TIDMHIK
RNS Number : 9583O
Hikma Pharmaceuticals Plc
17 March 2009
Hikma Pharmaceuticals PLC
Preliminary results announcement
for the year ended 31 December 2008
LONDON, 17 March 2009 - Hikma Pharmaceuticals PLC ("Hikma") (LSE:HIK)
(DIFX:HIK), the fast-growing multinational pharmaceutical group focused on
developing, manufacturing and marketing a broad range of generic and in-licensed
pharmaceutical products, across the Middle East and North Africa, the US and
Europe, today reports its preliminary results for the year ended 31 December
2008.
+------------------------------------------+------------+----------+-------------+
| Group performance | 2008 | 2007 | % change |
+------------------------------------------+------------+----------+-------------+
| | $m | $m | |
+------------------------------------------+------------+----------+-------------+
| Revenue | 580.7 | 448.8 | +29.4% |
+------------------------------------------+------------+----------+-------------+
| EBITDA* | 113.8 | 115.8 | -1.7% |
+------------------------------------------+------------+----------+-------------+
| Operating profit | 80.7 | 92.4 | -12.7% |
+------------------------------------------+------------+----------+-------------+
| Profit attributable to shareholders | 57.1 | 62.6 | -8.7% |
+------------------------------------------+------------+----------+-------------+
| Adjusted profit attributable to | 67.4 | 64.5 | +4.5% |
| shareholders** | | | |
+------------------------------------------+------------+----------+-------------+
| Diluted earnings per share (cents) | 29.6 | 35.4 | -16.4% |
+------------------------------------------+------------+----------+-------------+
| Operating cash flow | 75.0 | 53.3 | +40.7% |
+------------------------------------------+------------+----------+-------------+
| Dividend per share (cents) | 7.5 | 7.5 | - |
+------------------------------------------+------------+----------+-------------+
* Reported profit before interest, tax, depreciation and amortisation
** Profit before the amortisation of intangible assets (other than software) and
exceptional items
Highlights
- Group revenues up 29% to $580.7 million with 63% of revenues generated in
MENA
- Adjusted profit attributable to shareholders up 4.5% to $67.4 million
·Branded revenues up 61% to $321 million reflecting strong organic growth of
22%1
- Injectables revenues up 23% to $149 million, reflecting organic growth of
14%. Injectables revenues in MENA grew by 43%, and in the US by 29%
- Generics business returned to profit in Q4 2008 following management
changes and operational improvements
- Operating cash flow up 41% to $75 million through strong focus on working
capital management
- Net debt reduced by 44% to $171 million
_____________________
1 Excluding the impact of Hikma Egypt, Thymoorgan and
APM acquired in 2007.
Commenting on the 2008 results and outlook, Said Darwazah, Chief Executive of
Hikma, said:
"Hikma achieved another year of outstanding growth in its Branded and
Injectables businesses, with 63% of Group revenues generated in the Middle East
and North Africa. The acquisitions of APM and Hikma Egypt were significant
contributors, benefiting from Hikma management and marketing expertise to grow
revenues by 38% and 58% respectively. Following the poor performance of our US
Generics business in the first half of 2008, we made a number of management and
other changes that returned the business to profitability in the final quarter.
We also delivered a 41% increase in operational cash flow from our focus on
working capital management.
"Given the prevailing economic conditions in 2009, we are expecting Group
revenues to grow by 10-15%, with an improvement in our gross margin of 1-2%. The
higher end of these ranges is based on constant exchange rates while the lower
end can be expected if the 2009 average exchange rate is at the level prevailing
in mid-March. Our solid balance sheet and the improvements we are achieving in
operating cash flow will give us the financial flexibility to pursue strategic
acquisitions that will enhance our strong organic growth.
"We are confident that the proven strength of Hikma's business model will enable
us to deliver a strong performance in 2009 and the years ahead."
An interview with Said Darwazah, Chief Executive, is available on
http://www.hikma.com and http://www.cantos.com.
There will be an analyst and investor presentation at 09.00hrs which will
be webcast on http://www.hikma.com and available through a conference call
facility. Participants should dial +44 (0)20 8609 0582.
Enquiries:
Hikma Pharmaceuticals PLC Tel: +44 (0)20 7399 2760
Said Darwazah, Chief Executive
Bassam Kanaan, Chief Financial Officer
Peter Laing, Investor Relations
Brunswick Group Tel: +44 (0)20 7404 5959
Jon Coles / Justine McIlroy
About Hikma
Hikma Pharmaceuticals PLC is a fast growing multinational group focused
on developing, manufacturing and marketing a broad range of both branded
and non-branded generic and in-licensed pharmaceutical products. Hikma's
operations are conducted through three businesses: "Branded", "Injectables" and
"Generics".Hikma's operations are based principally in the Middle East and North
Africa ("MENA") region, where it is a market leader and sells across 17
countries, the United States and Europe. In 2008, the Group achieved revenues of
$581 million (2007 $449 million) and profit attributable to shareholders was
$57 million (2007 $63 million). For news and other information, please visit
www.hikma.com.
Forward looking statements
Certain statements in this announcement are forward-looking statements - using
words such as "intends", "believes", anticipates" and "expects". Where included,
these have been made by the Directors in good faith based on the information
available to them up to the time of their approval of this annoucement. By their
nature, forward-looking statements are based on assumptions and involve inherent
risks and uncertainties that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements,
and should be treated with caution. These risks, uncertainties or assumptions
could adversely affect the outcome and financial effects of the plans and events
described in this announcement. Forward-looking statements contained in this
announcement regarding past trends or activities should not be taken as a
representation that such trends or activities will continue in the future. You
should not place undue reliance on forward-looking statements, which speak as
only of the date of the approval of this announcement.
Except as required by law, the Company is under no obligation to update or keep
current the forward-looking statements contained in this announcement or to
correct any inaccuracies which may become apparent in such forward-looking
statements.
Business and Financial Review
Group performance
Revenue for the Group increased by 29.4% to $580.7 million, compared with $448.8
million in 2007. The revenue contribution from Hikma Egypt (previously Alkan),
APM and Thymoorgan - the acquisitions completed since the beginning of 2007 -
was $102.5 million. Underlying organic revenue growth (excluding the impact of
these acquisitions) was 9.5%, driven by strong performances in both the Branded
and Injectables businesses but offset by a 14.9% decline in revenues in our US
Generics business.
As a result, the Branded and Injectables businesses accounted for 81% of
revenues in 2008 compared with 71% in 2007.
+------------------------+------------------------+------------------------+
| Revenue by segment | 2008 | 2007 |
+------------------------+------------------------+------------------------+
| Branded | 55.3% | 44.3% |
+------------------------+------------------------+------------------------+
| Injectables | 25.7% | 27.0% |
+------------------------+------------------------+------------------------+
| Generics | 18.2% | 27.7% |
+------------------------+------------------------+------------------------+
| | | |
+------------------------+------------------------+------------------------+
| Revenue by region | | |
+------------------------+------------------------+------------------------+
| MENA | 63.0% | 51.0% |
+------------------------+------------------------+------------------------+
| US | 22.5% | 32.0% |
+------------------------+------------------------+------------------------+
| Europe and rest of | 14.5% | 17.0% |
| world | | |
+------------------------+------------------------+------------------------+
Branded Pharmaceuticals
The Branded business is our largest business in terms of revenue and operating
profit. Branded revenues increased by 61.3% to $320.8 million in 2008, compared
with $198.9 million in 2007, reflecting strong organic growth of 22.4% enhanced
by the acquisitions we made in the MENA region in 2007. Trading continued to be
strong across all our MENA markets, particularly Algeria, Jordan, Saudi Arabia
and the other Gulf Cooperation Council (GCC) countries.
Both of the acquisitions made in the MENA region in 2007 performed ahead of our
expectations in 2008.
Sales at APM, acquired in December 2007, grew by 38% to $61.3 million in 2008
compared with reported sales of $44.4 million in 2007. This performance
demonstrates how successful the integration process has been. We have improved
APM's organisational structure by creating a new sales operation and logistics,
supply chain, budgeting and production planning functions and we have integrated
the Hikma and APM distribution channels in many markets. These changes are
bringing synergies and will reduce future sales and marketing expenses. In order
to improve working capital management, we have applied Hikma's standard terms of
trade wherever possible. We have upgraded APM's manufacturing facilities to
bring them into line with Hikma's demanding levels of quality and compliance
standards. Through this process we nearly doubled production on most lines.
Further capacity upgrades were made towards the end of the year that required a
scheduled suspension of production at the APM plant for almost two months.
Production has since restarted.
Sales at Hikma Egypt, acquired in September 2007, grew by 58% to $28.8 million
in 2008 compared with $18.2 million in 2007. This acquisition significantly
enhanced our exposure to the fast-growing Egyptian market. Hikma Egypt has now
been fully integrated, with key functions such as finance, marketing and R&D
incorporated into Hikma's global systems. We have also made significant process
improvements, nearly doubling production output and units sold compared with
2007. We also made a significant investment in sales and marketing to launch the
Hikma brand in the Egyptian market and to promote key products.
In 2008 our largest markets were Algeria, Saudi Arabia, Jordan and Egypt. More
focused sales and marketing efforts have helped to drive customer demand and
increase sales across these and most other Branded markets. Significant
attention was paid to promoting new and recently launched products,
strengthening our market position in key therapeutic areas and building brand
recognition.
As a result of these efforts, Hikma is now the fifth largest pharmaceutical
manufacturer in the MENA region, with a market share of 3.4%2. For the top nine
retail pharmaceutical markets in MENA in which we operate, the total private
market was worth approximately $7.3 billion in 2008 with year on year growth of
18.5%.
Algeria is the largest private pharmaceutical market in the MENA region. The
private market in Algeria was worth over $1.7 billion in 2008, when it grew at a
rate of over 30%. In 2008, we raised our market share in Algeria to 6.4%
compared with 6.1% in 2007. We are now the fourth largest pharmaceutical
manufacturer and the largest generic pharmaceutical manufacturer by value in the
Algerian market.
Egypt is currently the second largest private pharmaceutical market in MENA. In
2008 it grew by 19% and was worth over $1.6 billion in retail sales. Our market
share in Egypt, while still well below our strategic target of 5%, has increased
significantly and currently stands at 1.4%. We expect further strong growth in
2009 as we launch more Hikma products through our Egyptian sales network.
Saudi Arabia is the third largest private pharmaceutical market in MENA. The
retail market was worth in excess of $1.5 billion in 2008 when it grew by 6%.
The acquisition of APM in 2007 has helped to strengthen Hikma's position in the
Saudi market where we are the fifth largest pharmaceutical manufacturer, with a
market share in value terms of 4.9% in 2008, compared with 4.8% in 2007.
Although the Jordanian pharmaceutical market is still comparatively small, we
remain the clear market leader with a market share of 12.4%, up from 7.7% in
2007, and more than twice the share of the second largest pharmaceutical company
operating in this market. The increase in our market share is due to our
expanding product range and the consolidation of APM.
_____________________
2 Source of all market and market share data: IMS
Health, Moving Annual Totals as of December 2008 for the top 9 MENA markets in
which Hikma operates (Algeria, Egypt, Jordan, Kuwait, Lebanon, Morocco, Saudi
Arabia, Tunisia and the United Arab Emirates). These market figures are for
retail pharmacy sales only and exclude hospital sales and government contracts
that can be significant in certain markets
In-licensing remains an important part of our growth strategy in the MENA region
and our portfolio of licensed products continues to deliver excellent results.
In 2008 revenue from our 40 in-licensed products (including in-licensed products
that we acquired from APM and Hikma Egypt) grew by 63% and accounted for one
third of total Branded sales. Our long-term strategic target is to raise this
proportion to 50%. We are confident that our strong market position in the MENA
region and our excellent track record with licensed products will continue to
attract leading multinational partners. This is demonstrated by the excellent
performance of the Takeda products that entered our portfolio in 2007. Sales of
the antidiabetic Actos , the antihypertensive Blopress and the other products
in-licensed from Takeda in 2007 grew by more than 64% in 2008 as we captured
greater market share.
Gross profit in the Branded business increased by 60.0% to $172.8 million,
compared with $108.0 million in 2007. The Branded business's gross margin
remained stable at 53.9%, compared with 54.3% in 2007.
Branded operating profit increased by 41.8% in 2008 to $87.5 million. Operating
margin in the Branded business was 27.3% in 2008, down from 31.0% in 2007. On an
adjusted basis, excluding the amortisation of intangible assets and exceptional
items, operating profit margin in 2008 was 29.2% against 31.2% in 2007. The
decline in margin primarily reflects the additional investment in sales and
marketing activities and research and development to support the strong growth
in Branded sales. This investment in sales and marketing relates in particular
to the promotion of key products including the new in-licensed products acquired
from APM.
In 2008, the Branded business received 91 regulatory approvals, including 17 new
products in Jordan and Egypt, 67 in other MENA markets and 7 in Europe and the
rest of the world. In line with our strategic objectives for the Branded
business, we launched a total of 6 new products in 2008, 4 in Jordan and 2 in
Egypt. The total number of Branded sales and marketing staff operating across
our 17 MENA markets at year end was 1090, including 296 in Egypt, 222 in Saudi
Arabia, 149 in Jordan and 164 in Algeria.
Injectable Pharmaceuticals
Revenue in our global Injectables business increased by 23.2% to $149.3 million.
Excluding the contribution from the acquisitions of Thymoorgan and APM that we
made in 2007, organic growth was 14.2%, driven by a strong performance in the
MENA region and our growing business in the US.
Injectables revenue grew by 43.0% in the MENA region with Jordan and Algeria
performing particularly well. This growth is attributable to the strength of our
product portfolio, the quality of our sales force and a 50% increase in
attractive tender business. The MENA region now represents 36.6% of Injectables
sales, compared with 31.5% in 2007. We continue to see excellent prospects for
growth in Injectables sales in the MENA region which we expect to account for an
increasing percentage of our future Injectable sales.
Despite intensifying competition in the US injectable market, our US Injectables
sales grew by 29.2% compared with 2007 and represented 16.7% of our global
Injectables business. We saw strong demand in both our own product and private
label business in the US. We benefited from a number of new product launches
that resulted in a US product portfolio that was significantly more diverse than
in 2007. We are also achieving higher sales volumes across a broader portfolio
of cephalosporin antibiotics and have seen excellent growth in some of our
liquid products.
In Europe, which includes our oncology business, we saw increasing pricing
pressure in the German market. Overall European injectable sales reached $69.8
million, compared with $63.7 million in 2007, an increase of 9.6%. Excluding $7
million of non-recurring sales in 2007 from two in-licensed products whose
licences, as we had expected, have expired, European injectable sales rose by
14%. Europe now represents 46.7% of our Injectables business compared with
52.5% in 2007. We have appointed a new management team for the oncology business
that will be expanding our product portfolio and also marketing these products
in markets outside Germany in 2009, particularly in the MENA region.
Injectables gross profit increased by 17.0% to $63.4 million, compared with
$54.2 million in 2007, but gross margin decreased to 42.4% compared with 44.7%
in 2007. The decrease in gross margin reflects, in part, the inclusion for a
full year of the Thymoorgan contract manufacturing business that has a lower
gross margin than the rest of Hikma's Injectables business. It also reflects the
consolidation of some low margin injectable sales contracts at APM that will not
be renewed on completion. Excluding the acquisitions of Thymoorgan and APM, the
Injectables gross margin was 45.1%, slightly below the 2007 level of 45.7%.
Injectables operating profit increased by 8.0% to $22.1 million, compared with
$20.5 million in 2007. Injectables operating margin decreased to 14.8% in 2008,
down from 16.9% in 2007, primarily as a result of the consolidation of APM's
lower margin injectable sales. Excluding the consolidation of APM and
amortisation of intangibles (excluding software), the Injectables operating
margin was slightly higher at 17.3%.
During 2008, the Injectables business received 60 regulatory approvals across
all markets, including 37 in the MENA region, 16 in Europe and the rest of the
world and 7 ANDA approvals in the US. A total of 61 products were launched,
including 9 new products.
Generic Pharmaceuticals
Our Generics business is entirely focused on the US market for oral generics.
Sales of injectable generics in the US market are included in our Injectables
segment.
Revenue in our Generics business decreased by 14.9% to $105.7 million, compared
with $124.2 million in 2007. This decline resulted initially from lower sales of
the antihypertensive lisinopril following the completion, in December 2007, of
our contract to supply the Department of Veterans Affairs. The absence of these
revenues in 2008 was exacerbated by continued price erosion across other product
lines and lower than expected demand for new products. In addition, as reported
in our interim results, we made a one-off provision of $4.8 million related to
revisions in our estimates for chargebacks, rebates and returns.
All of these factors, as well as higher than expected production and API costs,
led to a 67% decline in the Generics gross profit to $19.3 million, compared
with $58.6 million in 2007. The Generics gross margin was 18.3%, compared with
47.2% in 2007. Consequently, the Generics business realised an operating loss of
$5.8 million compared with an operating profit of $31.6 million in 2007.
We focused on stemming the losses in this business as quickly as possible and
made several management changes. These included the appointments of a new
General Manager and a new Vice President, Sales and Marketing for all US
operations.
This strengthened management team undertook a comprehensive review of the
business in the second half of 2008 and identified a number of approaches to
improving operating performance. Following an in-depth examination of
profitability by product and by customer, we withdrew from the supply of some
low margin products, implemented price increases where possible, secured lower
cost sources of APIs, improved our manufacturing and distribution efficiencies,
raised service levels and renegotiated our standard terms of trade.
We are pleased to report that these actions resulted in the Generics business
returning to profitability in the closing months of 2008, although the profit
achieved was not sufficient to offset losses incurred earlier in the year. We
expect profitable trading to be sustained during 2009 as we continue to focus on
implementing these actions. We have also noted a recent improvement in the
prices of certain products in the US following the FDA-enforced withdrawal of
some non-US suppliers in 2008.
During 2008, the Generics business received three regulatory approvals, of which
two were new products. A total of seven products were launched, including two
new products.
Other businesses
Our Other businesses segment consists primarily of Arab Medical Containers, a
manufacturer of plastic specialised packaging, and International Pharmaceuticals
Research Centre, which conducts bio-equivalency studies. These businesses, which
supply third parties as well as other Group operations, had aggregate revenues
of $4.8 million in 2008, compared with aggregate revenue of $4.5 million in
2007. This represented 0.8% of Group revenues in 2008.
These Other businesses delivered an operating loss of $3.7 million in 2008,
compared with an operating loss of $3.4 million in 2007. This loss can be
attributed primarily to corporate research and development costs that cannot be
allocated to specific business segments.
Research & Development3
The Group's product portfolio continues to grow. During 2008, we added 17 new
products to the Group portfolio that now includes 369 products in 767 dosage
strengths and forms. We manufacture and/or sell 40 of these products under
licence.
In 2008, Hikma received 154 regulatory approvals of which 91 approvals were for
the Branded business, 60 for the Injectables business and 3 for the Generics
business. Over the same period, 168 products and line extensions were launched
across the Group, including the 17 new pharmaceutical compounds not previously
marketed.
_____________________
3Products are defined as pharmaceutical compounds sold
by the Group. New products are defined as pharmaceutical compounds not yet
launched by the Group and existing compounds being introduced into a new segment
or a new region. Line extensions are new forms or dosage strengths. Filings
include only filings for new products and the first filing of line extensions in
a segment or region. Approvals are comprehensive and include approvals for new
products and line extensions and approvals in new countries. Pending approvals
include only applications that are pending for new products and the first filing
of a line extension in a segment or region.
+-------------+---------+------------+----------+------------+----------------+-------------+
| | Filings | Filings in | Filings | Total | Pending | Pending |
| | in 2008 | 2008 for | in 2008 | pending | approvals for | approvals |
| | | new | for new | approvals | new products | for new |
| | | products | products | as of 31 | and new line | products |
| | | and new | only | December | extensions as | only as of |
| | | line | | 2008 | of 31 December | 31 December |
| | | extensions | | | 2008 | 2008 |
+-------------+---------+------------+----------+------------+----------------+-------------+
| Generics | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
| United | 4 | 4 | 2 | 33 | 33 | 25 |
| States | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
| Branded | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
| MENA | 169 | 32 | 16 | 386 | 41 | 23 |
+-------------+---------+------------+----------+------------+----------------+-------------+
| Europe and | 16 | 16 | 6 | 37 | 37 | 14 |
| Rest of | | | | | | |
| World | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
| Injectables | | | | | | |
| | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
| United | 8 | 8 | 6 | 32 | 32 | 21 |
| States | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
| MENA | 26 | 12 | 7 | 145 | 17 | 11 |
+-------------+---------+------------+----------+------------+----------------+-------------+
| Europe and | 10 | 9 | 9 | 14 | 13 | 13 |
| Rest of | | | | | | |
| World | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
| | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
| Group | 233 | 81 | 46 | 647 | 173 | 107 |
| total | | | | | | |
+-------------+---------+------------+----------+------------+----------------+-------------+
To ensure a continuous flow of new products from our pipeline, we submitted 46
regulatory filings for new products, and a total of 233 submissions across all
regions and markets. As of 31 December 2008, we had a total of 107 pending
approvals for new products and 647 pending approvals across all regions and
markets.
We estimate the approximate addressable market for our portfolio of pending
approvals to be approximately $24 billion, based on estimates by IMS Health for
the 2008 full year sales of the currently marketed equivalent products in the
markets covered by the pending approvals.
At 31 December 2008, we had a total of 111 new products under development. We
expect the majority of these to receive several marketing authorisations for
differing strengths and/or product forms over the next few years.
Financial performance
The Group's gross profit increased by 15.8% to $256.5 million, compared with
$221.5 million in 2007. Group gross margin was 44.2%, compared with 49.4% in
2007, primarily due to the impact of the significant decline in gross profit in
the Generics business.
Group operating expenses rose by 36.1% to $175.8 million, compared with $129.1
million in 2007. This reflects primarily a strategic increase in sales and
marketing expenses and control of our general and administrative and research
and development costs during the year. Excluding acquisitions, operating
expenses grew by 19.7%. On an adjusted basis4, operating expenses as a
percentage of sales increased by 0.3 percentage points to 28.5%, up from 28.2%
in 2007.
_____________________
4Before the amortisation of intangible assets (other than software) and
exceptional items, which include acquisition integration costs and revisions to
estimates for charge-backs, rebates and returns
Sales and marketing expenses increased by 48.5% to $90.6 million, largely
reflecting the consolidation of APM and Hikma Egypt and the higher amortisation
costs related to intangible assets arising on these acquisitions. Excluding the
2007 acquisitions of APM, Hikma Egypt and Thymoorgan, sales and marketing
expenses rose by 19.8% as we invested in the promotion of our leading own-brand
and in-licensed products. We expect to see further benefits from this in 2009.
Sales and marketing expenses represented 15.6% of Group revenue in 2008,
compared with 13.6% in 2007. We expect sales and marketing expenses as a
percentage of sales to begin to decline slightly in 2009.
The Group's general and administrative expenses increased by 23.6% to $56.9
million, compared with $46.0 million in 2007. This increase partially reflects
the consolidation of APM, Hikma Egypt and Thymoorgan and includes exceptional
acquisition integration costs of $1.6 million. Tighter control of corporate
general and administrative costs meant that there was only a slight increase of
$1.3 million, bringing total corporate general and administrative costs to $19.4
million, compared with $18.0 million in 2007. Overall, general and
administrative expenses represented 9.8% of Group revenue in 2008, compared with
10.3% in 2007.
Investment in R&D increased by 14.6% to $22.2 million, with total investment in
R&D now representing 3.8% of Group revenue, compared with 4.3% in 2007. This
decline mainly reflects an increase in the proportion of our development
projects in the MENA region where development costs tend to be lower than in the
USA or Europe. It also reflects a strategic shift towards the acquisition of
product files and related product intangibles.
Other net operating expenses, consisting mainly of provisions against slow
moving items of $8.6 million partially offset by foreign exchange gains of $1.2
million, were $6.2 million, compared with $2.8 million in 2007. The major reason
for the increase in 2008 was the provision that we made in our US Generics
business for slow moving items due to deteriorating market conditions.
Operating profit for the Group decreased by 12.7% to $80.7 million, compared
with $92.4 million in 2007, and Group operating margin decreased to 13.9%,
compared with 20.6% in 2007. This decline reflects, for the most part, the loss
incurred in our Generics business where operating profit fell by $37.4 million
from 2007 to 2008.
Adjusted operating profit for the Group, defined as operating profit before the
amortisation of intangible assets (other than software) and exceptional items,
which include acquisition integration costs and revisions to estimates for
charge-backs, rebates and returns, was largely unchanged in 2008 at $94.3
million, compared with $95.1 million in 2007. These exceptional items include a
$4.8 million one-off provision for revisions to our estimates for chargebacks,
returns and rebates in our US Generics business and $1.6 million of acquisition
integration costs associated with the acquisition of APM and Hikma Egypt.
Adjusted operating profit margin was 16.1%, compared with 21.2% in 2007. This
decline is attributed primarily to the difficulties experienced by our Generics
business in the US but also to planned investment in sales and marketing related
to new product launches in the Branded business.
Finance income and costs
Net financing cost for the year was $16.7 million compared with $8.8 million
during 2007. The increase is due to higher average debt levels during 2008
compared to 2007.
Profit before tax
Profit before taxes for the Group decreased by $19.8 million, or 23.6%, to $64.0
million, compared with $83.8 million in 2007.
Tax
The Group had a tax expense of $6.9 million in 2008. The effective tax rate was
10.8%, a year on year decrease of 12.7 percentage points. This improvement
reflects the absence of profits in the USA and a further increase in the
proportion of sales and profits generated in the MENA region.
Minority interest
Hikma's minority interest was nil in 2008, compared with $1.6 million in 2007.
This was primarily due to a decline in the profitability of Hikma's 51% owned
subsidiary in Sudan.
Profit for the year
The Group's profit for the year attributable to equity holders of the parent
decreased by 8.7% to $57.1 million for the year ended 31 December 2008, compared
with $62.6 million in 2007.
Adjusted profit for the year
Excluding the amortisation of intangible assets (excluding software) and
exceptional items, which include integration costs and revisions to estimates
for charge-backs, rebates and returns, the Group's adjusted profit for the year
attributable to equity holders of the parent increased by 4.5% to $67.4 million
for the year ended 31 December 2008, compared with $64.5 million in 2007.
Earnings per share
Diluted earnings per share for the year to 31 December 2008 were 29.6 cents,
down by 16.4% from 35.4 cents in 2007.
Dividend
The Board has recommended a final dividend of 4.0 cents per share (approximately
2.8 pence per share), which will make the dividend for the full year of 7.5
cents per share, the same amount paid in 2007. The proposed final dividend will
be paid on 2 June 2009 to shareholders on the register on 1 May 2009, subject to
approval at the Annual General Meeting.
Operating cash flow and investment
Net cash inflow from operating activities was $75.0 million, compared with $53.3
million in 2007. The previously reported 2007 operating cash flow has been
increased due to the reclassification of finance income and interest paid by
GBP8.1 million. This improvement came as a result of our focus on effective
working capital management where, excluding acquisitions, receivable days
decreased by 9 days and inventory days decreased by 21 days.
Net cash used for investing activities was $66.1 million, compared with $348.9
million in 2007. The latter included just under $300 million of expenditure on
acquisitions ($71.7 million for Ribosepharm and Thymoorgan, $58.7 million for
Alkan Pharma in Egypt and $163.4 million for Arab Pharmaceutical Manufacturing
in Jordan). Capital expenditure amounted to $56.2 million, compared with $50.4
million in 2007. This expenditure related primarily to expansion projects in the
Branded and Injectables businesses. During the year the Group also made regular
investments to upgrade and maintain existing facilities.
On 17 January 2008 we successfully raised gross proceeds of GBP81.6 million
(approximately $160 million) in an equity placing of shares, funding the
acquisition of APM, strengthening our balance sheet and enhancing our
flexibility to finance future growth.
Outlook
Given the prevailing economic conditions, in 2009 we are expecting Group
revenues to grow by 10-15%, with an improvement in our gross margin of 1-2%.
This will be driven by organic growth and supported by the acquisitions and
investments we have made over the past two years. The higher end of these ranges
is based on constant exchange rates while the lower end can be expected if the
2009 average exchange rate is at the level currently prevailing5.
With over 60% of sales now generated in the MENA region, we should continue to
benefit from the growth in that pharmaceutical market, which remains much higher
than the global market. Our share of the MENA market should also continue to
increase as we further penetrate existing markets, expand into new markets and
grow our portfolio of own-brand and in-licensed products.
With new products and new markets, we believe that there remains considerable
scope for us to grow our global Injectables business, particularly in the MENA
region where we will be starting to launch our portfolio of oncology products.
In our US Generics business, which returned to profitability in the fourth
quarter of 2008, we will continue to implement the changes that helped to turn
this business around and benefit from improving market conditions in the US.
_____________________
5 As of 16 March 2009, the exchange rate against the US dollar of the Algerian
dinar was 73.846 and of the Euro was 0.77378 (Source Oanda Corporation
www.oanda.com)
Hikma Pharmaceuticals PLC
Consolidated income statement
for the year ended 31 December 2008
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | Notes | | 2008 | | 2007 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | USD | | USD |
| | | | | '000 | | '000 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Continuing operations | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Revenue | | 2 | | 580,656 | | 448,796 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Cost of sales | | 2 | | (324,174) | | (227,263) |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Gross profit | | 2 | | 256,482 | | 221,533 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Sales and marketing costs | | | | (90,560) | | (61,021) |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| General and administrative | | | | (56,853) | | (46,012) |
| expenses | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Research and development costs | | | | (22,172) | | (19,342) |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Other operating expenses (net) | | | | (6,215) | | (2,760) |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Total operating expenses | | | | (175,800) | | (129,135) |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Adjusted operating profit | | | | 94,326 | | 95,061 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Exceptional items : | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| - Revision to estimates for | | 3 | | (4,800) | | - |
| chargebacks, returns and | | | | | | |
| rebates | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| - Acquisition integration | | 3 | | (1,629) | | - |
| costs | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Intangible amortisation* | | 3 | | (7,215) | | (2,663) |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Operating profit | | | | 80,682 | | 92,398 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Finance income | | | | 817 | | 2,029 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Finance expense | | | | (17,545) | | (10,837) |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Other income | | | | 80 | | 199 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Profit before tax | | | | 64,034 | | 83,789 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Tax | | 4 | | (6,915) | | (19,596) |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Profit for the year | | | | 57,119 | | 64,193 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Attributable to: | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Minority interest | | | | (6) | | 1,617 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Equity holders of the parent | | | | 57,125 | | 62,576 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | 57,119 | | 64,193 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Earnings per share (cents) | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Basic | | 6 | | 30.4 | | 37.0 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| Diluted | | 6 | | 29.6 | | 35.4 |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
| | | | | | | |
+--------------------------------+-----------------+-------+-----+-----------+--+-----------+
Intangible amortisation comprises the amortisation on intangible assets other
than software.
Hikma Pharmaceuticals PLC
Consolidated balance sheet
at 31 December 2008
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | Notes | | 2008 | | 2007 |
| | | | | | | (Restated)* |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | USD '000 | | USD '000 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Non-current assets | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Intangible assets | | | | 258,228 | | 259,841 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Property, plant and equipment | | | | 271,650 | | 246,656 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Interest in joint venture | | | | 5,453 | | 4,543 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Deferred tax assets | | | | 13,305 | | 14,503 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Available for sale investments | | | | 540 | | 1,008 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Financial and other non-current | | | | 2,077 | | 1,290 |
| assets | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | 551,253 | | 527,841 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Current assets | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Inventories | | 7 | | 154,756 | | 140,409 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Income tax recoverable | | | | - | | 358 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Trade and other receivables | | 8 | | 195,843 | | 188,275 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Collateralised cash | | | | 819 | | 5,628 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Cash and cash equivalents | | | | 62,727 | | 28,905 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Other current assets | | | | 1,061 | | 2,625 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | 415,206 | | 366,200 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Total assets | | | | 966,459 | | 894,041 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Current liabilities | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Bank overdrafts and loans | | | | 117,300 | | 276,537 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Obligations under finance leases | | | | 1,221 | | 1,455 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Trade and other payables | | 9 | | 82,003 | | 84,324 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Income tax provision | | | | 12,016 | | 10,583 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Other provisions | | | | 5,392 | | 4,475 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Other current liabilities | | | | 10,502 | | 16,662 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | 228,434 | | 394,036 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Net current assets / | | | | 186,772 | | (27,836) |
| (liabilities) | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Non-current liabilities | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Long-term financial debts | | | | 110,414 | | 57,662 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Deferred income | | | | 695 | | 279 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Obligations under finance leases | | | | 5,496 | | 5,698 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Deferred tax liabilities | | | | 12,425 | | 11,709 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | | | |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| | | | | 129,030 | | 75,348 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Total liabilities | | | | 357,464 | | 469,384 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
| Net assets | | | | 608,995 | | 424,657 |
+----------------------------------+-----+----------+------+-----------+--+-------------+
*The 2007 comparatives have been restated due to the finalisation of 2007
acquisition accounting.
See note 11
Hikma Pharmaceuticals PLC
Consolidated balance sheet
at 31 December 2008
+--------------------------------+-----+------------+-------+----------+--+----------+
| | | | | | | |
+--------------------------------+-----+------------+-------+----------+--+----------+
| | | Notes | | 2008 | | 2007 |
+--------------------------------+-----+------------+-------+----------+--+----------+
| | | | | USD '000 | | USD '000 |
+--------------------------------+-----+------------+-------+----------+--+----------+
| Equity | | | | | | |
+--------------------------------+-----+------------+-------+----------+--+----------+
| Share capital | | 10 | | 33,857 | | 30,229 |
+--------------------------------+-----+------------+-------+----------+--+----------+
| Share premium | | | | 269,973 | | 114,059 |
+--------------------------------+-----+------------+-------+----------+--+----------+
| Own shares | | | | (1,124) | | - |
+--------------------------------+-----+------------+-------+----------+--+----------+
| Other reserves | | | | 300,503 | | 274,192 |
+--------------------------------+-----+------------+-------+----------+--+----------+
| | | | | | | |
+--------------------------------+-----+------------+-------+----------+--+----------+
| Equity attributable to equity | | | | 603,209 | | 418,480 |
| holders of the parent | | | | | | |
+--------------------------------+-----+------------+-------+----------+--+----------+
| | | | | | | |
+--------------------------------+-----+------------+-------+----------+--+----------+
| Minority interest | | | | 5,786 | | 6,177 |
+--------------------------------+-----+------------+-------+----------+--+----------+
| Total equity | | | | 608,995 | | 424,657 |
+--------------------------------+-----+------------+-------+----------+--+----------+
| | | | | | | |
+--------------------------------+-----+------------+-------+----------+--+----------+
Hikma Pharmaceuticals PLC
Consolidated statement of changes in equity
for the year ended 31 December 2008
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| | Merger | Revaluation | Translation | Retained | Total | Share | Share | Own | Total | Minority | Total |
| | reserve | reserves | reserves | earnings | reserves | capital | premium | shares | equity | interest | equity |
| | USD | USD '000 | USD '000 | USD '000 | USD '000 | USD | USD | USD | attributable | USD '000 | USD |
| | '000 | | | | | '000 | '000 | '000 | to equity | | '000 |
| | | | | | | | | | shareholders | | |
| | | | | | | | | | of the | | |
| | | | | | | | | | parent | | |
| | | | | | | | | | USD '000 | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Balance at 1 | 33,920 | 4,807 | 3,566 | 161,631 | 203,924 | 29,712 | 111,431 | - | 345,067 | 4,732 | 349,799 |
| January 2007 | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Issue of | - | - | - | - | - | 517 | 2,628 | - | 3,145 | - | 3,145 |
| equity | | | | | | | | | | | |
| shares | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Cost of | - | - | - | 1,601 | 1,601 | - | - | - | 1,601 | - | 1,601 |
| equity | | | | | | | | | | | |
| settled | | | | | | | | | | | |
| employee | | | | | | | | | | | |
| share scheme | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Deferred and | - | - | - | 2,968 | 2,968 | - | - | - | 2,968 | - | 2,968 |
| current tax | | | | | | | | | | | |
| arising on | | | | | | | | | | | |
| share-based | | | | | | | | | | | |
| payments | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Dividends on | - | - | - | (12,696) | (12,696) | - | - | - | (12,696) | - | (12,696) |
| ordinary | | | | | | | | | | | |
| shares | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Dividends | - | - | - | - | - | - | - | - | - | (172) | (172) |
| paid to | | | | | | | | | | | |
| minority | | | | | | | | | | | |
| shareholders | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Profit for | - | - | - | 62,576 | 62,576 | - | - | - | 62,576 | 1,617 | 64,193 |
| the year | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Cumulative | - | - | - | (151) | (151) | - | - | - | (151) | - | (151) |
| effect of | | | | | | | | | | | |
| change in | | | | | | | | | | | |
| fair value | | | | | | | | | | | |
| of available | | | | | | | | | | | |
| for sale | | | | | | | | | | | |
| investments | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Cumulative | - | - | - | (256) | (256) | - | - | - | (256) | - | (256) |
| effect of | | | | | | | | | | | |
| change in | | | | | | | | | | | |
| fair value | | | | | | | | | | | |
| of financial | | | | | | | | | | | |
| derivatives | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Realisation | - | (180) | | 180 | - | - | - | - | - | - | - |
| of | | | | | | | | | | | |
| revaluation | | | | | | | | | | | |
| reserve | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Currency | - | - | 16,226 | - | 16,226 | - | - | - | 16,226 | - | 16,226 |
| translation | | | | | | | | | | | |
| gain | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Balance at | 33,920 | 4,627 | 19,792 | 215,853 | 274,192 | 30,229 | 114,059 | - | 418,480 | 6,177 | 424,657 |
| 31 December | | | | | | | | | | | |
| 2007 and 1 | | | | | | | | | | | |
| January 2008 | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Issue of | - | - | - | - | - | 3,628 | 155,914 | - | 159,542 | - | 159,542 |
| equity | | | | | | | | | | | |
| shares | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Acquisition | - | - | - | - | - | - | - | (1,124) | (1,124) | - | (1,124) |
| of own | | | | | | | | | | | |
| shares | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Cost of | - | - | - | 3,384 | 3,384 | - | - | - | 3,384 | - | 3,384 |
| equity | | | | | | | | | | | |
| settled | | | | | | | | | | | |
| employee | | | | | | | | | | | |
| share scheme | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Deferred tax | - | - | - | (4,299) | (4,299) | - | - | - | (4,299) | - | (4,299) |
| arising on | | | | | | | | | | | |
| share-based | | | | | | | | | | | |
| payments | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Dividends on | - | - | - | (14,151) | (14,151) | - | - | - | (14,151) | - | (14,151) |
| ordinary | | | | | | | | | | | |
| shares | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Dividends | - | - | - | - | - | - | - | - | - | (385) | (385) |
| paid to | | | | | | | | | | | |
| minority | | | | | | | | | | | |
| shareholders | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Profit/(loss) | - | - | - | 57,125 | 57,125 | - | - | - | 57,125 | (6) | 57,119 |
| for the year | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Cumulative | - | - | - | (216) | (216) | - | - | - | (216) | - | (216) |
| effect of | | | | | | | | | | | |
| change in | | | | | | | | | | | |
| fair value | | | | | | | | | | | |
| of available | | | | | | | | | | | |
| for sale | | | | | | | | | | | |
| investments | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Cumulative | - | - | - | (78) | (78) | - | - | - | (78) | - | (78) |
| effect of | | | | | | | | | | | |
| change in | | | | | | | | | | | |
| fair value | | | | | | | | | | | |
| of financial | | | | | | | | | | | |
| derivatives | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Realisation | - | (180) | - | 180 | - | - | - | - | - | - | - |
| of | | | | | | | | | | | |
| revaluation | | | | | | | | | | | |
| reserve | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Currency | - | - | (15,454) | - | (15,454) | - | - | - | (15,454) | - | (15,454) |
| translation | | | | | | | | | | | |
| loss | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| Balance at | 33,920 | 4,447 | 4,338 | 257,798 | 300,503 | 33,857 | 269,973 | (1,124) | 603,209 | 5,786 | 608,995 |
| 31 December | | | | | | | | | | | |
| 2008 | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
| | | | | | | | | | | | |
+---------------+-----------+-------------+-------------+------------+------------+-----------+-----------+-----------+--------------+----------+------------+
Hikma Pharmaceuticals PLC
Consolidated cash flow statement
for the year ended 31 December 2008
+--------------------------------------------------+--------+--+------------+--+-------------+
| | Note | | 2008 | | 2007 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | USD | | USD |
| | | | '000 | | '000 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Net cash from operating activities | 12 | | 74,969 | | 53,283 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Investing activities | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Purchases of property, plant and equipment | | | (56,205) | | (50,402) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Proceeds from disposal of property, plant and | | | 1,003 | | 906 |
| equipment | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Purchase of intangible assets | | | (9,313) | | (4,586) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Proceeds from disposal of intangible assets | | | 1,257 | | - |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Change in interest in joint venture | | | (910) | | - |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Investment in financial and other non current | | | (787) | | 329 |
| assets | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Proceeds/(investment) in available for sale | | | 252 | | (226) |
| investments (net) | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Acquisition of subsidiary undertakings, net of | | | - | | (296,903) |
| cash acquired | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Subsequent Payments relating to prior year | | | (2,234) | | - |
| acquisitions | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Finance income | | | 817 | | 2,029 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Net cash used in investing activities | | | (66,120) | | (348,853) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Financing activities | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Decrease/(increase) in collateralised cash | | | 4,809 | | (291) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Increase in long-term financial debts | | | 101,685 | | 42,464 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Repayment of long-term financial debts | | | (48,933) | | (13,546) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| (Decrease)/increase in short-term borrowings | | | (159,237) | | 229,658 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| (Decrease)/increase in obligations under finance | | | (436) | | 126 |
| leases | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Dividends paid | | | (14,151) | | (12,834) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Dividends paid to minority shareholders | | | (385) | | (166) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Purchase of own shares | | | (1,124) | | - |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Interest paid | | | (17,097) | | (10,166) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Proceeds from issue of new shares | | | 162,026 | | 3,145 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Costs of issue of new shares | | | (2,484) | | - |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Net cash from financing activities | | | 24,673 | | 238,390 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Net increase/(decrease) in cash and cash | | | 33,522 | | (57,180) |
| equivalents | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Cash and cash equivalents at beginning of year | | | 28,905 | | 86,227 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Foreign exchange translation movements | | | 300 | | (142) |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| Cash and cash equivalents at end of year | | | 62,727 | | 28,905 |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
| | | | | | |
+--------------------------------------------------+--------+--+------------+--+-------------+
Hikma Pharmaceuticals PLC
Notes to the consolidated financial information
1. Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2008 or 2007, but is derived
from those accounts. Statutory accounts for 2007 have been delivered to the
Registrar of Companies and those for 2008 will be delivered following the
company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified, did not draw attention any matters by way of
emphasis without qualifying their report and did not contain statements under
s237(2) or (3) Companies Act 1985.
Hikma Pharmaceuticals PLC's consolidated financial statements are prepared in
accordance with International Financial Reporting Standards (IFRSs) issued by
the International Accounting Standards Board. The financial statements have also
been prepared in accordance with IFRSs adopted for use in the European Union and
therefore comply with Article 4 of the EU IAS Regulation. The financial
statements have been prepared under the historical cost convention, except for
the revaluation to market of certain financial assets and liabilities. The
preliminary announcement is based on the Company's financial statements.
Comparative figures for 31 December 2007 have been adjusted for revisions to the
provisional acquisition balance sheet of the companies acquired by the Group in
2007. There is no impact on the income statement and further details are set out
in note 11. In addition, in the consolidated cash flow statement and supporting
notes interest paid has been reclassified to financing activities and finance
income has been reclassified to investing activities to better reflect the
nature of the flows, following the recent acquisitions.
The Group's previously published financial statements were also prepared in
accordance with International Financial Reporting Standards. These International
Financial Reporting Standards have been subject to amendment and interpretation
by the International Accounting Standards Board and the financial statements
presented for the years ended 31 December 2006 and 31 December 2007 have been
prepared in accordance with those revised standards. Unless stated otherwise
these policies are in accordance with the revised standards that have been
applied throughout the year and prior years presented in the financial
statements.
The presentational and functional currency of Hikma Pharmaceuticals PLC is the
US Dollar as the majority of the Company's business is conducted in US Dollars
(USD).
Going concern
Although the current economic conditions may affect short term demand for our
products, as well as place pressure on customers and suppliers which may face
liquidity issues, the Group's geographic spread, product diversity and large
customer and supplier base substantially mitigate these risks. In addition, the
Group operates in the relatively defensive generic pharmaceuticals industry
which we expect to be less affected compared to other industries that are
subject to greater cyclical changes.
The Group has $229 million of banking facilities of which $120.8 million were
undrawn as at 31 December 2008. These facilities are well diversified across the
operating subsidiaries of the Group with a number of financial institutions. The
majority of these facilities are short term, uncommitted working capital
related. However, we continue to expected them to be renewed annually. In
addition the Group maintained cash balances of $62.7 million as at 31 December
2008. The Group's forecasts, taking into account reasonable possible changes in
trading performance, facility renewal sensitivities and maturities of long term
debt, show that the Group should be able to operate well within the levels of
its facilities and their related covenants.
After making enquiries, the directors believe that the Group is adequately
placed to manage its business and financing risks successfully despite the
current uncertain economic outlook. Accordingly, they continue to adopt the
going concern basis in preparing the annual report and accounts.
Notes to the consolidated financial information
2. Business and geographical segments
For management purposes, the Group is currently organised into three operating
divisions - Generic, Branded and Injectables. These divisions are the basis on
which the Group reports its primary segment information.
Segment information about these businesses is presented below.
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Year ended | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| 31 December 2008 | Branded | | Injectables | | Generic | | Others | | Group |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | USD '000 | | USD | | USD '000 | | USD | | USD '000 |
| | | | '000 | | | | '000 | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Revenue | 320,837 | | 149,320 | | 105,696 | | 4,803 | | 580,656 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Cost of sales | (148,023) | | (85,942) | | (86,385) | | (3,824) | | (324,174) |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Gross profit | 172,814 | | 63,378 | | 19,311 | | 979 | | 256,482 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Result | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Adjusted segment | 93,591 | | 24,688 | | (839) | | (3,738) | | 113,702 |
| result | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Exceptional items : | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| -Revision to | - | | - | | (4,800) | | - | | (4,800) |
| estimates for | | | | | | | | | |
| chargebacks, | | | | | | | | | |
| returns and | | | | | | | | | |
| rebates | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| - Acquisition | (1,629) | | - | | - | | - | | (1,629) |
| integration | | | | | | | | | |
| costs | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Intangible | (4,478) | | (2,587) | | (150) | | - | | (7,215) |
| amortisation* | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Segment result | 87,484 | | 22,101 | | (5,789) | | (3,738) | | 100,058 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Unallocated | | | | | | | | | (19,376) |
| corporate expenses | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Operating profit | | | | | | | | | 80,682 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Finance income | | | | | | | | | 817 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Finance expense | | | | | | | | | (17,545) |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Other income | | | | | | | | | 80 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Profit before tax | | | | | | | | | 64,034 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Tax | | | | | | | | | (6,915) |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Profit for the year | | | | | | | | | 57,119 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Attributable to: | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Minority interest | | | | | | | | | (6) |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| Equity holders of | | | | | | | | | 57,125 |
| the parent | | | | | | | | | |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | 57,119 |
+---------------------+-----------+--+-------------+--+-----------+--+-----------+--+------------+
"Others" mainly comprises Arab Medical Containers LTD and International
Pharmaceutical Research
Center LTD and the chemicals division of Hikma Pharmaceuticals LTD Jordan.
Notes to the consolidated financial information
Unallocated corporate expenses are primarily made up of employee costs, office
costs, professional fees and donations.
* Intangible amortisation comprises the amortisation on intangible assets other
than software.
2. Business and geographical segments
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Other information | | Branded | | Injectables | | Generic | | Corporate | | Group |
| 2008 | | | | | | | | and Other | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| | | USD | | USD | | USD | | USD | | USD |
| | | '000 | | '000 | | '000 | | '000 | | '000 |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Additions to property, | | 34,226 | | 12,981 | | 8,037 | | 1,427 | | 56,671 |
| plant and equipment | | | | | | | | | | |
| (cost) | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Additions to intangible | | 3,801 | | 4,781 | | 463 | | 1,601 | | 10,646 |
| assets | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Total property, plant and | | 336,839 | | 150,282 | | 32,185 | | 10,572 | | 529,878 |
| equipment and intangible | | | | | | | | | | |
| assets (net book value) | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Depreciation and | | 18,666 | | 8,540 | | 4,613 | | 1,303 | | 33,122 |
| amortisation | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Balance sheet | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Total assets | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Segment assets | | 642,397 | | 196,894 | | 95,456 | | 31,712 | | 966,459 |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Total liabilities | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| Segment liabilities | | 196,924 | | 82,804 | | 28,191 | | 49,545 | | |
| | | | | | | | | | | 357,464 |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
| | | | | | | | | | | |
+---------------------------+--+------------+--+-------------+--+-----------+--+-----------+--+------------+
Notes to the consolidated financial information
2. Business and geographical segments
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Year ended 31 December | Branded | Injectables | Generic | Others | | Group |
| 2007 | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | USD '000 | USD | USD '000 | USD | | USD |
| | | '000 | | '000 | | '000 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Revenue | 198,942 | 121,164 | 124,229 | 4,461 | | 448,796 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Cost of sales | (90,925) | (67,005) | (65,644) | (3,689) | | (227,263) |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Gross profit | 108,017 | 54,159 | 58,585 | 772 | | 221,533 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Result | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Adjusted segment result | 62,162 | 22,654 | 31,644 | (3,396) | | 113,064 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Intangible amortisation* | (466) | (2,197) | - | - | | (2,663) |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Segment result | 61,696 | 20,457 | 31,644 | (3,396) | | 110,401 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Unallocated corporate | | | | | | (18,003) |
| expenses | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Operating profit | | | | | | 92,398 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Finance income | | | | | | 2,029 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Finance expense | | | | | | (10,837) |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Other income | | | | | | 199 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Profit before tax | | | | | | 83,789 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Tax | | | | | | (19,596) |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Profit for the year | | | | | | 64,193 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Attributable to: | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Minority interest | | | | | | 1,617 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| Equity holders of the | | | | | | 62,576 |
| parent | | | | | | |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
| | | | | | | 64,193 |
+----------------------------+-----------+-------------+-----------+-----------+--+------------+
"Others" mainly comprises of Arab Medical Containers LTD and International
Pharmaceutical Research Center LTD and the chemicals division of Hikma
Pharmaceuticals LTD Jordan.
Unallocated corporate expenses are primarily made up of employee costs, office
costs, professional fees and donations.
Notes to the consolidated financial information
* Intangible amortisation comprises the amortisation on intangible assets other
than software.
2. Business and geographical segments
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Other information | Branded | | Injectables | | Generic | | Corporate | | Group |
| (Restated)* 2007 | | | | | | | and Other | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| | USD | | USD | | USD | | USD | | USD |
| | '000 | | '000 | | '000 | | '000 | | '000 |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Additions to property, | 28,366 | | 15,811 | | 4,189 | | 990 | | 49,356 |
| plant and equipment (cost) | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Acquisition of | 56,380 | | 9,213 | | - | | - | | 65,593 |
| subsidiary's property, | | | | | | | | | |
| plant and equipment | | | | | | | | | |
| (cost)* | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Additions to intangible | 1,453 | | 2,557 | | 445 | | 131 | | 4,586 |
| assets | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Intangible assets arising | 164,230 | | 62,495 | | - | | - | | 226,725 |
| on acquisition* | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Total property, plant and | 321,072 | | 148,252 | | 28,304 | | 8,869 | | 506,497 |
| equipment and intangible | | | | | | | | | |
| assets (net book value)* | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Depreciation and | 9,740 | | 7,054 | | 5,153 | | 1,486 | | 23,433 |
| amortisation | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Balance sheet | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Total assets | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Segment assets | 575,613 | | 196,337 | | 97,355 | | 24,736 | | 894,041 |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Total liabilities | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| Segment liabilities | 168,575 | | 78,723 | | 9,781 | | 212,305 | | 469,384 |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
| | | | | | | | | | |
+----------------------------+----------+--+-------------+--+---------+--+-----------+--+----------+
* The 2007 comparatives have been restated due to the finalisation of 2007
acquisition accounting. See note 11.
2. Business and geographical segments
The following table provides an analysis of the Group's sales by geographical
market, irrespective of the origin of the goods/services:
+--------------------------------------------------+-----+-----------+--+-----------+
| | | Sales revenue by |
+--------------------------------------------------+-----+--------------------------+
| | | geographical market |
+--------------------------------------------------+-----+--------------------------+
| | | For the year ended 31 |
| | | December |
+--------------------------------------------------+-----+--------------------------+
| | | 2008 | | 2007 |
+--------------------------------------------------+-----+-----------+--+-----------+
| | | USD '000 | | USD '000 |
+--------------------------------------------------+-----+-----------+--+-----------+
| | | | | |
+--------------------------------------------------+-----+-----------+--+-----------+
| Middle East and North Africa | | 365,922 | | 229,196 |
+--------------------------------------------------+-----+-----------+--+-----------+
| Europe and Rest of the World | | 84,128 | | 76,090 |
+--------------------------------------------------+-----+-----------+--+-----------+
| United States | | 130,606 | | 143,510 |
+--------------------------------------------------+-----+-----------+--+-----------+
| | | 580,656 | | 448,796 |
+--------------------------------------------------+-----+-----------+--+-----------+
| | | | | |
+--------------------------------------------------+-----+-----------+--+-----------+
| | | | | |
+--------------------------------------------------+-----+-----------+--+-----------+
Notes to the consolidated financial information
The following is an analysis of the additions and total property, plant and
equipment and intangible assets and an analysis of total assets by the
geographical area in which the assets are located:
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| | Additions to property, plant | | Total property, plant | | Total assets as at December |
| | and equipment and intangibles | | and equipment and | | 31 |
| | in the year | | intangibles as at | | |
| | | | December 31 | | |
+--------------+--------------------------------------+----------+--------------------------------+---------+----------------------------------+
| | 2008 | | 2007* | | 2008 | | 2007* | | 2008 | | 2007* |
| | | | (Restated) | | | | (Restated) | | | | (Restated) |
+ +--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| | USD 000 | | USD 000 | | USD | | USD | | USD 000 | | USD 000 |
| | | | | | 000 | | 000 | | | | |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| | | | | | | | | | | | |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| Middle East | 40,047 | | 251,457 | | 345,992 | | 329,646 | | 657,901 | | 589,457 |
| and North | | | | | | | | | | | |
| Africa | | | | | | | | | | | |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| Europe | 18,770 | | 90,169 | | 151,701 | | 148,547 | | 213,102 | | 208,388 |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| United | 8,500 | | 4,634 | | 32,185 | | 28,304 | | 95,456 | | 96,196 |
| States | | | | | | | | | | | |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| | | | | | | | | | | | |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| | 67,317 | | 346,260 | | 529,878 | | 506,497 | | 966,459 | | 894,041 |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| | | | | | | | | | | | |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
| | | | | | | | | | | | |
+--------------+--------------+----------+------------+----------+----------+--------+------------+---------+----------+----------+------------+
Additions in 2007 include property, plant and equipment and intangibles acquired
with and arising on the acquisition of subsidiary undertakings.
*The 2007 comparatives have been restated due to the finalisation of 2007
acquisition accounting. See note 11.
3. Exceptional items and intangible amortisation
Exceptional items are disclosed separately in the consolidated income statement
to assist in the understanding of the Group's underlying performance.
+------------------------------------+---------------------+-----------+---+-----------+
| | | For the years ended 31 |
| | | December |
+------------------------------------+---------------------+---------------------------+
| | | 2008 | | 2007 |
+------------------------------------+---------------------+-----------+---+-----------+
| | | USD | | USD |
| | | '000 | | '000 |
+------------------------------------+---------------------+-----------+---+-----------+
| | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
| Revision to estimates for | | (4,800) | | - |
| chargebacks, returns and rebates | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
| Acquisition integration costs | | (1,629) | | - |
+------------------------------------+---------------------+-----------+---+-----------+
| Exceptional items | | (6,429) | | - |
+------------------------------------+---------------------+-----------+---+-----------+
| | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
| Intangible amortisation | | (7,215) | | (2,663) |
+------------------------------------+---------------------+-----------+---+-----------+
| | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
| Exceptional items and intangible | | (13,644) | | (2,663) |
| amortization | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
| | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
| Tax effect | | 3,408 | | 736 |
+------------------------------------+---------------------+-----------+---+-----------+
| | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
| Impact on profit for the year | | (10,236) | | (1,927) |
+------------------------------------+---------------------+-----------+---+-----------+
| | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
| | | | | |
+------------------------------------+---------------------+-----------+---+-----------+
Revision to estimates for chargebacks, returns and rebates represents a one off
charge taken against revenue during 2008.
Acquisition integration costs
represent expenses incurred in integrating APM and Hikma Pharma SAE (Egypt) into
the Group. These are included within sales and marketing and general and
administrative expenses.
Intangible amortisation comprises the
amortisation of intangible assets other than software.
Notes to the consolidated financial information
4. Tax
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| | | For the years ended 31 |
| | | December |
+-----------------------------------------------+-----------------------------------------------+--------------------------------+
| | | 2008 | | 2007 |
+ +-----------------------------------------------+-----------+---------+----------+
| | | USD '000 | | USD |
| | | | | '000 |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| Current tax: | | | | |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| UK current tax | | 2,280 | | 13,664 |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| Double tax relief | | (2,280) | | (13,664) |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| Foreign tax | | 9,268 | | 20,552 |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| Prior year adjustments | | 76 | | (1,000) |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| Deferred tax | | (2,429) | | 44 |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| | | | | |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| | | 6,915 | | 19,596 |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| | | | | |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
| | | | | |
+-----------------------------------------------+-----------------------------------------------+-----------+---------+----------+
UK corporation tax is calculated at 28.5% (2007: 30%) of the estimated
assessable profit made in the UK for the year.
Taxation for other
jurisdictions is calculated at the rates prevailing in the respective
jurisdiction.
The charge for the year can be reconciled to profit before tax per the income
statement as follows:
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| | | 2008 | | 2007 |
+ +------------------------------------------------+------------+---------+------------+
| | | USD '000 | | USD |
| | | | | '000 |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| | | | | |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Profit before tax: | | 64,034 | | 83,789 |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Tax at the UK corporation tax rate of 28.5% ( | | 18,250 | | 25,137 |
| 2007: 30%) | | | | |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Profits taxed at different rates | | (15,089) | | (7,100) |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| UK tax on dividend income | | 2,280 | | 13,664 |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Double tax relief offset | | (2,280) | | (13,664) |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Permanent differences | | 2,886 | | 2,314 |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Losses for which no benefit is recognised | | 792 | | 713 |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Other tax adjustments | | - | | (468) |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Prior year adjustments | | 76 | | (1,000) |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| Tax expense for the year | | 6,915 | | 19,596 |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
| | | | | |
+------------------------------------------------+------------------------------------------------+------------+---------+------------+
5. Dividends
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| | | 2008 | | 2007 |
+ + +-----------------------------------------------+----------+---------+
| | | USD '000 | | USD |
| | | | | '000 |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| Amounts recognised as distributions to equity | | | | |
| holders in the year: | | | | |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| Final dividend for the year ended 31 December | | 7,542 | | 6,765 |
| 2007 of 4.0 cents (2006: 4.0 cents) per share | | | | |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| Interim dividend for the year ended 31 | | 6,609 | | 5,931 |
| December 2008 of 3.5 cents (2007: 3.5 cents) | | | | |
| per share | | | | |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| | | | | |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| | | 14,151 | | 12,696 |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| | | | | |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| | | | | |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
| The proposed final dividend for the year ended 31 December 2008 is 4.0 cents |
| (2007: 4.0 cents) per share, bringing the total dividends for the year to 7.5 |
| cents (2007: 7.5 cents) per share. |
+-------------------------------------------------------------------------------------------------------------------------------+
| | | |
+-----------------------------------------------+----------+-----------------------------------------------+----------+---------+
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
+----------------------------------------------------+----+--------+----------------------------------------------------+----+----------+
| | | | For the years |
| | | | ended 31 December |
+----------------------------------------------------+----+--------+--------------------------------------------------------------------+
| | | 2008 | | 2007 |
+ + +----------------------------------------------------+----+----------+
| | | USD '000 | | USD |
| | | | | '000 |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| Earnings for the purposes of basic and diluted | | 57,125 | | 62,576 |
| earnings per share being net profit attributable | | | | |
| to equity holders of the parent | | | | |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| | | | | |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| | | Number | | Number |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| Number of shares | | '000 | | '000 |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| Weighted average number of Ordinary Shares for the | | 187,876 | | 169,216 |
| purposes of basic earnings per share | | | | |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| | | | | |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| Effect of dilutive potential Ordinary Shares : | | | | |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| Share options and LTIP | | 5,295 | | 7,631 |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| | | | | |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| Weighted average number of Ordinary Shares for the | | 193,171 | | 176,847 |
| purposes of diluted earnings per share | | | | |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| | | | | |
+----------------------------------------------------+-------------+----------------------------------------------------+----+----------+
| | | | | |
+---------------------------------------------------------+--------+----------------------------------------------------+----+----------+
| | | | 2008 | | 2007 |
+----------------------------------------------------+----+--------+----------------------------------------------------+----+----------+
| | | | Earnings | | Earnings |
| | | | per | | per |
| | | | share | | share |
+----------------------------------------------------+----+--------+----------------------------------------------------+----+----------+
| | | | Cents | | Cents |
+----------------------------------------------------+----+--------+----------------------------------------------------+----+----------+
| | | | | | |
+----------------------------------------------------+----+--------+----------------------------------------------------+----+----------+
| Basic | | 30.4 | | 37.0 |
+---------------------------------------------------------+--------+----------------------------------------------------+----+----------+
| | | | | |
+---------------------------------------------------------+--------+----------------------------------------------------+----+----------+
| Diluted | | 29.6 | | 35.4 |
+---------------------------------------------------------+--------+----------------------------------------------------+----+----------+
| | | | |
+----------------------------------------------------+----+--------+----------------------------------------------------+----+----------+
7. Inventories
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| | | As at 31 December |
+------------------------------------------+------------+---------------------------------------------------------------------+
| | | 2008 | | 2007 |
| | | | | (Restated)* |
+ + +------------------------------------------+------------+-------------+
| | | USD '000 | | USD '000 |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| | | | | |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| Finished goods | | 45,585 | | 36,029 |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| Work-in-progress | | 23,609 | | 31,673 |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| Raw and packing materials | | 71,733 | | 62,327 |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| Goods in transit | | 13,829 | | 10,380 |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| | | | | |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| | | 154,756 | | 140,409 |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| | | | | |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
| | | | | |
+------------------------------------------+------------+------------------------------------------+------------+-------------+
Goods in transit include inventory held at third parties whilst in transit
between Group companies.
*The 2007 comparatives have been restated due to the finalisation of 2007
acquisition accounting. See note 11
+--------------------+--+----------+--+-----------+--+-------------+--+-------------+--+------------+
| | | As at 31 | | Additions | | Utilisation | | Translation | | As at 31 |
| | | December | | | | | | adjustments | | December |
| | | 2007 | | | | | | | | 2008 |
+--------------------+--+----------+--+-----------+--+-------------+--+-------------+--+------------+
| | | USD '000 | | USD | | USD | | USD '000 | | USD '000 |
| | | | | '000 | | '000 | | | | |
+--------------------+--+----------+--+-----------+--+-------------+--+-------------+--+------------+
| | | | | | | | | | | |
+--------------------+--+----------+--+-----------+--+-------------+--+-------------+--+------------+
| Provision for slow | | 8,309 | | 7,756 | | (7,399) | | (113) | | 8,553 |
| moving inventory | | | | | | | | | | |
+--------------------+--+----------+--+-----------+--+-------------+--+-------------+--+------------+
| | | | | | | | | | | |
+--------------------+--+----------+--+-----------+--+-------------+--+-------------+--+------------+
The total expense in the income statement for the write-off of inventory
including provision for such write offs was USD 8,589,000 (2007: USD 4,646,000).
8. Trade and other receivables
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| | | As at 31 December |
+---------------------------------------------+----------+----------------------------------------------------------------------+
| | | 2008 | | 2007 |
| | | | | (Restated)* |
+ + +---------------------------------------------+----------+-------------+
| | | USD '000 | | USD '000 |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| | | | | |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| Trade receivables | | 173,958 | | 171,393 |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| Prepayments | | 14,345 | | 12,629 |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| Value added tax recoverable | | 5,306 | | 3,647 |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| Interest receivable | | 108 | | 302 |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| Employee advances | | 2,126 | | 304 |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| | | | | |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| | | 195,843 | | 188,275 |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| | | | | |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
| | | | | |
+---------------------------------------------+----------+---------------------------------------------+----------+-------------+
*The 2007 comparatives have been restated due to the finalisation of 2007
acquisition accounting. See note 11
9. Trade and other payables
+--------------------------------------------+------------+----------+--+---------+
| | | As at 31 December |
+--------------------------------------------+------------+-----------------------+
| | | 2008 | | 2007 |
+ + +----------+--+---------+
| | | USD '000 | | USD '000 |
+--------------------------------------------+------------+--------------------------------------------+------------+----------+
| | | | | |
+--------------------------------------------+------------+----------+--+---------+
| Trade payables | | 42,632 | | 49,143 |
+--------------------------------------------+------------+----------+--+---------+
| Accrued expenses | | 29,823 | | 25,392 |
+--------------------------------------------+------------+----------+--+---------+
| Employees' provident fund * | | 2,753 | | 3,158 |
+--------------------------------------------+------------+----------+--+---------+
| VAT and sales tax payables | | 1,408 | | 543 |
+--------------------------------------------+------------+----------+--+---------+
| Dividends payable ** | | 2,495 | | 3,490 |
+--------------------------------------------+------------+----------+--+---------+
| Social security withholdings | | 745 | | 1,026 |
+--------------------------------------------+------------+----------+--+---------+
| Income tax withholdings | | 1,037 | | 588 |
+--------------------------------------------+------------+----------+--+---------+
| Other payables | | 1,110 | | 984 |
+--------------------------------------------+------------+----------+--+---------+
| | | | | |
+--------------------------------------------+------------+----------+--+---------+
| | | 82,003 | | 84,324 |
+--------------------------------------------+------------+----------+--+---------+
| | | | | |
+--------------------------------------------+------------+----------+--+---------+
| | | | | |
+--------------------------------------------+------------+----------+--+---------+
* The employee's provident fund liability mainly represents the outstanding
contributions due to the Hikma Pharmaceuticals Limited - Jordan retirement
benefit plan, on which the fund receives 5% interest.
** Dividends payable includes USD 2,303,000 (2007: USD 3,261,000) due to the
previous shareholders of APM.
10. Share capital
+-----------------------------------------------+---------+---------+--+---------+
| Authorised: | | 2008 | | 2007 |
+ + +---------+--+---------+
| | | USD '000 | | USD |
| | | | | '000 |
+-----------------------------------------------+---------+-----------------------------------------------+---------+---------+
| | | | | |
+-----------------------------------------------+---------+---------+--+---------+
| 500,000,000 Ordinary Shares of 10p each | | 88,700 | | 88,700 |
+-----------------------------------------------+---------+---------+--+---------+
| | | | | |
+-----------------------------------------------+---------+---------+--+---------+
+------------------------+-------+------------+-------+----------+--+------------+--+-----------+
| Issued and fully paid | | | | | | | | |
| - included in | | | | | | | | |
| shareholders' equity: | | | | | | | | |
+------------------------+-------+------------+-------+----------+--+------------+--+-----------+
| | | 2008 | | 2007 |
+------------------------+-------+-------------------------------+--+---------------------------+
| | | Number | | USD | | Number | | USD |
| | | '000 | | '000 | | '000 | | '000 |
+------------------------+-------+------------+-------+----------+--+------------+--+-----------+
| | | | | | | | | |
+------------------------+-------+------------+-------+----------+--+------------+--+-----------+
| At 1 January | | 170,734 | | 30,229 | | 168,164 | | 29,712 |
+------------------------+-------+------------+-------+----------+--+------------+--+-----------+
| Issued during the year | | 18,504 | | 3,628 | | 2,570 | | 517 |
+------------------------+-------+------------+-------+----------+--+------------+--+-----------+
| At 31 December | | 189,238 | | 33,857 | | 170,734 | | 30,229 |
+------------------------+-------+------------+-------+----------+--+------------+--+-----------+
| | | | | | | | | |
+------------------------+-------+------------+-------+----------+--+------------+--+-----------+
On 17 January 2008, a total of 17,000,000 new ordinary shares of 10 pence each
in the Group were placed at a price of 480 pence per share, raising gross
proceeds of approximately GBP 81.6 million (USD 160.3 million). As part of the
Placing 5.23 million shares were placed with Darhold Limited at the Placing
Price and 333,000 shares were placed with the Darwazah family and other
connected individuals at the Placing Price. The total number of shares issued
represents 9.96% of Hikma's issued ordinary share capital prior to the placing.
The Group used the proceeds from the placing to reduce borrowings incurred in
connection with its JOD 116.0 million (USD 163.8 million) acquisition of Arab
Pharmaceutical Manufacturing Company thereby providing the Group with increased
flexibility to finance future growth.
The costs of the placing of USD 2,484,000 were offset against share premium.
11. Acquisitions of subsidiaries
In accordance with IFRS 3 the Group balance sheet as at 31 December 2007 has
been restated to reflect the final fair value adjustments in relation to the
acquisitions made during 2007.
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | 2007 (as | | Final fair | | 2007 |
| | | | previously | | value | | (Restated) |
| | | | reported) | | adjustments | | USD '000 |
| | | | USD '000 | | USD '000 | | |
+---------------------------+--+-------+ +---------------+ +--+ +
| | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Non-current assets | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Intangible assets | | | 251,340 | | 8,501 | | 259,841 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Property, plant and | | | 243,901 | | 2,755 | | 246,656 |
| equipment | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Interest in joint venture | | | 4,543 | | - | | 4,543 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Deferred tax assets | | | 14,503 | | - | | 14,503 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Available for sale | | | 1,008 | | - | | 1,008 |
| investments | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Financial and other | | | 1,290 | | - | | 1,290 |
| non-current assets | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | 516,585 | | 11,256 | | 527,841 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Current assets | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Inventories | | | 147,670 | | (7,261) | | 140,409 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Income tax recoverable | | | 358 | | - | | 358 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Trade and other | | | 190,714 | | (2,439) | | 188,275 |
| receivables | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Collateralised cash | | | 5,628 | | - | | 5,628 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Cash and cash equivalents | | | 28,905 | | - | | 28,905 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Other current assets | | | 2,625 | | - | | 2,625 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | 375,900 | | (9,700) | | 366,200 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Total assets | | | 892,485 | | 1,556 | | 894,041 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Current liabilities | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Bank overdrafts and loans | | | 276,537 | | - | | 276,537 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Obligations under finance | | | 1,455 | | - | | 1,455 |
| leases | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Trade and other payables | | | 84,324 | | - | | 84,324 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Income tax provision | | | 10,583 | | - | | 10,583 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Other provisions | | | 4,475 | | - | | 4,475 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Other current liabilities | | | 14,542 | | 2,120 | | 16,662 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | 391,916 | | 2,120 | | 394,036 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Net current (liabilities) | | | (16,016) | | (11,820) | | (27,836) |
| | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Non-current liabilities | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Long-term financial debts | | | 57,662 | | - | | 57,662 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Deferred income | | | 279 | | - | | 279 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Obligations under finance | | | 5,698 | | - | | 5,698 |
| leases | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Deferred tax liabilities | | | 12,273 | | (564) | | 11,709 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | 75,912 | | (564) | | 75,348 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Total liabilities | | | 467,828 | | 1,556 | | 469,384 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| Net assets | | | 424,657 | | - | | 424,657 |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
| | | | | | | | |
+---------------------------+--+-------+---------------+---------------+-------------+--+------------+
12. Net cash from operating activities
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| | | 2008 | | 2007 |
+ + +--------------------------------------------------+--------+-----------+
| | | USD '000 | | USD '000 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Profit before tax | | 64,034 | | 83,789 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Adjustments for: | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Depreciation, amortisation and impairment of: | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Property, plant and equipment | | 25,067 | | 19,374 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Intangible assets | | 8,055 | | 4,059 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Gains on disposal of property, plant and | | (6) | | (202) |
| equipment | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Gains on disposal of intangible assets | | (832) | | - |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Movement on provisions | | 917 | | 1,078 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Movement on deferred income | | 416 | | (78) |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Cumulative effect of change in fair value of | | (78) | | (256) |
| derivatives | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Cost of equity settled employee share scheme | | 3,384 | | 1,601 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Finance income | | (817) | | (2,029) |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Interest and bank charges | | 17,545 | | 10,837 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Cash flow before working capital | | 117,685 | | 118,173 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Change in trade and other receivables | | (10,903) | | (29,453) |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Change in other current assets | | 1,564 | | (47) |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Change in inventories | | (19,327) | | (29,065) |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Change in trade and other payables | | (615) | | 17,774 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Change in other current liabilities | | (5,751) | | (6,112) |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Cash generated by operations | | 82,653 | | 71,270 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Income tax paid | | (7,684) | | (17,987) |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| Net cash generated from operating activities | | 74,969 | | 53,283 |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
| | | | | |
+--------------------------------------------------+--------+--------------------------------------------------+--------+-----------+
13. Foreign exchange currencies
The currencies that have a significant impact on the group accounts and the
exchange rates used are as follows:
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| | Period end rates | | Average rates |
+--------------------------------------+----------------------+--+----------------------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| USD/EUR | 1.4097 | | 1.4729 | | 1.4713 | | 1.3707 |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| USD/Sudanese Pound | 0.4579 | | 0.4872 | | 0.4779 | | 0.4961 |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| USD/Algerian Dinar | 0.0141 | | 0.0150 | | 0.0155 | | 0.0144 |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| USD/Saudi Riyal | 0.2667 | | 0.2667 | | 0.2667 | | 0.2667 |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| USD/British Pound | 1.4479 | | 1.9973 | | 1.8552 | | 2.0018 |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| USD/Jordanian Dinar | 1.4104 | | 1.4104 | | 1.4104 | | 1.4104 |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| USD/Egyptian Pound | 0.1806 | | 0.1823 | | 0.1833 | | 0.1821 |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+---------+--+---------+
The Jordanian Dinar and Saudi Riyal have no impact on the income statement as
those currencies are pegged against the US Dollar.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFWEDMSUSEDD
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