sanofi-aventis Pakistan limited

INTERIM CONDENSED
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UN-AUDITED)

CONTENTS

Pages Company Information Directors Report Balance Sheet Profit and Loss Account Cash Flow Statement Statement of Changes in Equity Notes to the Accounts 2 3 4 5 6 7 8

COMPANY INFORMATION
Board of Directors
Syed Babar Ali Tariq Wajid Pir Ali Gohar Tariq Iqbal Khan Syed Hyder Ali J.L. Grunwald Eric Le-Bris Jean-Marc Georges M.Z. Moin Mohajir Chairman Managing Director (Alternate Arshad Ali Gohar) (Alternate Dr.Amanuallah Khan) (Alternate Shakeel Mapara) (Alternate Muhammad Amjad)

Company Secretary
Muhammad Irfan

Board Audit Committee

Syed Hyder Ali Eric Le-Bris Dr. Amanullah Khan Yasir Pirmuhammad (Chairman) Non-Executive Director (Member) Non-Executive Director (Member) Executive Director (Secretary) Head of Audit & Compliance

Board Share Transfer Committee

Tariq Wajid M.Z. Moin Mohajir

Management Committee
Tariq Wajid Muhammad Amjad Dr. Amanullah Khan Zubair Rizvi Aslam Sheikh Masaud Ahmed Dr. Sohail Manzoor M.Z. Moin Mohajir Shakeel Mapara Aamer Waheed Masood A. Khan Yasir Pirmuhammad Mamoona F. Naqvi Laila Khan

Auditors
Ford Rhodes Sidat Hyder & Co. Chartered Accountants

Legal Advisors
Azfar & Azfar Rizvi, Isa, Afridi & Angell Haidermota & Co. Saadat Yar Khan & Co. Khan & Hafiz Associates.

Bankers
Citibank, N.A. Deutsche Bank AG Habib Bank Ltd. MCB Bank Ltd. Standard Chartered Bank The Royal Bank of Scotland Ltd.

Registered Office
Plot 23, Sector 22, Korangi Industrial Area, Karachi - 74900

Postal Address
P.O. Box No. 4962, Karachi - 74000

Registrars & Share Transfer Office

FAMCO Associates (Pvt.) Ltd. State Life Building No. 2-A, I.I. Chundrigar Road, Karachi - 74000.

URL
www.sanofi-aventis.com.pk

DIRECTORS REPORT TO THE SHAREHOLDERS

We are pleased to present the un-audited interim condensed financial statements of your company, for the nine months period ended September 30, 2008. These financial statements have been prepared in accordance with section 245 of the Companies Ordinance, 1984. The Companys net sales during the quarter and nine months period ended were Rs.1,149 million and Rs.3,193 million respectively showing an increase of 6.98% and 6.83% over the comparative prior periods this is all volume growth, as we have not received any price increase from the government since December 2001. The improved sales performance in the present business environment was driven by sales growth across our broad portfolio of products particularly in the therapeutic areas of Anticoagulants, Antidiabetics, Antiepileptics and Antispasmodics. Export business achieved a growth of 75.33% and 118.50% during the quarter and nine months period ended respectively over the corresponding prior periods. Gross margin as a percentage of net sales has reduced to 20.78% and 25.42% for the quarter and nine months period ended respectively from 28.55% and 28.68% during the comparative prior periods. The decrease in margins is mainly due to the depreciation of Pak Rupee against all hard currencies resulting in higher cost of raw and packing materials, inflation soaring at more than 30%, exorbitant increases in fuel and energy prices, transportation costs, labour costs, etc resulting in the escalation of production costs of pharmaceutical products. We are continuously improving our processes to bring in efficiencies but such initiatives can only partially offset the high costs increases. We foresee further erosion in margins and profitability if the government does not grant across the board price increase soon. Distribution and marketing expenses for the quarter ended have decreased by 8.73% whereas these recorded an overall increase of 2.83% during the nine months period ended as compared to the same periods last year. The decrease in cost during the quarter was attributable to several cost cutting measures, whereas the overall cost has risen due to general inflation and increased spending on advertising and promotional activities during the first half of the year. Administrative expenses increased by 10.40% and 16.73% for the quarter and nine months period ended respectively over the corresponding periods last year, again mainly due to general inflation. Finance cost increased by 119.29% and 0.27% for the quarter and nine months period ended respectively over the similar periods last year, mainly due to exchange loss suffered on account of the weakening Pak Rupee. The Company uses forward contracts against imports to hedge its exposure to foreign currency risk; however, due to suspension of forward bookings by the State Bank of Pakistan effective July 8, 2008, finance cost for the quarter has increased significantly as compared to the half year ended June 30, 2008 and similar period last year. Moreover, as a consequence to the significant foreign exchange loss and rising inflation, the Company suffered a net loss before taxation amounting to Rs.23.735 million during the quarter under report. Profit after tax for the nine months period ended has reduced by 42.074 million over the comparative prior period because of the reasons explained above. We believe your company has the potential to maintain good sales growth in the last quarter of the year, notwithstanding the events described above and expect good growth potential for the pharmaceutical industry in Pakistan. However, these expectations are subject to future events and are subject to change. In particular, due to adverse impact of inflation and devaluation of Pak Rupee, we believe that a price increase is now essential for this industry. On behalf of the Board of Directors, we would like to acknowledge the hard work put in by all the employees of the Company. By order of the Board

SYED BABAR ALI

Chairman Karachi: October 29, 2008

TARIQ WAJID
Chief Executive

INTERIM CONDENSED BALANCE SHEET

AS AT SEPTEMBER 30, 2008 September 30, December 31, 2008 2007 ----------- Rupees in 000----------(Un-audited) (Audited)

Note ASSETS NON-CURRENT ASSETS Fixed assets Property, plant and equipment Intangible assets Long-term loans Long-term deposits CURRENT ASSETS Stores and spares Stock-in-trade Trade debts Short-term loans and advances Trade deposits and short-term prepayments Other receivables Taxation net Cash and bank balances 4

1,085,358 563 7,441 3,325

791,082 926 8,513 3,425

41,639 964,034 148,255 31,437 47,244 91,167 269,406 2,281 1,595,463 2,692,150

42,278 1,077,021 137,920 24,974 26,789 100,136 212,887 2,102 1,624,107 2,428,053

TOTAL ASSETS EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital Authorised 10,000,000 Ordinary shares of Rs.10 each Issued, subscribed and paid-up Reserves Capital reserves Revenue reserves

100,000 96,448

100,000 96,448

23,935 965,241 989,176 1,085,624 73,836

23,935 993,741 1,017,676 1,114,124 73,087

NON-CURRENT LIABILITY Deferred taxation CURRENT LIABILITIES Trade and other payables Accrued mark-up Short-term running finances CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES 5

941,432 15,500 575,758 1,532,690

688,130 10,527 542,185 1,240,842

2,692,150

2,428,053

The annexed notes 1 to 10 form an integral part of these interim condensed financial statements.

SYED BABAR ALI

Chairman

TARIQ WAJID
Chief Executive

Karachi: October 29, 2008

INTERIM CONDENSED PROFIT AND LOSS ACCOUNT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UN-AUDITED)

Nine Months Ended September 30, September 30, 2008 2007 ----- Rupees in 000----NET SALES Cost of sales GROSS PROFIT Distribution and marketing expenses Administrative expenses Other operating expenses 3,193,050 2,381,458 811,592 616,595 86,217 14,048 716,860 20,680 115,412 75,579 39,833 24,333 815 748 25,896 13,937 1.44 2,988,816 2,131,713 857,103 599,634 73,862 15,153 688,649 18,457 186,911 75,785 111,126 27,972 (4,253) 31,396 55,115 56,011 5.81

Quarter Ended September 30, September 30, 2008 2007 ----- Rupees in 000----1,149,329 910,478 238,851 176,031 29,969 5,014 211,014 4,198 32,035 55,770 (23,735) (9,642) 5,050 (4,592) (19,143) (1.98) 1,074,385 767,605 306,780 192,866 27,146 6,190 226,202 845 81,423 25,432 55,991 9,956 (772) 3,298 12,482 43,509 4.51

Other operating income OPERATING PROFIT Finance costs PROFIT/(LOSS) BEFORE TAXATION Taxation - Current - Prior - Deferred NET PROFIT/(LOSS) FOR THE PERIOD BASIC EARNINGS PER SHARE (Rs. Per share)

The annexed notes 1 to 10 form an integral part of these interim condensed financial statements.

SYED BABAR ALI

Chairman

TARIQ WAJID
Chief Executive

Karachi: October 29, 2008

INTERIM CONDENSED CASH FLOW STATEMENT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UN-AUDITED)

Nine Months Ended September 30, September 30, 2008 2007 Note -------- Rupees in 000-------CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Finance costs paid - net of exchange gain / (loss) realised Taxes paid Retirement benefits paid Long-term deposits (net) Long-term loans (net) Net cash generated from/ (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Fixed capital expenditure Proceeds from disposal of fixed assets Interest received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long-term loan Proceeds of short-term loans Repayment of short-term loans Dividends paid Net cash (used in) / inflow from financing activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 7 (42,266) (42,266) (33,394) (540,083) (573,477) (62,500) 2,451,000 (2,225,000) (68,269) 95,231 (7,882) (155,501) (163,383) (380,329) 15,770 254 (364,305) (90,681) 1,654 799 (88,228) 6 548,967 (95,296) (81,666) 100 1,072 373,177 177,696 (73,179) (119,327) (2,616) (103) 2,644 (14,885)

The annexed notes 1 to 10 form an integral part of these interim condensed financial statements.

SYED BABAR ALI

Chairman

TARIQ WAJID
Chief Executive

Karachi: October 29, 2008

INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UN-AUDITED)

CAPITAL RESERVES REVENUE RESERVES Difference of Issued, share capital subscribed under scheme and Long term of arrangement paid-up share liabilities for General Unappropriated capital forgone amalgamation reserve profit

Total

-------------------------------Rupees in 000---------------------------------

Balance as at January 01, 2007 Net profit for the period ended September 30, 2007 Cash dividend @ Rs.7.10 per Ordinary share of Rs.10 each, declared on February 22, 2007 Transfer to revenue reserve Balance as at September 30, 2007 Balance as at January 01, 2008 Net profit for the period ended September 30, 2008 Cash dividend @ Rs.4.40 per Ordinary share of Rs.10 each, declared on February 13, 2008 Transfer to revenue reserve Balance as at September 30, 2008

96,448

5,935

18,000

685,538

310,220

1,116,141

56,011

56,011

96,448 96,448

5,935 5,935

18,000 18,000

150,000 835,538 835,538

(68,478) (150,000) 147,753 158,203

(68,478) 1,103,674 1,114,124

13,937

13,937

96,448

5,935

18,000

100,000 935,538

(42,437) (100,000) 29,703

(42,437) 1,085,624

The annexed notes 1 to 10 form an integral part of these interim condensed financial statements.

SYED BABAR ALI

Chairman

TARIQ WAJID
Chief Executive

Karachi: October 29, 2008

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UN-AUDITED)

1.

THE COMPANY AND ITS OPERATIONS The Company was incorporated in Pakistan in 1967 under the Companies Act, VII of 1913 as a Public Limited Company. The shares of the Company are listed on Karachi, Lahore and Islamabad Stock Exchanges. It is currently engaged in the manufacturing and selling of pharmaceutical products. The registered office of the Company is located at Plot 23, Sector 22, Korangi Industrial Area, Karachi.

2.

BASIS OF PREPARATION These interim condensed financial statements are unaudited and are being submitted to the shareholders as required under Section 245 of the Companies Ordinance, 1984 and the Listing Regulations of Karachi, Lahore and Islamabad Stock Exchanges and have been prepared in accordance with the requirements of the International Accounting Standard (IAS) 34 Interim Financial Reporting, as applicable in Pakistan. The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Companys annual financial statements for the year ended December 31, 2007.

3.

SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of these interim condensed financial statements are the same as those applied in the preparation of the annual financial statements of the Company for the year ended December 31, 2007. September 30, December 31, 2008 2007 ----------- Rupees in 000----------(Un-audited) (Audited)

Note

4.

PROPERTY, PLANT AND EQUIPMENT Operating fixed assets Capital work-in-progress 4.1 Operating fixed assets
Following were the major additions and disposals of operating fixed assets during the current period:

4.1

640,511 444,847 1,085,358

647,370 143,712 791,082

Additions ----------- Rupees in 000----------Building on leasehold land Plant and machinery Furniture and fixtures Vehicles Factory and office equipments 1,401 37,335 124 29,784 10,550 621 12,121 1,917 621 5,929 1,815

Disposals Accumulated Cost depreciation

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UN-AUDITED)

5.

CONTINGENCIES AND COMMITMENTS Contingencies 5.1 Bank guarantees as at September 30, 2008, aggregating to Rs.64.328 (December 31, 2007: Rs.60.139) million, have been given to the Collector of Customs in respect of exemption of levies on import of specified pharmaceutical materials subject to the consumption of such raw materials within the specified period. There is no change in the status of other contingencies, as set out in note 20.1 to the annual financial statements of the Company for the year ended December 31, 2007.

5.2

Commitments 5.3 Commitments in respect of capital expenditure contracted for as at September 30, 2008 amounted to Rs.257.301 (December 31, 2007: Rs.251.545) million. Commitments for rentals under operating lease agreements in respect of vehicles as at September 30, 2008 amounted to Rs.5.052 (December 31, 2007: Rs.13.570) million, payable over the next four years as follows: September 30, December 31, 2008 2007 ----------- Rupees in 000----------1,477 2,512 709 354 5,052 9,997 2,511 708 354 13,570

5.4

Years 2008 2009 2010 2011

5.5

Commitments in respect of foreign exchange forward contracts with banks as at September 30, 2008 amounted to Rs.158.375 (December 31, 2007:Rs.566.700) million.

Nine Months Nine Months Ended Ended September 30, September 30, 2008 2007 Note ----------- Rupees in 000-----------

6.

CASH GENERATED FROM OPERATIONS Profit before taxation Adjustment for non-cash charges and other items: Depreciation / amortization Gain on sale of fixed assets Provision for retirement benefits Interest income Financial charges Working capital changes 80,122 (9,476) 6,524 (254) 75,579 356,639 548,967 70,078 (1,078) 6,381 (799) 75,785 (83,797) 177,696 39,833 111,126

6.1

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UN-AUDITED) Nine Months Nine Months Ended Ended September 30, September 30, 2008 2007 --------- Rupees in 000--------6.1 Working capital changes Decrease / (increase) in current assets: Stores and spares Stock-in-trade Trade debts Loans and advances Trade deposits and short-term prepayments Other receivables - net 639 112,987 (10,335) (6,463) (20,455) 10,189 86,562 (2,829) (258,925) 13,689 (3,594) 22,056 30,248 (199,355)

Increase in current liabilities: Trade and other payables net (excluding accruals for financial charges and unclaimed dividend)

270,077 356,639

115,558 (83,797)

7.

CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise of the following items: Cash and bank balances Running finance utilized under mark-up arrangements 2,281 (575,758) (573,477) 6,060 (169,443) (163,383)

8.

TRANSACTIONS WITH RELATED PARTIES Related parties comprise of associated undertakings, employees provident fund, employees gratuity fund, employees pension fund, directors and key management personnel of the Company. There are no transactions with key management personnel other than under the terms of employment. Details of transactions with related parties during the period were as follows:
September 30, 2008 Related parties RetireKey ment manageGroup By virtue of benefits Comp- common ment anies Directorship plans personnel Total ---------------------- Rupees in 000--------------------September 30, 2007 Related parties RetireGroup By virtue of ment Comp- common benefits anies Directorship plans

Key management personnel Total -------------------- Rupees in 000------------------9,545 1,431,652 799 22,011 2,455 28,684 3,817 6,841 4,023 (968) 7,349 11,330 33,866 12,000 1,460,336 3,817 6,841 4,023 799 22,011 (968) 7,349 11,330 33,866

i) ii) iii) iv) v) vi) vii) viii)

ix)

Gross sales Purchase of goods Purchase of services Recovery of service charges and other expenses License fee of land received Interest income earned Royalty and technical fee Contribution - Pension Fund - Gratuity Fund - Provident Fund Remuneration of key management personnel

20,856 1,138,616 6,172 -

3,129 6,153 3,626 4,328 4,023 -

(726) 7,250 13,091 -

35,448

23,985 1,144,769 3,626 4,328 4,023 6,172 (726) 7,250 13,091 35,448

10

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UN-AUDITED)

9.

DATE OF AUTHORISATION FOR ISSUE These interim condensed financial statements were authorized for issue on October29, 2008 by the Board of Directors of the Company.

10.

GENERAL Figures presented in these interim condensed financial statements have been rounded off to the nearest thousand rupees.

SYED BABAR ALI

Chairman

TARIQ WAJID
Chief Executive

Karachi: October 29, 2008

11

Book Post
Under certificate of Posting

If undelivered please return to: sanofi-aventis Pakistan limited Plot NO. 23, Sector No. 22, Korangi Industrial Area, Karachi-74900 POSTAL ADDRESS P.O. Box No. 4962, Karachi-74000