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Chairman’s Review ReportOn behalf of the Board, it is my pleasure to present the Chairman’s Review Report for the year ended December 31, 2020.The Company has continued to deliver positive results and maintain position of being a market leader acrosscategories despite of the global pandemic - COVID-19. We faced the challenge of complete lockdown where our foodsolutions business was badly impacted, but with strong commitment, consumer trust and our nationwide presence, weensured high performance and steady growth.The Board’s role was instrumental in steering the Company forward in a challenging environment whilst discharging itsstatutory responsibilities for the benefit of all stakeholders. The Board has remained cognizant throughout the year ofits strategic role for achieving the Company’s key objectives and on enhancing the returns for all its stakeholders due tofocused oversight over the operations.In 2020, the business recorded a creditable growth rate of 17.2% through volume and pricing. Knorr and Rafhanrecorded growth because of launch of new variants of our products and a renewed sales mix. Increased investment ininnovative marketing helped to drive consumer traction and brand reinforcement. Moreover, we recorded EPS growthof 56.4%, which reiterates our ongoing commitment to creating stakeholder value.BOARD PERFORMANCE AND EFFECTIVENESSIn accordance with the Code of Corporate Governance and the Companies Act, 2017 the evaluation of theBoard, its committees and individual directors was conducted by PICG (Pakistan Institute of CorporateGovernance) to ensure transparency. The evaluation reflects an increase in overall strategic performance of theboard every year.The board was assisted by sub-committees, i.e. the Audit Committee and the HR&R Committee. Thesesub-committees held meetings during the year as per the stipulations of the code of corporate governance.Unilever Pakistan Foods Limited - Annual Report 2020BUSINESS AND INDUSTRY OVERVIEWIt is important to recognize the key role played by the Sub-Committees (Audit Committee & Human Resourcesand Remuneration Committee) in highlighting areas of improvements and recommending pragmatic solutionsfor optimum performance. Going forward we will continue our efforts to adopt and implement best governancepractices for sustained growth for the benefit of all stakeholders.FUTURE PROSPECTSThe Company will strive to deliver strong sales growth by driving its core product portfolio supported by launchof new / innovate products taking cognizance of the competitive environment & market dynamics. Further, thecompany will make strenuous efforts for wider penetration of rural areas house holds to increase consumptionof its products. The Company is committed to achieving operational excellence & attaining its objective/visionof providing sustainable living to all its stakeholders through responsible value chain as well as trust worthypurpose driven brands.ACKNOWLEDGMENTSOn behalf of the board of directors, I would like to express gratitude to our stakeholders for their continuedsupport and encouragement. I would also like to appreciate the valuable services rendered by the employees ofthe Company despite challenging environment due to COVID-19 and new ways of working. I also acknowledgethe commitment and diligence of my fellow directors during 2020 and thank their leadership for their valuablecontributions for the continued growth of the Company.Mr. Kamran Y. MirzaChairman of the Board06

DIRECTORS’REPORT*

Winning with Brands and InnovationsUnilever Pakistan Foods Limited - Annual Report 202009We have some of the world’s best known andmost trusted brands, with leadership positionsin many of the fast moving consumer goodscategories in which we compete. Committed toenhancing the quality of life of the people ofPakistan, we aim to offer a broad portfolio thatappeals to diverse consumers year on year.

Directors’ ReportCompany’s Principal ActivitiesThe Company manufactures and sells consumer and commercial food products under the brand names Rafhan, Knorr,Energile, Glaxose-D and Best Foods. In 2020 the business recorded a broad-based growth of 17.2%, despite COVID-19lockdown that significantly affected Food Solutions business.The key growth drivers in 2020 were:Knorr: Growth in Knorr was primarily led by Noodles & Ketchup that grew on the back of building brand equity andconsumption in urban as well driving penetration in rural areas, leveraging digital mediums through precisionmarketing and capitalizing on the excitement of mega occasions. The launch of “cheesy chatt patta” variant was wellreceived in the market.Rafhan: Despite a challenging year, the brand was able to record healthy sales growth in desserts and corn oil productlines. This was achieved by strategic pricing decisions and relevant consumer promotions.Foods Solutions: The entity-based business saw a steep decline in sales during the year primarily due to lockdown andmultiple restrictions on outdoor dining.Gross margin increased by 1.49% to 42.9% through better cost absorption and a rigorous savings agenda. EPS grew by56.4% versus last year driven by growth, margin improvement and tax credits pertaining to capital expenditure.Operating Results20202019Unilever Pakistan Foods Limited - Annual Report 2020The directors present Unilever Pakistan Foods Limited’s (UPFL) Annual Report together with audited financialstatements for the year ended December 31, 2020.Rupees in millionSalesGross ProfitProfit from OperationsProfit before taxProfit after 2,453EPS-basic (Rs)602.42385.08DividendsCapital ExpenditureFirst Interim Dividend 2020 (already paid): Rs. 130 per share(2019: Rs. 88 per share).The Company, in order to expand capacity and increaseefficiency, invested Rs. 363.5 million during the year.Second Interim Dividend 2020 (already paid): Rs. 141 pershare. (2019: Rs. 63 per share).Liquidity ProfileThird Interim Dividend 2020 (already paid): Rs. 120.52 pershare. (2019: Rs. 93 per share).Final Dividend 2020: Rs. 210.89 per share (2019: Rs. 142 pershare).Industry ReviewThe Foods market (Total package segment) in Pakistan iscurrently estimated at PKR 3.3 trillion (estimate as perEuromonitor and Consumer Panel). The market consists ofseveral local and multinational companies, with numerousregional players as well. Packaged food is growing at 11.9%mainly led by edible oil and dressings.The Company was able to generate Rs. 3,908 million fromoperating activities during the year. The Company had a netcash and cash equivalents of Rs. 930 million at year end.Cashflow projections are prepared, reviewed and monitoredon a periodic basis by your Company to devise the mosteffective strategy and to optimize returns.Investment strategies are planned after careful considerationof risk profile and surplus funds are mostly kept in short-termbank deposits.10

Unilever Pakistan Foods Limited - Annual Report 2020Evaluation of Company’s PerformanceEnvironment ProtectionThere is a stringent performance management mechanism inplace at the Company. The management uses severalindicators based on global best practices from parentcompany as well as local leadership to ensure that both shortterm delivery and long-term health of the business remain ingood position.Sustainable environmental production lies at the core ofthe UPFL manufacturing strategy. The Company expendsconsiderable efforts to achieve sustainable developmentthrough environment friendly operations whilst upholdingthe vision of the United Nation’s Sustainable DevelopmentGoals. In 2020, our manufacturing sites initiated variousenvironmental protection measures for the conservationof water, energy and waste by implementing the followingsustainability projects:Our strategic framework to assess performance is based onthe ‘5 fundamentals of growth’ which captures – PurposefulBrands, Improved Penetration, Design for Channel, Impactfulinnovations and Fuel for Growth – thereby providing awholistic approach to assessing business shape andprogress end to end.Principal Risks and UncertaintiesThe Company is faced with the following principal risks: The on-going COVID-19 situation poses a risk to thegrowth plans for the business as the plan hinges onsales outlets coverage improvements, drivingproduct assortment and ensuring General Tradechannel growing faster than prior years. The macro-economy has shown signs ofimprovements with trade balance and currentaccount increasing, however, medium to long termstructural economic reforms remain to be seen.Our PeopleAt Unilever, our people are our biggest strength. They drivethe company mission forward while holding themselvesaccountable to the highest standards of integrity, respect andsocial responsibility. We take great pride in the opportunitieswe make accessible to our people, whether it is throughcontinuous learning programs, challenging assignments,wellbeing initiatives and the like.2020 while being a most difficult year further highlighted thecapabilities and grit of our people as they rose to thechallenge of working in an uncertain environment. We pushedour boundaries to devise a flexible work model whichcomplied with international standards of safety, while alsotaking care of employee mental and physical health withexceptional results as proved by the individual and functionalinitiatives rolled out to deal with the unique needs that arosein a pandemic.Equity, Diversity and Inclusion remained a top priority atUnilever as we continued efforts to hire withoutdiscrimination against gender, age, race, religion,socioeconomic backgrounds, transgenders and differentlyabled people, and offer equitable opportunities based onindividual needs.We encourage a culture of agile working especially in theface of an evolving global work environment to promotehealthy work life balance.11 Energy optimization by installation of LoadManagement system for cooling towers, chillersand air handling. Replacement of HPS lights with energy efficientLED lights Significant reduction in air emission through boilers byreplacing HFO with cleaner fuel Reusing effluence in cooling towers by ultraviolet andultrafiltration projects Replacement of water piping network which resultedin significant water savings Upgradation of Rainwater Harvesting Storage Tanks Recycling of waste materials generated from sites Implementation of Project E-BagA reduced carbon footprint is an effort which encompassesthe scope of our offices, factories, consumers, and partners.This is enabled by a vision to create an impact at scalethrough powerful alliances that can serve as a catalystfor a sustainable future for the planet amid rising globalawareness on climate issues and challenges.Community Investment and WelfareSchemes (PKR 14.9 Million)Driven by its duty to serve the nation in a time of need,Unilever Pakistan was one of the first companies to commitrelief towards COVID-19. Through monetary and in-kinddonations, Unilever Pakistan brought alive its vision ofUnilever for Pakistan with the intention of embracing itsrole as a force of good for the nation.Further:a) Knorr invested in an educational contentpartnership with Taleemabad to educatechildren on key themes revolving aroundpersonal safety and good deeds. Almost 1million children have been reached throughthis partnership.b) Knorr continued to provide livelihoods to ruralyouth through its entrepreneurial programwhich provides noodle vending carts to peopleas a means of earning an income while alsohelping deliver hygienic snacking alternativesto rural communities. Through this initiative,employment opportunities were providedwhich enhanced the lives of up to 2000 families.

Occupational Safety and HealthEmployee EngagementThe spirit of giving ranks high among our employees asthey make a conscious effort to elevate the lives ofunderserved communities through active support forthe health and wellbeing, education and access tohealthy eating through committed fundraising andvolunteering activities. Our Employee Payroll Programraised close to Rs. 1.5 million in support for our socialpartners; The Citizen’s Foundation; Aga Khan UniversityHospital and the World Food Program. These funds arechannelized to facilitate access to learning, nutritionand wellbeing for underprivileged children and youth.Value of investments of employeesin retirement fundsUPFL contributed Rs. 15.88 million to the staff retirementfunds during the year. The value of investments made bythe staff retirement funds operated by the Company asper their financial statements as at December 31, 2020is as follows:Rs. in millionProvident FundGratuity FundTotal – 2020Total – 201919234226210Corporate GovernanceThe management of UPFL is committed to good corporategovernance and complying with best practices. As requiredunder the Code of Corporate Governance, the Directors arepleased to state as follows: The financial statements prepared by themanagement of the Company present fairly theresult of its operations, cash flows and changesin equity. Proper books of account have been maintained. Appropriate accounting policies, as applicable inPakistan, have been consistently applied in thepreparation of the financial statements andaccounting estimates are based on reasonableand prudent judgement. The system of internal control is sound in design andhas been effectively implemented and monitored. There are no significant doubts upon the Company'sability to continue as a going concern. There has been no departure from the best practicesof corporate governance, as detailed in the Rule Bookof the Stock Exchange. Statements regarding the following are annexed orare disclosed in the notes to the financial statements. Number of meetings of Board of Directors and itscommittees held and attendance by directors. Key financial data for the last six years. Pattern of shareholding.DirectorsThe following persons are the directors of the company: Mr. Kamran Y. Mirza (Chairman of the Board)Mr. Amir R. Paracha (CEO)Mr. Aly Yusuf (CFO)Ms. Farheen Salman AmirMr. Zulfikar MonnooMr. Muhammad Adil MonnooMr. Kamal MonnooMr. Sarfaraz Ahmed RehmanMr. Ali TariqMr. Khalid MansoorUnilever Pakistan Foods Limited - Annual Report 2020There is no room for compromise on safety across allUPFL operations, which is a priority aligned with ourgoal of Vision Zero UPFL. We maintain continuousattention to a safety mindset through reinforcedleadership messaging, responsible employee behavior,safety focused plant designs, facilities and products inaddition to the implementation of safe procedures andsystems throughout the year. International Financial Reporting Standards havebeen followed in the preparation of the financialstatements and any departure there from has beenadequately disclosed.The election of directors was held at the AGM of 2020.The term of the present directors will expire on April 19, 2023.Internal Financial ControlsThe directors are aware of their responsibility with respectto internal financial controls. Through discussions withmanagement and auditors (both internal and external), theyare of the opinion that adequate controls have beenimplemented by the Company.Board EvaluationIn accordance with the Code of Corporate Governance andthe Companies Act, 2017 the evaluation of the Board, itscommittees and individual directors was conducted byPICG (Pakistan Institute of Corporate Governance) toensure transparency. The board is assisted bysub-committees, i.e. the Audit Committee and the HR&RCommittee, and these sub-committees held meetingsduring the year as per the stipulations of the code ofcorporate governance. It is also important to highlight thekey role played by the sub-committees (Audit Committee &Human Resources and Remuneration Committee) inhighlighting areas of improvements and recommendingpractical solutions. Going forward we will continue ourefforts to ensure that we comply with best governancepractices on the interest of all stakeholders.12

Unilever Pakistan Foods Limited - Annual Report 2020Directors Remuneration PolicyHolding CompanyDirectors Fee is paid in line with Board approval and theCompany has approved a formal policy in this regard inaccordance with the Companies Act, 2017 and the CCG. Thefee of the Non-Executive and Independent Directors forattending the Board and Committee meetings of theCompany is determined by the Board from time to time.Through its wholly owned subsidiary Conopco Inc., USA,Unilever PLC, has a holding of 76.5% of the shares in UPFL,and is the Company’s ultimate parent company.AuditorsNo material changes and commitments affecting thefinancial position of the Company have occurred betweenthe end of the financial year and the date of this report.Subsequent EventsThe Auditors, KPMG Taseer Hadi & Co., CharteredAccountants, were appointed for the year endingDecember 31, 2020. The Board has recommended theappointment of KPMG Taseer Hadi & Co. as the Auditors ofthe Company for the year 2021.Reserve AppropriationsShareCapitalIssued,subscribed andpaid up ialGeneralSub TotalUnappropriatedProfit(Rupees in thousand)Balance as at December 31, 2019Total comprehensive income for the 67,706)628138Profit for the year endedDecember 31, 2020Other comprehensive income for theyear ended December 31, 2020Final dividend for the year endedDecember 31, 2019 @ Rs. 142 per shareFirst Interim dividend for the year endingDecember 31, 2020 @ Rs. 130 per shareSecond Interim dividend for the year endingDecember 31, 2020 @ Rs. 141 per shareThird Interim dividend for the year endingDecember 31, 2020 @ Rs. 120.52 per shareBalance as at December 31, 20201363,6991,296,4991,386,7302,683,9952,747,694

Our people are the key drivers behind the sustained growth of UPFL. The directors acknowledge the contribution of each employeeof the Company. We would also like to express our thanks to our customers for the trust shown in our products. We are also gratefulto our shareholders for their support and confidence in our management.Future OutlookCovid-19 has posed enhanced difficulties on an international scale vis-a-vis growth and accompanying socio-economicadversities. Pakistan has been no exception while at the same time also having to grapple with its own specific cumlong-st

International Steel (ISL), Safari Club and NAVTEC. He lectures regularly at the Pakistan Institute of Corporate Governance (PICG). Amir R. Paracha - CEO Amir joined the Board on 1 February, 2020. Over his 21 years with Unilever, he has held various senior management positions in Pakistan and other markets. Amir Paracha is