With the name of Allah, The most merciful The most beneficent.

Unilever Pakistan Foods Limited (Analysis of Financial Statements) Presented by:Ayesha Arshad Arid number:08-arid-348

Introduction Unilever Pakistan Foods Limited, formerly known as Rafhan Best Foods Limited (RBL) has been one of the leading producers of consumer food products. The majority of RBL s shares are held by Bestfoods, USA, which is engaged in producing a vast range of food products. RBL was incorporated in Pakistan 1997 and is listed on Karachi and Lahore stock exchanges in Food and Allied sector.

On 24th April, 2007 Rafan Best Foods Limited was renamed Unilever Pakistan Foods Limited. Currently, Unilever Foods Pakistan has 5 major brands: Knorr, Rafhan, Energile, Glaxose-D and Unilever Food Solutions.

Vision We work to create a better future every day, we help people feel good, look good and get more out of life with brands and services that are good for them and good for others.We will inspire people to take small everyday actions that can add up to a big difference in the world. We will develop new ways of doing business that will allow us to double the size of our Company while reducing our environmental impact.

Core values According to them: – We are honest, transparent and ethical in our dealings at all times. – We deliver what we promise. – We win the hearts and minds of our consumers and customers. – We are empowered leaders, who are inspired by new challenges and have a bias for action. – We believe in trust, truth and outstanding teamwork. We value a creative & fun environment. – We care about and actively contribute to the community in which we live.

Director’s Report (for the year 2009) Sales for the year 2009 grew by 9.6% Gross margin remained under pressure due to rising input material costs and rupee depreciation. Director declared an interim cash dividend of Rs per share on August 17, 2009 and recommend a further dividend of Rs per share, which makes a total of Rs per share for the year 2009.

CSR (corporate Social Responsibility) – The Company believes that the highest standards of corporate behaviour towards society are essential to success. Corporate Philanthropy Energy Conservation Environmental Protection Measures Consumer Protection Measures Occupational Safety and Health Business Ethics and Anti-Corruption Measures

Corporate Governance The management of the Company is committed to good corporate governance and complying with the best practices. – The financial statements prepared by the management of the Company present fairly its state of affairs, the result of its operations, cash flows and changes in equity. – Appropriate accounting policies have been consistently applied in preparation of financial statements.

– International Financial Reporting Standards have been followed in preparation of financial statements and any departure there from has been disclosed. – The system of internal control is sound in design and has been effectively implemented and monitored. – There are no significant doubts upon the Company's ability to continue as a going concern. Corporate Governance (cont’d)

Directors: – The Board of Directors comprises of two executive directors and eight non-executive directors. Audit Committee: – The Board of Directors has established an Audit Committee in compliance with the Code of Corporate Governance.

Auditors' Review Report Audited the annexed balance sheet of Unilever Pakistan Foods Limited as at December 31, 2009 and the related profit and loss account, cash flow statement and statement of changes in equity together with the notes. It is the responsibility of the company’s management to establish and maintain a system of internal control. We conducted our audit in accordance with the auditing standards as applicable in Pakistan.

Opinions Proper books of accounts have been kept by the Company as required by the Companies Ordinance, The balance sheet and profit and loss account together with the notes have been drawn up in conformity with the Companies Ordinance, The expenditure incurred during the year was for the purpose of the Company’s business.

Opinions(cont’d) The business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Company. Zakat deductible at source under the Zakat and Ushr Ordinance,1980 was deducted by the Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

Balance sheet Profit and loss account

AssetsNotes Non current assets Property, plant and equipment3288,872307,707 Intangible assets481,637181,145 Long term loans53,2894,836 Long term payments63555, ,153499,176 Current assets Store and spares714,63613,804 Stock in trade8333,840352,394 Trade debts979,64949,976 Loans and advances1011,96318,897 Trade deposits and short term prepayments1118,03934,132 Other receivables1215,2872,519 Taxation-payments less provision86,57336,693 Cash and bank balances1340,6968, ,683516,437 Total assets974,8361,015,613

Property, plant and equipment Property, plant and equipment is stated at cost less depreciation except capital work in progress which is stated at cost. Depreciation is calculated using the straight- line method. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Intangible assets Intangible assets having indefinite useful life are stated at cost less accumulated amortization. The useful lives of intangible assets are reviewed at each balance sheet date to determine whether events and circumstances continue to support an indefinite useful life assessment for the asset.

Stores and spares These are valued at average cost and provision is made for slow moving and obsolete stores and spares. Stock in trade This is stated at the lower of cost and estimated net realizable value. Cost is determined using the weighted average method. Cost of work in process includes direct cost of materials whereas that of finished goods also includes direct cost of labor and production overheads. Net realizable value is the estimated selling price in the ordinary course of business less cost necessarily to be incurred in order to make the sale.

Trade debts Trade and other debts are recognized at fair value of consideration receivable. Debts considered irrecoverable are written off and provision is made against those considered doubtful of recovery. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. Operating leases Leases in which a significant portion of the risks and rewards of ownership is retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit and loss on a straight-line basis over the period of the lease.

Equity and liabilities Notes Capital and reserves Share capital1461,576 Reserves15207,080239, ,656301,223 Liabilities Non current liabilities Retirement benefits-obligation167,9944,889 Deferred taxation1717,50337,190 Current liabilites Trade and other payables18512,182415,673 Accrued interest/ mark up199487,318 Sales tax payable2018,7786,729 Short term borrowings21148,775242, ,683672,311 Total liabilities 706,180714,390 Commitments22 Total equity and liabilities 974,8361,015,613

Trade and other payables Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in future for goods and services. Borrowings and their cost Borrowings are recorded at the proceeds received. Borrowing costs are recognised as an expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs, if any, are capitalised as part of the cost of that asset.

Notes Sales233,376,5113,081,879 Cost of sales24(2,122,144)(1,874,921) Gross profit 1,254,3671,206,958 Distribution cost25(797,304)(575,726) Administrative expenses26(50,219)(58,021) Other operating expenses27(120,275)(41,603) Other operating income2830,16120, ,730552,544 Restructing cost2952,557 Profit from operations264,173552,544 Finance cost3022,51722,233 Profit before taxation241,656530,311 Taxation3164,864181,765 Profit after taxation176,792348,546 Earnings per share-rupees

Provisions Provisions, if any, are recognized when the Company has a present legal or constructive obligation as a result of past events. Financial assets and liabilities All financial assets and liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively. Foreign currency transactions and translation Foreign currency transactions are converted into Pak Rupees using the exchange rates prevailing at the dates of the transactions.

Revenue recognition Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, and is recognized on the following basis: – sale is recognized when the product is dispatched to customers; and – return on savings account is recognized on accrual basis. Dividends Dividend and appropriation to reserves are recognised in the financial statements in the period in which these are approved.