional charges 37,753 27,974
Repairs and maintenance 22,093 27,620
Donations - note 25.3 15,145 25,681
Printing and stationery 10,931 15,662
Auditors’ remuneration - note 25.4 9,582 11,863
Vehicle running 19,984 17,243
Security expenses 16,982 14,957
Publication and subscriptions 9,466 12,195
Rent, rates and taxes 7,374 7,113
Insurance 9,180 6,759
Canteen expenses 7,014 8,402

Restructuring cost 324,533 257,218

Less: recovery from associated undertaking - (127,823)
324,533 129,395
Other expenses
Less: recovery from associated undertaking 69,125 101,492
(53,094) (75,880)
16,031 25,612

1,022,493 826,236

74
25.1 Salaries, wages and other benefits include Rs. 15.73 million and Rs. 9.94 million (2010: Rs. 11.69
million and Rs. 11.21 million) in respect of defined benefit plans and contributory provident fund
respectively.

25.2 These are net of recovery from related party of Rs. 980 thousand (2010: Rs. 985 thousand).

25.3 Donations include a sum of Rs. 655 thousand (2010: Rs. 537 thousand) paid to Concern for
Children Trust, B/63, Estate Avenue, S.I.T.E, Karachi and Rs.190 thousand (2010: Rs.815 thousand)
paid to Trust for Health and Medical Sciences, Beecham Road, Laiqabad, Landhi, Karachi. In both
the trusts Mr. Muhammad Salman Burney, Chairman / Chief Executive, Mr. Shahid Mustafa Qureshi,
Director, Ms. Erum Shakir Rahim, Director and Ms. Fariha Salahuddin, Director, are trustees.

2011 2010
Rupees ’000
25.4 Auditors' remuneration

Audit fee 4,800 3,900

Fee for review of half yearly financial statements,
special certifications and others 4,010 3,578
Taxation services 283 3,485
Out-of-pocket expenses 489 900
9,582 11,863

26. OTHER OPERATING EXPENSES

Workers' Profits Participation Fund - note 7.2 121,588 105,150

Workers' Welfare Fund 50,409 46,481
Central Research Fund 22,069 19,512
194,066 171,143
27. OTHER OPERATING INCOME

Income from financial assets

Return on PIBs 8,848 16,141
Return on Treasury Bills 68,907 68,045
Income on savings and deposit accounts 265,634 238,167
343,389 322,353
Income from non-financial assets
Gain on disposal of operating assets 43,852 1,581

Others
Scrap sales 31,799 18,818
Insurance commission 25,256 13,647
Service fee on clinical trial studies 4,779 6,634
Liabilities no longer required written back 7,528 31,000
Others 5,324 3,663
461,927 397,696
28. FINANCIAL CHARGES

Exchange loss - net 19,455 5,058

Bank charges 16,237 14,832
Interest on Workers' Profits
Participation Fund – note 7.2 834 136
36,526 20,026

75
 Notes to and Forming Part of the Financial Statements

2011 2010
Rupees ’000

29. TAXATION

Current
- for the year 1,059,128 864,298
- prior years 25,000 12,500
Deferred 11,844 (2,457)
1,095,972 874,341

29.1 Relationship between tax expense

and accounting profit

Profit before taxation 2,236,888 1,931,724

Tax at the applicable rate of 35% 782,911 676,103

Prior years' adjustment 25,000 12,500
Effect of final tax regime 233,919 129,217
Effect of flood surcharge 42,000 -
Tax effect of other than temporary differences 12,142 56,521
1,095,972 874,341

30. EARNINGS PER SHARE

Profit after taxation 1,140,916 1,057,383

Weighted average number of outstanding shares - note 30.1 239,269 239,269

Earnings per share - basic Rs.4.77 Rs. 4.42

30.1 The weighted average shares at December 31, 2010 have been increased to reflect the bonus
shares issued during the year and shares issued under the scheme of amalgamation with former
Stiefel Laboratories Pakistan (Private) Limited.

30.2 A diluted earnings per share has not been presented as the company did not have any convertible
instruments in issue which would have any effect on the earnings per share if the option to convert
is exercised.

76
 2011 2010
Rupees ’000
31. CASH GENERATED FROM OPERATIONS

Profit before taxation 2,236,888 1,931,724

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

and other items

Depreciation / amortisation 361,173 372,137

Return on investments - PIBs (8,848) (16,141)
Impairment charge - net 32,308 18,309
Gain on disposal of operating assets (43,852) (1,581)
Provision for staff retirement benefits 105,388 89,983
446,169 462,707
Profit before working capital changes 2,683,057 2,394,431

Effect on cash flow due to working capital changes

(Increase) / decrease in current assets

Stores and spares (8,636) (8,567)

Stock-in-trade (1,289,991) 231,154
Trade debts (47,642) 1,032,695
Loans and advances (19,111) (49,419)
Trade deposits and prepayments 41,577 9,990
Interest accrued (12,712) 2,945
Refunds due from government 430 (14,484)
Other receivables (26,844) (166,836)
(1,362,929) 1,037,478

Increase / (decrease) in current liabilities

Trade and other payables (3,988) 321,907
Provisions 86,238 (105,933)
(1,280,679) 1,253,452
1,402,378 3,647,883
32. CASH AND CASH EQUIVALENTS

Cash and bank balances - note 21 2,128,926 2,808,772

Short term investment - Treasury bill - note 20 196,706 729,724
2,325,632 3,538,496
33. SEGMENT INFORMATION

A business segment is a group of assets and operations engaged in providing products that are
subject to risks and returns that are different from those of other business segments. Management
has determined the operating segments based on the information that is presented to the chief
operation decision-maker of the company for allocation of resources and assessment of
performance. Based on internal management reporting structure the company is organised into the
following two operating segments:

- Pharmaceuticals
- Consumer healthcare

Management monitors the operating results of above mentioned segments separately for the
purpose of making decisions about resources to be allocated and for assessing performance.

77
 Notes to and Forming Part of the Financial Statements

Segment results and assets include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis.

33.1 The financial information regarding operating segments is as follows:

Segment wise operating results

Year ended December 31, 2011 Year ended December 31, 2010
Pharma- Consumer Pharma- Consumer
ceuticals healthcare Total ceuticals healthcare Total
(Rupees ‘000) (Rupees ‘000)

Revenue - note 33.2 19,389,916 2,360,231 21,750,147 17,147,771 1,768,420 18,916,191

Cost of sales (14,047,218) (1,884,510) (15,931,728) (12,813,392) (1,249,850) (14,063,242)

Gross Profit 5,342,698 475,721 5,818,419 4,334,379 518,570 4,852,949
Selling, marketing and
distribution expenses (2,300,204) (490,169) (2,790,373) (1,973,179) (328,337) (2,301,516)
Administrative expenses (983,597) (38,896) (1,022,493) (792,043) (34,193) (826,236)
Segment results 2,058,897 (53,344) 2,005,553 1,569,157 156,040 1,725,197

Reconciliation of segments’ results with profit before taxation:

2011 2010
Rupees ‘000

Total results for reportable segments 2,005,553 1,725,197

Other operating expenses (194,066) (171,143)
Other operating income 461,927 397,696
Financial charges (36,526) (20,026)
Profit before taxation 2,236,888 1,931,724

33.2 All revenue comprises of sales to external customers as there is no inter-segment sale.

33.3 Segment Assets & Liabilities represent:

As at December 31, 2011 As at December 31, 2010

Pharma- Consumer Pharma- Consumer
ceuticals healthcare Total ceuticals healthcare Total
(Rupees ‘000) (Rupees ‘000)

Segment assets 11,720,066 272,581 11,992,647 9,692,541 351,550 10,044,091

Segment liabilities 3,073,551 159,429 3,232,980 2,921,543 86,019 3,007,562

Reconciliation of segments' assets and liabilities with totals in the balance sheet is as follows:

As at December 31, 2011 As at December 31, 2010

(Rupees ‘000) (Rupees’000)
Assets Liabilities Assets Liabilities

Total for reportable segments 11,992,647 3,232,980 10,044,091 3,007,562

Unallocated assets / liabilities 3,444,938 1,096,033 4,847,708 1,084,423
Total as per balance sheet 15,437,585 4,329,013 14,891,799 4,091,985

78
33.4 Other segment information is as follows:

Year ended December 31, 2011 Year ended December 31, 2010
Pharma- Consumer Pharma- Consumer
ceuticals healthcare Total ceuticals healthcare Total
(Rupees ‘000) (Rupees ‘000)

Depreciation and
amortisation 356,109 5,064 361,173 367,702 4,435 372,137
Salaries, wages and
other benefits 2,305,669 67,014 2,372,683 2,090,656 59,570 2,150,226
Sales promotion and
advertisement 848,544 362,849 1,211,393 633,714 232,645 866,359
Handling and Freight 273,619 7,684 281,303 224,282 3,247 227,529

34. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The amounts charged in these financial statements for remuneration of the Chief Executive, Directors and
Executives are as follows:

Chief Executive Directors Executives

2011 2010 2011 2010 2011 2010
(Rupees ‘000)

Managerial remuneration 14,773 13,401 28,170 14,800 250,445 238,363

Bonus and SARs - note 34.1 16,019 16,533 25,354 12,032 123,579 84,990
Retirement benefits 3,476 3,130 7,290 3,802 59,176 53,273
House rent 6,043 5,482 12,677 6,660 102,894 88,107
Utilities 1,343 1,218 2,817 1,480 22,883 19,579
Medical expenses 134 133 419 216 10,718 8,922
Others 433 528 4,386 1,999 35,669 15,449
42,221 40,425 81,113 40,989 605,364 508,683

Number of person (s) 1 1 6 3 228 213

In addition to the above, fee to three (2010: two) non-executive Directors during the year amounted to Rs. 300
thousand (2010: Rs. 135 thousand).

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

34.1 Bonus includes Share Appreciation Rights (SARs) given to Chief Executive, Executive Directors and certain executives
amounting to Rs. 45.53 million (2010: Rs. 18.84 million). These are granted every year and are payable upon
completion of three years of qualifying period of service. They are linked with the share value of ultimate parent
company, GlaxoSmithKline plc, UK.

79
 Notes to and Forming Part of the Financial Statements

35. TRANSACTIONS WITH RELATED PARTIES

2011 2010
Rupees '000
Relationship Nature of transactions

Holding Company: Dividend paid 640,723 672,268

Associated companies: a. Purchase of goods 4,633,717 4,152,353

b. Sale of goods 159,192 115,790
c. Royalty paid 133,218 88,496
d. Recovery of expenses 54,088 74,699
e. Service fee on clinical trial studies 4,779 6,634
f. Donations 845 1,352
g. Severance cost reimbursement - 127,823

Staff retirement
funds: a. Expense charged for retirement
benefit plans 174,025 154,140
b. Payments to retirement benefit plans 274,118 126,160
c. Receipts from retirement benefit plans - 31,212

Key management
personnel: a. Salaries and other employee benefits 179,919 138,967
b. Post employment benefits 17,173 12,945
c. Sale of assets 655 292
d. Legal / professional fee 272 12,000

35.1 Balances of related parties as at December 31, 2011 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.

36. RUNNING FINANCE UNDER MARK-UP ARRANGEMENTS

The facility for running finance available from a bank amounted to Rs. 100 million (2010: Rs. 350 million).
Rate of mark-up is three month KIBOR plus 1.25% (2010: from three month KIBOR plus 0.50% to one
month KIBOR plus 1.25%) per annum. The arrangements are secured by Intra Group Guarantee.

The facilities for opening letters of credit and guarantees as at December 31, 2011 amounted to Rs. 2.16
billion (2010: Rs. 2.16 billion) of which unutilised balances at the year end amounted to Rs. 1.14 billion
(2010: Rs. 1.28 billion).

37. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

37.1 Financial assets and liabilities

All the financial assets of the company, except Treasury Bill classified as held to maturity, 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.

80
 Interest bearing Non-interest bearing Total
Maturity up Maturity Maturity up Maturity
to one after one Total to one after one Total
year year year year
Rupees '000
Financial assets
Loans to employees 1,767 1,322 3,089 46,755 80,683 127,438 130,527
Trade Deposits - - - 43,866 11,780 55,646 55,646
Trade debts - - - 343,404 - 343,404 343,404
Interest accrued - - - 30,372 - 30,372 30,372
Other receivables - - - 319,800 - 319,800 319,800
Cash and bank balances 2,036,689 - 2,036,689 92,237 - 92,237 2,128,926
Treasury Bills 196,706 - 196,706 - - - 196,706
December 31, 2011 2,235,162 1,322 2,236,484 876,434 92,463 968,897 3,205,381
December 31, 2010 3,633,186 1,324 3,634,510 823,931 84,137 908,068 4,542,578

Financial liabilities
Trade and other payables - - - 3,534,935 - 3,534,935 3,534,935
Provisions - - - 217,239 - 217,239 217,239
December 31, 2011 - - - 3,752,174 - 3,752,174 3,752,174
December 31, 2010 - - - 3,154,544 - 3,154,544 3,154,544

On balance sheet date gap

December 31, 2011 2,235,162 1,322 2,236,484 (2,875,740) 92,463 (2,783,277) (546,793)
December 31, 2010 3,633,186 1,324 3,634,510 (2,330,613) 84,137 (2,246,476) 1,388,034

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

37.2 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, 2011 the company does not have any borrowings.
Further the entire interest bearing financial assets of Rs. 2.24 billion (2010: Rs. 3.46 billion) are on
fixed interest rates, hence management believes that the company is not 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, 2011 amount to Rs. 762.38 million (2010: Rs. 1.02 billion). The liability is mainly denominated in
US Dollars. At December 31, 2011, 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 lower / higher by Rs. 38.12 million (2010: Rs. 51.08 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:

81
 Notes to and Forming Part of the Financial Statements
2011 2010
Rupees ‘000

Trade debts 343,404 295,762

Loans to employees, trade deposits,
interest accrued and other receivables 536,345 536,089
Investments 196,706 901,955
Bank balances 2,115,994 2,803,756
3,192,449 4,537,562

Trade debts of the company are not exposed to significant credit risk as the company trades with
credit worthy third parties. Trade debts of Rs. 124.47 million (2010: Rs. 108.77 million) are past due
of which Rs. 47.55 million (2010: Rs. 29.74 million) have been impaired. Past due but not impaired
balances include Rs. 17.46 million (2010: Rs. 5.61 million) outstanding for more than three months.

Loans to employees are secured against their retirement benefits.

Investments represent Treasury bill. The Treasury bill is of short term nature and therefore has a low
credit risk.

Bank balances represent low credit risk as these 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, 2011 there is
no maturity mismatch between financial assets and liabilities that exposes the company to liquidity risk.

38. 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.

39. CAPACITY AND PRODUCTION

The capacity and production of the company's plants are indeterminable as these are multi-product and
involve varying processes of manufacture.

40. SUBSEQUENT EVENTS

The Board of Directors in its meeting held on March 08, 2012 proposed a cash dividend of Rs. 4.0 per
share (2010: Rs. 4.0 per share) amounting to Rs. 0.96 billion (2010: Rs. 0.83 billion) and proposed a transfer
of Rs. 239.27 million from ‘Unappropriated profit’ to “reserve for bonus shares” (2010:Rs. 312.09 million
out of the capital reserves) for issuance of ten bonus shares for every hundred shares held (2010:15
bonus shares for every hundred shares held) subject to the approval of the company in the forthcoming
annual general meeting of the company.

41. DATE OF AUTHORISATION FOR ISSUE

These financial statements were approved and authorised for issue by the Board of Directors of the
company on March 08, 2012.

M. Salman Burney Yahya Zakaria

Chairman / Chief Executive Chief Financial Officer

82
Form 34
Pattern of Shareholding
NUMBER OF SHARES HOLDING TOTAL SHARES HELD
SHAREHOLDERS From To

929 1 100 28,910

1,225 101 500 330,328
839 501 1000 558,010
1,222 1001 5000 2,726,499
278 5001 10000 1,914,441
121 10001 15000 1,493,167
56 15001 20000 976,426
37 20001 25000 817,685
30 25001 30000 832,006
11 30001 35000 354,121
6 35001 40000 231,971
8 40001 45000 338,910
9 45001 50000 420,197
7 50001 55000 363,619
5 55001 60000 282,189
2 60001 65000 123,695
8 65001 70000 543,140
2 70001 75000 141,875
4 75001 80000 304,633
2 80001 85000 163,957
2 85001 90000 174,559
3 90001 95000 277,557
1 95001 100000 100,000
1 110001 115000 110,061
2 120001 125000 246,017
1 130001 135000 134,170
1 135001 140000 135,282
1 140001 145000 144,106
1 155001 160000 159,445
2 160001 165000 327,233
2 175001 180000 358,897
1 180001 185000 181,150
1 220001 225000 221,575
2 225001 230000 457,082
1 295001 300000 300,000
1 300001 305000 301,610
1 555001 560000 557,372
1 565001 570000 568,977
1 660001 665000 662,459
1 810001 815000 814,172
1 2235001 2240000 2,236,047
1 2315001 2320000 2,316,541
1 3710001 3715000 3,714,959
1 6835001 6840000 6,837,763
1 7380001 7385000 7,382,983
1 13395001 13400000 13,395,558
1 29585001 29590000 29,586,199
1 154620001 154625000 154,621,626
4,836 239,269,179

83
 Categories of Shareholders
a)

Sr. Categories of Number of Shares Percentage

No. Shareholders Shareholders Held (%)

1 Individuals 2,105 4,636,852 1.94

2 Investment Companies 4 2,274 0.00
3 Insurance Companies 1 1 0.00
4 Joint Stock Companies 10 22,829 0.01
5 Financial Institutions 2 4,892 0.00
6 Associated Companies 4 197,618,183 82.59
7 Central Depository Company (b) 2,705 36,951,654 15.45
8 Others (see below) 5 32,494 0.01
4,836 239,269,179 100.00

Others:
i Mohsin Trust 1 19,875 0.01
ii The Al-Malik Charitable Trust 1 704 0.00
iii Securities Exchange Commission of Pakistan 1 1 0.00
iv Punjabi Saudagar Multipurpose Co-operative Society 1 250 0.00
v The Anjuman Wazifa Sadat-o-Momineen Pakistan 1 11,664 0.00
5 32,494 0.01

(b) Categories of Account holders and Sub-Account holders

as per Central Depository Company of Pakistan
as at December 31, 2011

Sr. Categories of Number of Shares Percentage

No. Shareholders Shareholders Held (%)

1 Individuals 2,609 8,881,474 3.71

2 Investment Companies 11 654,156 0.28
3 Insurance Companies 11 8,703,848 3.64
4 Joint Stock Companies 43 380,108 0.16
5 Financial Institutions 13 17,817,732 7.45
6 Modarabas 2 31,063 0.01
7 Foreign Companies 3 77,533 0.03
8 Others (see below) 13 405,740 0.17
2,705 36,951,654 15.45

Others:
i The Aga Khan University Foundation 1 26,680 0.01
ii The Pakistan Memon Educational & Welfare Society 1 48,300 0.02
iii Trustees Kandawala Trust 1 51,355 0.02
iv Trustees Saeeda Amin WAKF 1 51,750 0.02
v Trustees Mohammad Amin WAKF ESTATE 1 86,250 0.04
vi Managing Committee Karachi Zorthosti Banu Mandal 1 21,799 0.01
vii Trustees of Zafa Phar Lab. Staff P. Fund 1 12,577 0.01
viii Trustees Gul Ahmed Textile Mills Ltd. 1 500 0.00
ix Trustees Mrs. Khorshed H. Dinshaw & Mr. Hosh 1 40,752 0.02
x Trustees D.N.E. Dinshaw Charity Trust 1 55,306 0.02
xi Centre for Development of Social Service 1 3,450 0.00
xii Trustee A Saadat & Co. Employees Gratuity 1 4,600 0.00
xiii The Al-Malik Charitable Trust 1 2,421 0.00
13 405,740 0.17

84
Shareholding Information
Categories of Shareholders Number of No. of
Shareholder Shares held
Holding Company

S.R. One International B.V. Netherlands 2 184,207,825

SmithKline Beecham Nominee Ltd. 1 14,800
Stiefel Laboratories (Ireland) Ltd. 1 13,395,558

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

Investment Corporation of Pakistan 2 279

National Bank of Pakistan (Trustee Department) 2 7,383,008

Directors, CEO and their spouses and minor children:

Mr. M. Salman Burney 1 3,593

Mr. Shahid Mustafa Qureshi 1 3
Dr. Muzaffar Iqbal 1 1
Mr. Rafique Dawood 1 1
Mr. Husain Lawai 1 2,910
Mr. Maqbool-ur-Rehman 1 1,957

Executives 3 1,575

Public sector companies and corporation :

Banks, Development Finance Institutions,

Non-Banking Finance Institutions, Insurance 43 19,908,212
Companies, Modarabas and Mutual Funds

Shareholders holding 10% or more voting interest :

S.R. One International B.V. Netherlands 2 184,207,825

83%

Distribution of Shares
Holding Company 83%
Individuals 6%
Insurance Companies 4%
Financial Institutions 7%

7%
4% 6%

85
 Notice of Annual General Meeting

Notice is hereby given that the SIXTY-FIFTH Annual General Meeting of the Shareholders of the Company
will be held at the Beach Luxury Hotel, Karachi at 11:00 a.m. on Friday, April 06, 2012 to transact the
following business:

1. (a) To receive and adopt the Report of the Directors and the Accounts for the year ended December
31, 2011 and the Auditors' Report thereon;

(b) to approve the payment of a dividend.

2. To appoint Auditors and fix their remuneration.

3. To consider and if thought fit to capitalize a sum of Rs. 239.27 million out of the Unappropriated
profit of the company for the issuance of 23,926,918 bonus shares in the proportion of ten ordinary
shares for every one hundred ordinary shares held by the Members of the Company as on March 30, 2012

By Order of the Board

Karachi Shahid Mustafa Qureshi

March 17, 2012 Director/Company Secretary

Notes:

1. The Individual Members who have not yet submitted photocopy of their valid Computerised National
Identity Card (CNIC) to the Company are once again requested to send at the earliest directly to
Company’s Share Registrar at 516, Clifton Centre, Khayaban-e-Roomi, Khehkashan, Block-5, Clifton,
Karachi. The Corporate Entities are requsted to provide their National Tax Number (NTN) Please give
Folio Number with the copy of CNIC/NTN detailes.Reference is also made to the Securities and
Exchange Commission of Pakistan (SECP) Notification dated August 18, 2011, SRO 779 (i) 2011,
which mandates that the dividend warrents should bear CNIC number of the registered number or the
authorized person, except in case of minor(s) and corporate members.

2. The Share Transfer Books of the Company will be closed for the purpose of determining the
entitlement for the payment of dividend from March 30, 2012 to April 06, 2012 (both days
inclusive). Transfers received at the Office of the Share Registrars of the Company at 516, Clifton
Centre, Khayaban-e-Roomi, Kehkashan, Block - 5, Clifton, Karachi-75600 at the close of business on
March 29, 2012 will be treated in time for the purposes of entitlement to the transferees.

3. 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.

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

5. 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.

86
 A. For Attending the Meeting:

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

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

B. For Appointing Proxies:

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

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

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

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

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

6. The shareholders holding physical shares are also required to bring their original CNIC and/or copy of CNIC
of shareholder(s) of whom he/she/they hold Proxy(ies) without CNIC such shareholder(s) shall not be
allowed to attend and/or sign the Register of Shareholders/Members at the AGM.

87
 Factories and Distribution / Sales Offices
FACTORIES DISTRIBUTION / SALES OFFICE

Karachi Karachi
Estate Avenue,
35, Dockyard Road, B - 63, 65 S.I.T.E.,
West Wharf, Karachi - 74000 Karachi
Tel: (92 - 21) 32315478 - 82 Tel: (92 - 21) 32561200 - 07
Fax: (92 - 21) 32311120 Fax: (92 - 21) 32564908
UAN: 111 - 475 - 725
Sukkur
F - 268, S.I.T.E.,
Near Labour Square, Plot No. 77/80, Block B,
Karachi - 75700 Friends Cooperative Housing Society,
Tel: (92 - 21) 32570665 - 69 Akhuwut Nagar, Airport Road
Fax: (92 - 21) 32572613 Tel: (92 - 71) 5630668, 5630144
Fax: (92 - 71) 5631665
Plot # 5, Sector 21,
Korangi Industrial Area, Multan
Karachi - 74900
Fax: (92 - 21) 35015800 Islam-ud-din House, Mehmood Kot,
UAN: 111 - 000 - 267 Bosan Road
Tel: (92 - 61) 6222061 - 63
Lahore Fax: (92 - 61) 6222064

18.5 Km., Ferozepur Road, Lahore

P.O. Box No. 244
Tel: (92- 42) 5811931 - 35 Cordeiro House,
Fax: (92 - 42) 5820821 Plot No. 27, Kot Lakhpat Industrial Estate,
Kot Lakhpat
Tel: (92 - 42) 35111061- 64
Fax: (92- 42) 35111065

Islamabad

Aleem House, Plot No. 409,

Sector 1-9, Industrial Area
Tel: (92 - 51) 4433589, 4433598
Fax: (92 - 51) 4433706

Peshawar

D’ Souza House, Nasirpur,

Near Abid Flour Mills,
G. T. Road
Tel: (92 - 91) 2261451 - 52
Fax: (92 - 91) 2261457

88
Form of Proxy
GlaxoSmithKline Pakistan Limited

I/We______________________________________of___________________________________________ , being a
Member of GlaxoSmithKline Pakistan Limited holding ___________________ ordinary shares, HEREBY APPOINT
________________________________________ of ____________________________________________ , another
member of the Company, failing him/her _________________________ of _____________________________ as
my/ou r prox y in my/ou r absenc e to attend and to vote and act for me/us and on my/ou r behal f at the Annua l
General Meeting of the Company to be held at the Beach Luxury Hotel, Karachi on Firday, April 06, 2012 and at
any adjournment thereof.

As witness my/our hand(s) this _____ day of _______________ 2012.

Signed in the presence of:

____________________ ____________________
Ten Rupees
(Signature of Witness 1) (Signature of Witness 2)
Revenue Stamp
Name of Witness: Name of Witness:
CNIC No.: CNIC No.:

Address: Address:

________________________________________ __________________________________________
(Name in Block Letters) Signature of the Shareholder
Folio No.
Notes:
1. The Member is requested:
(a) to affix Revenue Stamp of Rs. 10/- at the place indicated above;
(b) to sign in the same style of signature as is registered with the Company;
(c) to write down his/her Folio Number.

2. For the appointment of the above proxy to be valid, this instrument of proxy must be received at the
Office of the Share Registrars of the Company at 516, Clifton Centre, Khayaban-e-Roomi, Kehkashan,
Block - 5, Clifton, Karachi - 75600, at least 48 hours before the time fixed for the Meeting.

3. Any alteration made in this instrument of proxy should be initialed by the person who signs it.

4. In the case of joint holders, the vote of the senior who tenders a vote whether in person or by proxy will
be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority will be
determined by the order in which the names stand in the Register of Members.

5. The Proxy must be a Member of the Company.

For CDC Account Holders / Corporate Entities

In addition to the above, the following requirements have to be met:

(i) The proxy form must be witnessed by two persons whose names, addresses and CNIC numbers shall be
mentioned on the form.
(ii) Attested copies of CNIC or the passport of the beneficial owners and of the Proxy must be furnished with
the proxy form.
(iii) The Proxy must produce his original CNIC or original passport at the time of the Meeting.
(iv) In case of corporate entities, the Board of Directors’ resolution/power of attorney and specimen signature must
be submitted (unless it has been provided earlier) along with proxy forms to the Share Registrars.
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CORRECT
Gangjees Registrar Services (Pvt.) Ltd. POSTAGE
516, Clifton Centre, Khayaban-e-Roomi,
Kahkeshan, Block - 5, Clifton,
Karachi - 75600