TIDMHIK
RNS Number : 6588R
Hikma Pharmaceuticals Plc
26 August 2010
PRESS RELEASE
Hikma delivers strong H1 results, with revenue up 11.3% and adjusted operating
profit up 20.2%
London, 26 August 2010 - Hikma Pharmaceuticals PLC (LSE: HIK) (NASDAQ DUBAI:
HIK), the fast growing global pharmaceutical group, today reports its interim
results for the six months ended 30 June 2010.
+--------------------------------+----------+--------+-----------+
| Summary P&L | H1 2010 | H1 | Change |
| $ million | | 2009 | |
+--------------------------------+----------+--------+-----------+
| Revenue | 357.7 | 321.5 | +11.3% |
+--------------------------------+----------+--------+-----------+
| Gross profit | 178.5 | 151.2 | +18.1% |
+--------------------------------+----------+--------+-----------+
| Operating profit | 74.3 | 57.2 | +29.9% |
+--------------------------------+----------+--------+-----------+
| Adjusted operating profit ¹ | 73.2 | 60.9 | +20.2% |
+--------------------------------+----------+--------+-----------+
| Profit attributable to | 54.7 | 43.2 | +26.6% |
| shareholders | | | |
+--------------------------------+----------+--------+-----------+
| Adjusted profit attributable | 52.8 | 46.4 | +13.8% |
| to shareholders ¹ | | | |
+--------------------------------+----------+--------+-----------+
| Diluted earnings per share | 27.9 | 22.3 | +25.1% |
| (cents) | | | |
+--------------------------------+----------+--------+-----------+
| Adjusted diluted earnings per | 26.9 | 23.9 | +12.6% |
| share (cents) ¹ | | | |
+--------------------------------+----------+--------+-----------+
| Dividend per share (cents) | 5.5 | 4.5 | +22.2% |
+--------------------------------+----------+--------+-----------+
| Net cash flow from operating | 63.0 | 36.2 | +74.0% |
| activities | | | |
+--------------------------------+----------+--------+-----------+
¹Before the amortisation of intangible assets (excluding software) of $3.7
million and exceptional items, which include a non-recurring gain of $7.2
million arising from the revaluation of the previously held interests in the
Tunisian company Ibn Al Baytar and the Algerian company Al Dar Al Arabia, and
transaction costs of $2.3 million related to these acquisitions.
H1 2010 highlights
· Group revenue up 11.3% and adjusted operating profit up 20.2%, delivering
continuous growth through diversification
· Gross margin improved to 49.9% compared to 47.0% in H1 2009
· Adjusted operating margin increased to 20.5% compared to 18.9% in H1 2009
while investing for future growth
· Continued new product delivery across all countries and markets -
launched 70 products and received 33 product approvals - and new in-licensing
partners, including South Korea's Celltrion for biosimilars
· Excellent working capital management, with net cash flow from operating
activities up 74.0% to $63.0 million
· Successfully completed acquisitions in Tunisia and Algeria, strengthening
our presence and capabilities in the MENA region
· Strong balance sheet with relatively stable net debt of $123.6 million
compared to $116.9 million as of 31 December 2009
· Received FDA approval for the manufacture of oncology products at our
injectable plant in Germany
Said Darwazah, Chief Executive Officer of Hikma, said:
"We delivered another strong set of results during the first half of 2010. Our
Generic and Injectables businesses have performed very well, with exceptional
sales and profitability in Generics and a strong performance in US Injectables.
Branded sales were stable and we expect stronger sales in the second half of the
year in this business.
The excellent first half performance of the Group overall reflects the strength
and diversity of our business and we remain confident that we will achieve our
target of low teens revenue growth for the full year with improved gross margin
compared to 2009."
Enquiries
Hikma Pharmaceuticals PLC
+44 (0)20 7399 2760
Susan Ringdal, Investor Relations Director
Financial Dynamics
+44 (0)20 7831 3113
Ben Atwell /Julia Phillips/Jonathan Birt/Matthew Cole
About Hikma
Hikma Pharmaceuticals PLC is a fast growing global pharmaceutical group focused
on developing, manufacturing and marketing a broad range of both branded and
non-branded generic and in-licensed products. Hikma's operations are conducted
through three businesses: "Branded", "Injectables" and "Generics" based
primarily in the Middle East and North Africa ("MENA") region, where it is a
market leader, the United States and Europe. In 2009, Hikma achieved revenues
of $637 million and profit attributable to shareholders of $78 million. For
news and other information, please visit www.hikma.com.
A presentation for analysts will take place today at 09:00 at Financial
Dynamics. Please call Mo Noonan for details on +44 (0) 20 7831 3113.
A video interview of Said Darwazah, CEO, and Bassam Kanaan, CFO, is available at
www.hikma.com and www.cantos.com.
Interim management report
Group performance
Revenue for the Group increased by 11.3% to $357.7 million, compared to $321.5
million in the first half of 2009. During the period, we had an exceptionally
strong performance in our Generics business, while at the same time we delivered
improved sales in our Injectables business and stable Branded sales.
Group revenues by business segment
+----------------------------+------------+---------------+
| | H1 2010 | H1 2009 |
| | | |
+----------------------------+------------+---------------+
| Branded | 54.2% | 59.2% |
+----------------------------+------------+---------------+
| Injectables | 20.8% | 21.1% |
+----------------------------+------------+---------------+
| Generics | 24.4% | 19.2% |
+----------------------------+------------+---------------+
| | | |
| Group revenues by region | | |
+----------------------------+------------+---------------+
| | H1 2010 | H1 2009 |
+----------------------------+------------+---------------+
| MENA | 61.0% | 68.0% |
+----------------------------+------------+---------------+
| US | 28.0% | 20.9% |
+----------------------------+------------+---------------+
| Europe and rest of world | 11.0% | 11.1% |
+----------------------------+------------+---------------+
The Group's gross profit increased by 18.1% to $178.5 million, compared to
$151.2 million in the first half of 2009. Group gross margin for the first half
of 2010 was 49.9%, compared to 47.0% in the first half of 2009. This resulted
primarily from the exceptional improvement in gross profit in our Generics
business as well as from higher sales and profitability in our Injectables
business.
Adjusted Group operating expenses grew by 16.7% to $105.4 million. This excludes
the amortisation of intangible assets (excluding software) of $3.7 million and
exceptional items, which include a non-recurring gain of $7.2 million and
transaction costs of $2.3 million related to the Algerian and Tunisian
acquisitions². The paragraphs below address the Group's main operating expenses
in turn.
²See note 13 of the condensed consolidated interim financial statements.
Sales and marketing expenses remained stable as a percentage of sales at 14.7%,
reaching $52.7 million for the first half of the year, compared to $47.3 million
in the first half of 2009. This was achieved despite the integration of our
Tunisian acquisition, continued investment in our sales force in the MENA
region, and enhanced marketing activities in our Branded business. These
investments were offset by the significant increase in sales in our Generics
business and its relatively lower sales and marketing expenses as a percentage
of sales.
General and administrative expenses as a percentage of sales remained stable at
9.8%, increasing by 11.2% to $35.2 million, compared to $31.7 million in the
first half of 2009. During the period, we continued to focus on strengthening
our corporate functions across the Group.
Investment in R&D grew by 27.9% to $10.2 million, with total investment in R&D
now representing 2.8% of Group revenues, compared to 2.5% in the first half of
2009, reflecting increased investment across all three business segments.
Other net operating expenses decreased on a reported basis by $0.9 million to
$6.1 million. On an adjusted basis, other net operating expenses increased by
$4.0 million to $11.0 million. This increase was due primarily to higher
provisions for slow moving items, but also to transactional foreign exchange
losses, which resulted mainly from the depreciation of the Algerian Dinar and
the Sudanese Pound.
Operating profit for the Group increased by 29.9% to $74.3 million, compared to
$57.2 million in the first half of 2009. Group operating margin rose to 20.8%,
up from 17.8% in the first half of 2009. On an adjusted basis, Group operating
profit increased by 20.2% to $73.2 million and Group operating margins rose to
20.5%.
Branded
H1 2010 highlights:
· Branded revenue excluding acquisitions remained stable in H1
2010, reflecting disruptions in Algeria
· Successful completion of acquisitions in Tunisia and Algeria,
strengthening our presence and capabilities in the MENA region
· On track to meet revenue guidance of low double digit growth for
the full year, with stronger sales expected in the second half
Branded revenue increased by 1.9% in the first half of 2010 to $193.8 million.
Ibn Al Baytar, the Tunisian business acquired at the end of March, contributed
$3.7 million in sales during the period.
As previously reported, we experienced disruptions to our operations in Algeria
in the first half, particularly at the start of the year, due to government
imposed restrictions on imports. As a result of these restrictions, we were
unable to import certain key products and faced delays in the issuance of import
licenses. We experienced price declines on locally produced products and new
requirements to sell through confirmed letters of credit also impacted sales.
Most of these issues have now been addressed. We have increased the number of
products manufactured locally. We continue to transfer the manufacture of
products to Algeria and we will be able to re-launch locally produced versions
of some restricted products by year end. We have also made excellent progress
in diversifying and strengthening our customer base and product portfolio.
Finally, we have had great success promoting our leading branded generic and
in-licensed products. We are confident that, as a result of these efforts, we
are in a much stronger position to accelerate growth in this market.
During the period we continued to emphasise 'quality sales' across all of our
markets, focusing on new product promotion, developing our market position in
leading products and therapeutic areas, and improving the credit quality of our
customer base. These efforts are delivering results, with strong growth in many
of our leading branded generic and in-licensed products.
We expect to see strong growth in the second half in most of our markets. In
Egypt, we expect to benefit from the significant increase in the number of sales
representatives and new product launches, while in Jordan, growth will be driven
by the continued restructuring of our distribution channels and focus on quality
customers. Strong demand for our leading branded generic and in-licensed
products and an increase in tender sales will also contribute to stronger sales
across the Branded business.
In the first half, we successfully completed two acquisitions, strengthening our
presence and capabilities in the MENA region. ³ In March, we took a controlling
equity interest in the Tunisian pharmaceutical company Société D'Industries
Pharmaceutiques Ibn Al Baytar, enabling us to accelerate our penetration of the
fast growing Tunisian market. In April, the Group agreed to acquire the
remaining 50% of the issued share capital of Al Dar Al Arabia that we did not
already own. The Al Dar Al Arabia plant is expected to be operational by the
end of 2011. It will double Hikma's manufacturing capacity in Algeria and will
provide significant scope for further expansion, both in Algeria and across the
region.
³For more details on these acquisitions, please see note 13 of the condensed
consolidated interim financial statements.
Revenue from in-licensed products grew by 8.8% in the first half to $82.6
million, representing 42.6% of Branded sales in the first half of 2010. Key
in-licensed products like Actos and Blopress continued to perform extremely
well. During the period, we continued our efforts to develop our portfolio of
in-licensed products through partnerships. In April 2010 we announced a
strategic investment in biosimilars through a partnership with the South Korean
company Celltrion. Under this agreement Hikma will have the exclusive rights to
distribute and market nine biosimilar products, which are currently under
development, throughout the MENA region under its own brand. This agreement and
others signed during the period demonstrate our position as the partner of
choice in the MENA region and represent excellent sources of growth for the
medium-term.
During the first half of 2010, the Branded business launched a total of 50
products across all markets, including seven new compounds and eight new dosage
forms and strengths. The Branded business also received 16 regulatory approvals
across the region, including one for a new product.
Gross profit in the Branded business was relatively stable at $102.2 million,
compared to $100.9 million in the first half of 2009. Branded gross margin
reached 52.7%, compared to 53.0% in the first half of 2009.
The combination of stable Branded sales against an increase in provisions for
slow moving items and transactional foreign exchange losses, totalling $3.4
million, combined with continued investment in our sales force in the MENA
region, which included an overall increase of more than 100 sales
representatives, has had a short term impact on the Branded operating profit and
margin. As a consequence, adjusted operating profit in the Branded business
decreased by 10.5% to $49.5 million, compared to $55.2 million in the first half
of 2009. Adjusted operating margin was 25.5%, compared to 29.0% in the first
half of 2009.
We are confident that the Branded business will deliver stronger sales growth in
the second half in our key markets. We therefore expect to achieve our target
of low double digit revenue growth for the full year with full year operating
margins slightly lower than 2009, excluding exceptional items.
Injectables
H1 2010 highlights:
- Injectables revenue up 10.0% to $74.5 million on the back of
strong sales in the US and increasing demand for contract manufacturing
- Operating margin increased to 14.2% from 13.2% reflecting
improving economies of scale
Injectables revenue by region
+---------------------+----------------+-----------------+
| | H1 2010 | H1 2009 |
+---------------------+----------------+-----------------+
| MENA | 40.0% | 47.6% |
+---------------------+----------------+-----------------+
| US | 17.4% | 8.1% |
+---------------------+----------------+-----------------+
| Europe and ROW | 42.6% | 44.3% |
+---------------------+----------------+-----------------+
Revenue in our global Injectables business increased by 10.0% to $74.5 million,
compared to $67.7 million in the first half of 2009. US injectables sales more
than doubled to reach $13.0 million, compared to $5.5 million in the first half
of 2009. Growth was driven by good demand for existing products, the successful
launch of new products and an increasing demand for contract manufacturing.
European Injectables sales reached $31.7 million in the first half, up 5.7% from
$30.0 million in the first half of 2009, despite the negative impact of
regulatory changes, primarily in the German market. Growth was driven by our
existing product portfolio and by increased demand for contract manufacturing.
In the MENA region, Injectables sales declined by 7.5% to $29.8 million,
compared to $32.2 million in the first half of 2009. This decline is mainly
attributed to the timing of orders in both the private and tender markets. As
in 2009, we expect strong growth in the second half as we start benefiting from
new tender contracts and order deliveries in newer markets such as Iraq.
During the first half, our injectable facility in Germany, which manufactures
lyophilized and liquid injectable products for both oncology and non-oncological
uses, was inspected and approved by the US FDA. This represents an important
step in the process of registering our oncology products in both the US and
Europe and reinforces our excellent track record for quality.
During the first half of 2010, the Injectables business launched a total of 20
products across all markets, including nine new compounds and 20 new dosage
forms and strengths. The Injectables business also received a total of 16
regulatory approvals across all regions and markets, including eight in MENA,
four in Europe and four in the US.
Injectables gross profit increased by 17.3% to $34.3 million, compared to $29.2
million in the first half of 2009, with gross margin increasing to 46.1%,
compared to 43.2% in the first half of 2009. The increase in margin reflects
improving economies of scale as we drive higher sales in the US and Europe, a
more efficient management of overheads and an improving sales mix.
Injectables operating profit increased by 18.0% to $10.6 million, compared to
$8.9 million in the first half of 2009. Injectables operating margin improved
to 14.2%, up from 13.2% in the first half of 2009.
We anticipate a stronger performance in Injectables in the second half, when we
expect to benefit from a pick up in MENA sales alongside continued growth in the
US and Europe.
Generics
H1 2010 highlights:
· Generics revenue up 41.1% to $87.2 million
· Robust demand across the core product portfolio delivers strong
sales and profitability
· Exceptional sales in certain products enhance segment results
Our Generics business delivered exceptional results in the first half, with
revenue growth of 41.1% to $87.2 million, compared to $61.8 million in the first
half of 2009. This performance reflects strong demand for our top products as
well as a substantial increase in sales resulting from our ability to take
advantage of attractive market opportunities in certain products as they arise.
We continue to leverage our global manufacturing capabilities and now produce 11
products in 55 dosage forms and strengths in the MENA region for sale in the US
market. These products represented 17.2% of Generics sales during the period.
We saw strong demand for some of our anti-infective products, which we were able
to meet following the investment we have made in our FDA-approved manufacturing
facilities in the MENA region.
During the first half of 2010, the Generics business received one ANDA approval.
Generics gross profit doubled to $41.8 million, compared to $20.9 million in the
first half of 2009 enabling gross margin to reach 47.9% compared to 33.8% in the
first half of 2009. This reflects the significant increase in sales against
relatively small increases in costs. Generics operating profit increased by
185.7% to $26.1 million, compared to $9.1 million in the first half of 2009.
Operating margin increased to 30.0%, up from 14.8%. This significant
improvement results from the exceptional performance of certain products as well
as good profitability from the core product portfolio. For the second half of
the year, and going forward, we do not expect this exceptional performance to
continue.
Based on the performance that we have achieved in the Generics business in the
first half of 2010 and the outlook for the second half of the year, we now
expect Generics revenue growth of at least 20% for the full year.
Other businesses
Other businesses, which comprise primarily Arab Medical Containers, a
manufacturer of plastic specialised packaging, and International Pharmaceuticals
Research Centre, which conducts bio-equivalency studies, contributed revenues of
$2.2 million, compared to aggregate revenue of $1.9 million in the first half of
2009.
These other businesses delivered an operating loss of $1.9 million in the first
half of 2010, remaining at the same level as in the first half of 2009.
Research & Development ?
?Products are defined as pharmaceutical compounds sold by the Group. New
compounds are defined as pharmaceutical compounds not yet launched by the Group
and existing compounds being introduced into a new segment.
The Group's product portfolio continues to grow. During the first half of the
year, we launched 16 new compounds, expanding the Group portfolio to 395
compounds in 811 dosage forms and strengths. We manufacture and/or sell 40 of
these compounds under-license from the originator.
Across all businesses and markets, a total of 70 products were launched during
the first half. In addition, the Group received 33 approvals.
+-------------+------------+--------------+-----------+-----------+------------+
| | Total marketed products | Products launched in H1 2010 |
+-------------+---------------------------+------------------------------------+
| | Compounds | Dosage forms | New | New | Total |
| | | and | compounds | dosage | launches |
| | | strengths | | forms | across |
| | | | | and | all |
| | | | | strengths | countries? |
+-------------+------------+--------------+-----------+-----------+------------+
| | | | | | |
+-------------+------------+--------------+-----------+-----------+------------+
| Branded | 252 | 480 | 7 | 8 | 50 |
+-------------+------------+--------------+-----------+-----------+------------+
| | | | | | |
+-------------+------------+--------------+-----------+-----------+------------+
| Injectables | 94 | 223 | 9 | 20 | 20 |
+-------------+------------+--------------+-----------+-----------+------------+
| | | | | | |
+-------------+------------+--------------+-----------+-----------+------------+
| Generics | 49 | 108 | 0 | 0 | 0 |
+-------------+------------+--------------+-----------+-----------+------------+
| | | | | | |
+-------------+------------+--------------+-----------+-----------+------------+
| Group | 395 | 811 | 16 | 28 | 70 |
+-------------+------------+--------------+-----------+-----------+------------+
| | | | | | |
+-------------+------------+--------------+-----------+-----------+------------+
+-------------+---------+----------+-----------+------------+-----------+-----------+-------------+
| | Products approved in H1 2010 | |
| | | Products pending approval as at 30 |
| | | June 2010 |
+-------------+---------------------------------------------+-------------------------------------+
| | New compounds | New | Total | New | New | |
| | | dosage | approvals | compounds | dosage | Total |
| | | forms | across all | | forms and | pending |
| | | and | countries? | | strengths | approvals |
| | | strengths | | | | across all |
| | | | | | | countries? |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| | | | | | | |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| Branded | 1 | 2 | 16 | 47 | 96 | 268 6 |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| | | | | | | |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| Injectables | 7 | 9 | 16 | 33 | 50 | 281 6 |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| | | | | | | |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| Generics | 1 | 1 | 1 | 23 | 30 | 30 |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| | | | | | | |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| Group | 9 | 12 | 33 | 103 | 176 | 579 |
+-------------+--------------------+-----------+------------+-----------+-----------+-------------+
| | | | | | | |
+-------------+---------+----------------------+------------+-----------+-----------+-------------+
| | | | | | | | |
+-------------+---------+----------+-----------+------------+-----------+-----------+-------------+
? Totals include all compounds and formulations that are either launched,
approved or pending approval across all markets.
6 Includes all submissions made for the first time in a particular market, but
excludes re-submissions, which have historically been included in this
calculation.
To ensure the continuous development of our product pipeline, we submitted 104
regulatory filings in the first half of the year across all regions and markets.
As of 30 June 2010, we had a total of 579 pending approvals across all regions
and markets.
At 30 June 2010, we had a total of 64 new products under development, the
majority of which should receive several marketing authorisations for different
strengths and/or product forms over the next few years.
Net finance expense
Net finance expense decreased slightly to $6.4 million, compared to $6.7 million
in the first half of 2009 due to lower net debt as explained in the net cash
flow from operating activities and investment section below.
Profit before tax
Profit before tax for the Group increased by 33.7% to $67.5 million, compared to
$50.5 million in the first half of 2009. Adjusted profit before tax increased by
22.5% to $66.4 million.
Tax
The Group incurred a tax expense of $12.9 million in the first half, compared to
$6.5 million in the first half of 2009. The effective tax rate was 19.1%,
compared to 12.9% in the first half of 2009. The increase in the tax rate is
mainly attributable to the significant increase in profitability in the US.
Profit for the period
The Group's profit attributable to equity holders of the parent increased by
26.6% to $54.7 million in the first half of 2010. Adjusted profit attributable
to equity holders of the parent increased by 13.8% to $52.8 million.
Earnings per share
Diluted earnings per share increased by 25.1% to 27.9 cents, compared to 22.3
cents in the first half of 2009. Adjusted diluted earnings per share were 26.9
cents, an increase of 12.6% over the first half of 2009.
Dividend
The Board has declared an interim dividend of 5.5 cents per share (approximately
3.6 pence per share), compared to 4.5 cents per share for the first half of
2009. The interim dividend will be paid on 14 October 2010 to eligible
shareholders on the register at the close of business on 10 September 2010. The
ex-dividend date is 8 September 2010 and the final date for currency elections
is 17 September 2010.
Net cash flow from operating activities and investment
The Group achieved an overall improvement in its working capital indicators.
Group receivable days decreased by eight days compared to 30 June 2009, from 115
days to 107 days as at 30 June 2010. Inventory days decreased by four days to
175 days and payable days improved by 12 days from 65 days to 77 days. These
improvements are a reflection of our continued focus on improving collections,
improving supplier payment terms and a leaner supply chain.
Working capital improvements coupled with improved profitability in the US led
to a significant increase in operating cash flow to reach $63.0 million during
the first half, compared to $36.2 million during the first half of 2009.
Capital expenditures increased to $23.4 million, compared to $15.9 million in
the first half of 2009, reflecting primarily increased investment in new
machinery and expansion projects in MENA, the completion of our new
lyophilisation facilities in Portugal and machinery upgrades in the US.
As a result, net debt decreased from $164.4 million at 30 June 2009 to $123.6
million at 30 June 2010, maintaining the Group in a very strong financing
position. Net debt on 31 December 2009 stood at $116.9 million.
Balance sheet
During the period, shareholders equity was impacted by a $28.9 million
unrealised decrease in the translation reserve. This decrease reflects
primarily the Euro/USD spot rate, which has declined by nearly 15% as of 30 June
2010 (1.2208) compared to 31 December 2009 (1.4333), and is the result of the
revaluation of net assets denominated in currencies other than US dollars.
Outlook
The strong performance of the Group in the first half reflects the strength and
diversity of our business and we remain on track to meet our full year target of
low teens revenue growth for the Group. We are expecting a strong second half
in the MENA region, in both our Injectables and Branded businesses, and we
expect our Generics business to continue to perform well. Given the strength of
the Group's gross profit in the first half, we now expect to deliver improved
gross margin for the Group for the full year, compared to 2009.
Principal risks and uncertainties
The Group's business faces risks and uncertainties which could have a
significant effect on its financial condition, results of operation or
performance over the remaining six months of the financial year and could cause
actual results to differ materially from expected and historical results. The
Directors do not consider that the principal risks and uncertainties, which are
summarised below, have changed materially since the publication of the Annual
Report & Accounts for the year ended 31 December 2009 (see pages 37 to 39),
which is available at www.hikma.com.
Operational risks
Regulation
Hikma is subject to extensive regulation on the approval, manufacture and
distribution of its products in all its markets. There is no single worldwide
harmonised set of regulations relating to the development, manufacture and sale
of pharmaceutical products, and these laws and regulations may be subject to
unexpected change. This can increase the overall cost of bringing products to
market, delay full penetration of products into all markets and disrupt
production.
Economic and political dynamics
The Group operates in emerging markets. A change in the economic conditions or
political environment or sustained civil unrest in any particular market or
country could disrupt product development, manufacturing or marketing activities
and adversely affect the financial condition of the Group.
Interruption of production
The Group's manufacturing facilities could be disrupted for reasons beyond the
Group's control such as fire, work force actions, disruption to the supply chain
or other issues. Non-compliance with current Good Manufacturing Practices (cGMP)
could disrupt operations or delay approval for new products.
Suppliers and Partnerships
The Group benefits from close commercial relationships with a number of key
customers, partners and suppliers. Damage to or loss of any of these
relationships could have a direct and detrimental effect on the Group's results.
Compliance or other failure by any of our regulated suppliers or partners could
lead to delays in production or increased costs or liabilities.
R&D and commercialisation of new products
Group results may be impacted significantly by the timeliness of its research
and development and product commercialisation activities. Additional costs may
be incurred, and sales opportunities lost, if there is a significant delay in
the development, licensing, acquisition or regulatory approval of new products.
Competitors
The Group operates in highly competitive markets with significant product
innovations and is subject to the risk of competitors entering those markets
with an efficacy, convenience or pricing advantage over an existing product.
Litigation
There is a risk that claims brought by third parties (consumers, competitors and
suppliers, amongst others) could have a financial or reputational impact on the
Group.
Financial risks
Group Treasury is responsible for Financial Risk Management and setting the
appropriate controls and risk policies. Group Treasury is supported by treasury
departments at the operating company and segmental levels, and reports to the
Chief Financial Officer.
Foreign exchange risk
The Group uses the US Dollar as its reporting currency and is therefore exposed
to foreign exchange movements, primarily in the European, Algerian, Sudanese,
Egyptian and Tunisian currencies, which could materially affect the Group's
financial results.
Interest rate risk
The Group manages its exposures to interest rate risks by changing the
proportion of fixed rate debt and variable rate debt in its total debt
portfolio. To manage this mix the Group may enter into interest rate swap
agreements, in which it exchanges the periodic payments based on notional
amounts and agreed upon fixed and variable interest rates.
Credit Risk
In most cases, the Group grants its buyers credit terms for settlement of sales
invoices. Credit risk is managed through the Group Credit policy and the use of
various financial instruments such as letters of credit, factoring and credit
insurance arrangements. As at 30 June 2010, the Group has concentration of risk
arising from significant balances with key customers in the MENA region and the
US.
Liquidity Risk
The Group has constant financing requirements, both for short-term working
capital needs and for long term strategic plans. The principal terms of the
Group's committed debt facilities and the Directors' view on the sufficiency of
those facilities are described in note 2 to the condensed interim financial
statements.
Tax
The Group operates in many markets each of which has individual tax laws and
regulations. Actual or potential changes are monitored to understand how they
could affect the tax rate of the Group.
Going concern statement
As stated in note 2 to the condensed financial statements, the Directors are
satisfied that the Group has sufficient resources to continue in operation for
the foreseeable future, a period of not less than twelve months from the date of
this report. Accordingly they continue to adopt the going concern basis in
preparing the condensed financial statements.
Responsibility statement
The Board confirms that to the best of its knowledge:
(a) the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting';
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events during the
first six months including their impact on the financial statements and
description of principal risks and uncertainties for the remaining six months of
the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties' transactions
and changes therein which have had or could have a material financial effect on
the financial position of the Group during the period).
By order of the Board
Said Darwazah
Chief Executive Officer
26 August 2010
Cautionary statement
This Interim Management Report ("IMR") has been prepared solely to provide
additional information to shareholders to assess the Group's strategies and the
potential for those strategies to succeed. The IMR should not be relied on by
any other party or for any other purpose.
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
announcement. 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.
Hikma Pharmaceuticals PLC
INDEPENDENT REVIEW REPORT TO HIKMA PHARMACEUTICALS PLC
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2010 which comprises the condensed consolidated statement of comprehensive
income, the condensed consolidated balance sheet, the condensed consolidated
statement of changes in equity, the condensed consolidated cash flow statement
and related notes 1 to 14. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued
by the Auditing Practices Board. Our work has been undertaken so that we might
state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdoms' Financial Services Authority.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Registered Auditors
London, United Kingdom
25 August 2010
Hikma Pharmaceuticals PLC
Condensed consolidated statement of comprehensive income
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| | | | H1 | | H1 | | FY |
| | | | 2010 | | 2009 | | 2009 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| |Notes | | $000's | | $000's | | $000's |
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Continuing operations | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Revenue | 3 | | 357,694 | | 321,495 | | 636,884 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Cost of sales | 3 | | (179,187) | | (170,312) | | (332,459) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Gross profit | 3 | | 178,507 | | 151,183 | | 304,425 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Sales and marketing costs | | | (52,692) | | (47,303) | | (98,083) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| General and administrative | | | (35,230) | | (31,674) | | (66,677) |
| expenses | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Research and development costs | | | (10,173) | | (7,956) | | (16,843) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Other operating expenses (net) | | | (6,134) | | (7,036) | | (15,529) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Total operating expenses | | | (104,229) | | (93,969) | | (197,132) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Adjusted operating profit | | | 73,154 | | 60,930 | | 114,742 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Exceptional items | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| - Acquisition related | 11 | | (2,306) | | | | |
| expenses | | | | | - | | - |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| - Gains on revaluation of | 11 | | 7,176 | | - | | |
| previously held equity | | | | | | | - |
| interests | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Intangible amortisation* | 11 | | (3,746) | | (3,716) | | (7,449) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Operating profit | | | 74,278 | | 57,214 | | 107,293 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Finance income | | | 97 | | 226 | | 514 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Finance expense | | | (6,519) | | (6,923) | | (12,827) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Other expense | | | (382) | | (64) | | (193) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Profit before tax | | | 67,474 | | 50,453 | | 94,787 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Tax | 4 | | (12,856) | | (6,493) | | (15,469) |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Profit for the period | | | 54,618 | | 43,960 | | 79,318 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Attributable to: | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Non-controlling interests | | | (53) | | 730 | | 1,635 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Equity holders of the parent | | | 54,671 | | 43,230 | | 77,683 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| | | | 54,618 | | 43,960 | | 79,318 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Earnings per share (cents) | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Basic | 6 | | 28.5 | | 22.8 | | 40.9 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Diluted | 6 | | 27.9 | | 22.3 | | 40.1 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Adjusted basic | 6 | | 27.5 | | 24.5 | | 44.1 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Adjusted diluted | 6 | | 26.9 | | 23.9 | | 43.2 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Cumulative effect of change in | | | 41 | | 18 | | 2 |
| fair value of available for | | | | | | | |
| sale investments | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Cumulative effect of change in | | | (180) | | 26 | | (202) |
| fair value of financial | | | | | | | |
| derivatives | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Exchange difference on | | | (28,850) | | (3,552) | | 1,364 |
| translation of foreign | | | | | | | |
| operations | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Total comprehensive income for | | | 25,629 | | 40,452 | | 80,482 |
| the period | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Attributable to: | | | | | | | |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Non-controlling interests | | | (633) | | 390 | | 1,586 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| Equity holders of the parent | | | 26,262 | | 40,062 | | 78,896 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
| | | | 25,629 | | 40,452 | | 80,482 |
+--------------------------------+-------+-+----------------------+-+---------------------+-+--------------------+
On this page and throughout this interim financial information "H1 2010" refers
to the six months ended 30 June 2010, "H1 2009" refers to the six months ended
30 June 2009 and "FY 2009" refers to the year ended 31 December 2009.
* Intangible amortisation comprises the amortisation on intangible assets other
than software.
Hikma Pharmaceuticals PLC
Condensed consolidated balance sheet
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| | | | 30 | | 30 | | 31 |
| | | | June | | June | | December |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| |Notes | | 2010 | | 2009 | | 2009 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| | | | $000's | | $000's | | $000's |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Non-current assets | | | (Unaudited) | | (Unaudited) | | (Audited) |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Intangible assets | | | 265,521 | | 254,746 | | 255,696 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Property, plant and | | | 301,710 | | 273,922 | | 283,371 |
| equipment | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Interest in joint | | | | | 5,453 | | 5,451 |
| venture | | | - | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Deferred tax assets | | | 19,953 | | 18,438 | | 18,793 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Available for sale | | | 583 | | 557 | | 542 |
| investments | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Financial and other | | | 548 | | 2,030 | | 2,270 |
| non-current assets | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| | | | 588,315 | | 555,146 | | 566,123 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Current assets | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Inventories | 7 | | 171,445 | | 166,635 | | 160,509 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Trade and other | 8 | | 238,944 | | 229,231 | | 226,841 |
| receivables | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Collateralised cash | | | 7,045 | | 1,025 | | 2,334 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Cash and cash | | | 60,996 | | 50,526 | | 65,663 |
| equivalents | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Other current assets | | | 1,043 | | 1,165 | | 1,251 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| | | | 479,473 | | 448,582 | | 456,598 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Total assets | | | 1,067,788 | | 1,003,728 | | 1,022,721 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Current liabilities | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Bank overdrafts and | | | 85,680 | | 101,550 | | 60,317 |
| loans | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Obligations under | | | 1,112 | | 708 | | 1,826 |
| finance leases | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Trade and other payables | 9 | | 117,817 | | 104,094 | | 107,618 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Income tax provision | | | 12,069 | | 12,824 | | 14,857 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Other provisions | | | 7,572 | | 5,452 | | 6,153 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Other current | | | 22,980 | | 7,082 | | 13,671 |
| liabilities | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| | | | 247,230 | | 231,710 | | 204,442 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Net current assets | | | 232,243 | | 216,872 | | 252,156 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Non-current liabilities | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Long-term financial | | | 98,543 | | 108,340 | | 116,119 |
| debts | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Deferred income | | | 348 | | 588 | | 494 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Obligations under | | | 6,334 | | 5,358 | | 6,675 |
| finance leases | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Deferred tax liabilities | | | 13,593 | | 12,353 | | 11,734 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| | | | 118,818 | | 126,639 | | 135,022 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Total liabilities | | | 366,048 | | 358,349 | | 339,464 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Net assets | | | 701,740 | | 645,379 | | 683,257 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Equity | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Share capital | | | 34,501 | | 34,010 | | 34,236 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Share premium | | | 275,203 | | 270,900 | | 272,785 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Own shares | | | (2,251) | | (2,203) | | (2,203) |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Other reserves | | | 387,517 | | 336,496 | | 371,067 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Equity attributable to equity | | 694,970 | | 639,203 | | 675,885 |
| holders of the parent | | | | | | |
+----------------------------------+----------+------------------+--+-------------------+----------+---------------------+
| Non-controlling interest | | | 6,770 | | 6,176 | | 7,372 |
| | | | | | | | |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
| Total equity | | | 701,740 | | 645,379 | | 683,257 |
+--------------------------+-------+----------+------------------+--+-------------------+----------+---------------------+
Hikma Pharmaceuticals PLC
Condensed consolidated statement of changes in equity
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| | Merger | Revalua-tion | Translation | Retained | Total | Share | Share | Own | Total | Non-controlling | Total |
| | reserve | reserves | reserves | earnings | reserves | capital | premium | shares | equity | interest | equity |
| | $000's | $000's | $000's | $000's | $000's | $000's | $000's | $000's | attributable | $000's | $000's |
| | | | | | | | | | to equity | | |
| | | | | | | | | | shareholders | | |
| | | | | | | | | | of the | | |
| | | | | | | | | | parent | | |
| | | | | | | | | | $000's | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Balance at 1 | 33,920 | 4,447 | 4,338 | 257,798 | 300,503 | 33,857 | 269,973 | (1,124) | 603,209 | 5,786 | 608,995 |
| January 2009 | | | | | | | | | | | |
| (Audited) | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Profit for the | | | | 43,230 | 43,230 | | | | 43,230 | 730 | 43,960 |
| period | - | - | - | | | - | - | - | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cumulative | | | | 18 | 18 | | | | 18 | | 18 |
| effect of change | - | - | - | | | - | - | - | | - | |
| in fair value of | | | | | | | | | | | |
| available for | | | | | | | | | | | |
| sale investments | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cumulative | | | | 26 | 26 | | | | 26 | | 26 |
| effect of change | - | - | - | | | - | - | - | | - | |
| in fair value of | | | | | | | | | | | |
| financial | | | | | | | | | | | |
| derivatives | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Realisation of | | (91) | | 91 | | | | | | | |
| revaluation | - | | - | | - | - | - | - | - | - | - |
| reserve | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Currency | | | (3,212) | | (3,212) | | | | (3,212) | (340) | (3,552) |
| translation loss | - | - | | - | | - | - | - | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Total | | (91) | (3,212) | 43,365 | 40,062 | | | | 40,062 | 390 | 40,452 |
| comprehensive | - | | | | | - | - | - | | | |
| income for the | | | | | | | | | | | |
| period | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Issue of equity | | | | | | 153 | 927 | | 1,080 | | 1,080 |
| shares | - | - | - | - | - | | | - | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Acquisition of | | | | | | | | (1,079) | (1,079) | | (1,079) |
| own shares | - | - | - | - | - | - | - | | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cost of equity | | | | 2,170 | 2,170 | | | | 2,170 | | 2,170 |
| settled employee | - | - | - | | | - | - | - | | - | |
| share scheme | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Deferred tax | | | | 1,336 | 1,336 | | | | 1,336 | | 1,336 |
| arising on | - | - | - | | | - | - | - | | - | |
| share-based | | | | | | | | | | | |
| payments | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Dividends on | | | | (7,575) | (7,575) | | | | (7,575) | | (7,575) |
| ordinary shares | - | - | - | | | - | - | - | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Balance at 30 | 33,920 | 4,356 | 1,126 | 297,094 | 336,496 | 34,010 | 270,900 | (2,203) | 639,203 | 6,176 | 645,379 |
| June 2009 | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Balance at 1 | 33,920 | 4,447 | 4,338 | 257,798 | 300,503 | 33,857 | 269,973 | (1,124) | 603,209 | 5,786 | 608,995 |
| January 2009 | | | | | | | | | | | |
| (Audited) | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Profit for the | | | | 77,683 | 77,683 | | | | 77,683 | 1,635 | 79,318 |
| year | - | - | - | | | - | - | - | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cumulative | | | | 2 | 2 | | | | 2 | | 2 |
| effect of change | - | - | - | | | - | - | - | | - | |
| in fair value of | | | | | | | | | | | |
| available for | | | | | | | | | | | |
| sale investments | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cumulative | | | | (202) | (202) | | | | (202) | | (202) |
| effect of change | - | - | - | | | - | - | - | | - | |
| in fair value of | | | | | | | | | | | |
| financial | | | | | | | | | | | |
| derivatives | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Realisation of | | (181) | | 181 | | | | | | | |
| revaluation | - | | - | | - | - | - | - | - | - | - |
| reserve | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Currency | | | 1,413 | | 1,413 | | | | 1,413 | (49) | 1,364 |
| translation | - | - | | - | | - | - | - | | | |
| gain/(loss) | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Total | | (181) | 1,413 | 77,664 | 78,896 | | | | 78,896 | 1,586 | 80,482 |
| comprehensive | - | | | | | - | - | - | | | |
| income for the | | | | | | | | | | | |
| year | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Issue of equity | | | | | | 379 | 2,812 | | 3,191 | | 3,191 |
| shares | - | - | - | - | - | | | - | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Acquisition of | | | | | | | | (1,079) | (1,079) | | (1,079) |
| own shares | - | - | - | - | - | - | - | | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cost of equity | | | | 4,616 | 4,616 | | | | 4,616 | | 4,616 |
| settled employee | - | - | - | | | - | - | - | | - | |
| share scheme | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Deferred tax | | | | 3,170 | 3,170 | | | | 3,170 | | 3,170 |
| arising on | - | - | - | | | - | - | - | | - | |
| share-based | | | | | | | | | | | |
| payments | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Dividends on | | | | (16,118) | (16,118) | | | | (16,118) | | (16,118) |
| ordinary shares | - | - | - | | | - | - | - | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Balance at 31 | 33,920 | 4,266 | 5,751 | 327,130 | 371,067 | 34,236 | 272,785 | (2,203) | 675,885 | 7,372 | 683,257 |
| December 2009 | | | | | | | | | | | |
| (Audited) | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Profit/(loss) | | | | 54,671 | 54,671 | | | | 54,671 | (53) | 54,618 |
| for the period | - | - | - | | | - | - | - | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cumulative | | | | 41 | 41 | | | | 41 | | 41 |
| effect of change | - | - | - | | | - | - | - | | - | |
| in fair value of | | | | | | | | | | | |
| available for | | | | | | | | | | | |
| sale investments | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cumulative | | | | (180) | (180) | | | | (180) | | (180) |
| effect of change | - | - | - | | | - | - | - | | - | |
| in fair value of | | | | | | | | | | | |
| financial | | | | | | | | | | | |
| derivatives | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Realisation of | | (91) | | 91 | | | | | | | |
| revaluation | - | | - | | - | - | - | - | - | - | - |
| reserve | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Currency | | | (28,270) | | (28,270) | | | | (28,270) | (580) | (28,850) |
| translation loss | - | - | | - | | - | - | - | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Total | | (91) | (28,270) | 54,623 | 26,262 | | | | 26,262 | (633) | 25,629 |
| comprehensive | - | | | | | - | - | - | | | |
| income for the | | | | | | | | | | | |
| period | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Issue of equity | | | | | | 265 | 2,418 | | 2,683 | | 2,683 |
| shares | - | - | - | - | - | | | - | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Acquisition of | | | | | | | | (108) | (108) | | (108) |
| own shares | - | - | - | - | - | - | - | | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Cost of equity | | | | 2,090 | 2,090 | | | | 2,090 | | 2,090 |
| settled employee | - | - | - | | | - | - | | | - | |
| share scheme | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Exercise of | | | | (60) | (60) | | | 60 | | | |
| employees long | - | - | - | | | - | - | | - | - | - |
| term incentive | | | | | | | | | | | |
| plan | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Deferred tax | | | | 632 | 632 | | | | 632 | | 632 |
| arising on | - | - | - | | | - | - | - | | - | |
| share-based | | | | | | | | | | | |
| payments | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Dividends on | | | | (12,474) | (12,474) | | | | (12,474) | | (12,474) |
| ordinary shares | - | - | - | | | - | - | - | | - | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Acquisition of | | | | | | | | | | 31 | 31 |
| subsidiaries | - | - | - | - | - | - | - | - | - | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
| Balance at 30 | 33,920 | 4,175 | (22,519) | 371,941 | 387,517 | 34,501 | 275,203 | (2,251) | 694,970 | 6,770 | 701,740 |
| June 2010 | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | |
+------------------+----------------+--------------------------+-------------------------+---------------------+---------------------+----------------+--------------------+-----------------+-----------------------------+-------------------------+---------------------+
Hikma Pharmaceuticals PLC
Condensed consolidated cash flow statement
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| |Note | | H1 | | H1 | | FY |
| | | | 2010 | | 2009 | | 2009 |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| | | | $000's | | $000's | | $000's |
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Net cash from operating | 10 | | 63,000 | | 36,246 | | 118,979 |
| activities | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Investing activities | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Purchases of property, plant and | | | (23,354) | | (14,325) | | (35,170) |
| equipment | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Proceeds from disposal of | | | 785 | | 246 | | 1,080 |
| property, plant and equipment | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Purchase of intangible assets | | | (1,156) | | (2,067) | | (5,213) |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Proceeds from disposal of | | | | | 738 | | 1,316 |
| intangible assets | | | - | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Investment in joint venture | | | | | | | 2 |
| | | | - | | - | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Investment in financial and | | | 6 | | 46 | | (193) |
| other non current assets | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Proceeds from available for sale | | | | | 1 | | |
| investments (net) | | | - | | | | - |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Acquisition of subsidiary | | | (22,796) | | - | | |
| undertakings, net of cash | | | | | | | - |
| acquired | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Finance income | | | 97 | | 226 | | 514 |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Net cash used in investing | | | (46,418) | | (15,135) | | (37,664) |
| activities | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Financing activities | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Increase in collateralised cash | | | (4,609) | | (206) | | (1,515) |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Increase in long-term financial | | | 12,758 | | 30,768 | | 39,275 |
| debts | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Repayment of long-term financial | | | (32,465) | | (15,842) | | (33,570) |
| debts | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Increase/(decrease) in | | | 18,271 | | (32,750) | | (56,983) |
| short-term borrowings | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| (Decrease)/increase in | | | (1,557) | | (650) | | 1,784 |
| obligations under finance leases | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Dividends paid | | | (12,474) | | (7,574) | | (16,118) |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Purchase of own shares | | | (108) | | (1,079) | | (1,079) |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Interest paid | | | (6,320) | | (6,992) | | (13,461) |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Proceeds from issue of new | | | 2,683 | | 1,080 | | 3,191 |
| shares | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Net cash used in financing | | | (23,821) | | (33,245) | | (78,476) |
| activities | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Net (decrease)/increase in cash | | | (7,239) | | (12,134) | | 2,839 |
| and cash equivalents | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Cash and cash equivalents at | | | 65,663 | | 62,727 | | 62,727 |
| beginning of period | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Foreign exchange translation | | | 2,572 | | (67) | | 97 |
| movement | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
| Cash and cash equivalents at end | | | 60,996 | | 50,526 | | 65,663 |
| of period | | | | | | | |
+----------------------------------+------+--+-----------------+----------+----------------------+-+------------------+
Hikma Pharmaceuticals PLC
Notes to the condensed set of financial statements
1. General information
The financial information for the year ended 31 December 2009 does not
constitute statutory accounts within the meaning of Section 434 of the Companies
Act 2006. Statutory accounts for the year ended 31 December 2009, which were
prepared under International Financial Reporting Standards (IFRSs) issued by the
International Accounting Standards Board, have been filed with the Registrar of
Companies. The auditors' report on those accounts was unqualified, did not draw
attention to any matters by way of emphasis and did not contain any statement
under Section 498 (2) or (3) of the Companies Act 2006.
2. Accounting policies
The unaudited condensed set of financial statements for the six months ended 30
June 2010 have been prepared using the same accounting policies and on a basis
consistent with the audited results for the year ended 31 December 2009, other
than as noted below. The financial information has been prepared under the
historical cost convention, except for the revaluation to market value of
certain financial assets and liabilities.
Basis of preparation
The currency used in the preparation of the accompanying consolidated financial
statements is the US Dollar as the majority of the Group's business is conducted
in US Dollars ($).
The Group's condensed consolidated financial statements included in this half
yearly financial report are prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union. They were approved by
the Board on 25 August 2010.
Going concern
The Group has $374 million of banking facilities of which $182.5 million were
undrawn as at 30 June 2010. These facilities are well diversified across the
operating subsidiaries of the Group with a number of financial institutions.
About 50% of the Group's short-term and undrawn long-term facilities are of a
committed nature.
We continue to expect the short-term facilities to be renewed upon maturity. In
addition the Group maintained cash balances of $68 million as at 30 June 2010.
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.
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.
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 half yearly condensed financial statement.
2. Accounting policies (continued)
Changes in accounting policy
The same accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as applied in the Group's
latest annual audited financial statements, except as described below.
In the current financial year, the Group has adopted International Financial
Reporting Standard 3 "Business Combinations" (revised 2008) and International
Accounting Standard 27 "Consolidated and Separate Financial Statements" (revised
2008).
The most significant changes to the Group's previous accounting policies for
business combinations are as follows:
· Acquisition related costs which previously would have been included
in the cost of a business combination are included in other operating
income/(expense) as they are incurred;
· Any previously held equity interest in the entity acquired is
remeasured to fair value at the date of obtaining control, with any resulting
gain or loss recognised as a profit or loss;
· Any changes in the Group's ownership interest subsequent to the date
of obtaining control are recognised directly in equity, with no adjustment to
goodwill; and
· Any changes to the cost of an acquisition, including contingent
consideration, resulting from events after the date of acquisition are
recognised as a profit or loss. Previously, such changes resulted in an
adjustment to goodwill.
The revised standards have been applied to the acquisition of Societe
D'industries Pharmaceutiques Ibn Al Baytar S.A. (Ibn Al Baytar) and Al Dar al
Arabia as described in note 13. The result has been a total gain of $7,176,000
due to the remeasurement to fair value of the previously held equity interests
and transaction costs totalling of $2,306,000 have been expensed to other
operating income/(expense). Both the gain and the transaction costs have been
classified as exceptional item as described in note 11.
Any adjustments to contingent consideration for acquisitions made prior to 1
January 2010 which result in an adjustment to goodwill continue to be accounted
for under IFRS 3(2004) and IAS 27 (2005), for which the accounting policies can
be found in the Group's latest annual audited financial statements. There have
been no such adjustments into the period to 30 June 2010.
Exceptional items are defined as those that are material in nature or amount and
are non-recurring. These items are disclosed separately in the condensed
consolidated statement of comprehensive income to assist in the understanding of
the financial performance of the Group.
3. Business and geographical segments
For management purposes, the Group is currently organised into three operating
divisions - Branded, Injectables and Generics. These divisions are the basis on
which the Group reports its primary segment information.
Segment information about these businesses is presented below.
Six months ended 30 June 2010 (unaudited)
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| | Branded | | Injectables | | Generic | | Others | | Group |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| | $000's | | $000's | | $000's | | $000's | | $000's |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Revenue | 193,848 | | 74,461 | | 87,151 | | 2,234 | | 357,694 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Cost of sales | (91,675) | | (40,166) | | (45,384) | | (1,962) | | (179,187) |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Gross profit | 102,173 | | 34,295 | | 41,767 | | 272 | | 178,507 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Result | | | | | | | | | |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Adjusted segment result | 49,460 | | 11,836 | | 26,286 | | (1,935) | | 85,647 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Exceptional items : | | | | | | | | | |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| - Acquisition related | (2,306) | | | | | | - | | (2,306) |
| expenses | | | - | | - | | | | |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| - Gains on revaluation of | 7,176 | | - | | | | - | | 7,176 |
| previously held equity | | | | | - | | | | |
| interests | | | | | | | | | |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Intangible amortisation* | (2,302) | | (1,283) | | (161) | | - | | (3,746) |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| | | | | | | | | | |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Segment result | 52,028 | | 10,553 | | 26,125 | | (1,935) | | 86,771 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Unallocated corporate | | | | | | | | | (12,493) |
| expenses | | | | | | | | | |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Operating profit | | | | | | | | | 74,278 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Finance income | | | | | | | | | 97 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Finance expense | | | | | | | | | (6,519) |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Other expense | | | | | | | | | (382) |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Profit before tax | | | | | | | | | 67,474 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Tax | | | | | | | | | (12,856) |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Profit for the period | | | | | | | | | 54,618 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Attributable to: | | | | | | | | | |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Non-controlling interest | | | | | | | | | (53) |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| Equity holders of the | | | | | | | | | 54,671 |
| parent | | | | | | | | | |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
| | | | | | | | | | 54,618 |
+----------------------------+------------+-------+--------------+-------+----------+-------+----------+-------+----------------+
*Intangible amortisation comprises the amortisation on intangible assets other
than software.
"Others" mainly comprise Arab Medical Containers Ltd, International
Pharmaceutical Research Centre 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.
3. Business and geographical segments (continued)
Other Information 30 June 2010 (unaudited)
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| | | Branded | | Injectables | | Generic | | Others | | Group |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| | | $000's | | $000's | | $000's | | $000's | | $000's |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Additions to property, | | 17,797 | | 2,074 | | 2,785 | | 698 | | 23,354 |
| plant and equipment | | | | | | | | | | |
| (cost) | | | | | | | | | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Acquisition of | | 24,437 | | - | | | | - | | 24,437 |
| subsidiary's property, | | | | | | - | | | | |
| plant and equipment | | | | | | | | | | |
| (net book value) | | | | | | | | | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Additions to intangible | | 708 | | 423 | | 5 | | 20 | | 1,156 |
| assets | | | | | | | | | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Intangible assets | | 28,066 | | | | - | | | | 28,066 |
| arising on acquisition | | | | - | | | | - | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Total property, plant | | 392,698 | | 134,441 | | 31,164 | | 8,928 | | 567,231 |
| and equipment and | | | | | | | | | | |
| intangible assets (net | | | | | | | | | | |
| book value) | | | | | | | | | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Depreciation | | 8,739 | | 2,692 | | 2,181 | | 526 | | 14,138 |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Amortisation (including | | 2,919 | | 1,452 | | 260 | | 26 | | 4,657 |
| software) | | | | | | | | | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Balance sheet | | | | | | | | | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Total assets | | | | | | | | | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Segment assets | | 766,483 | | 164,463 | | 118,475 | | 18,367 | | 1,067,788 |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Total liabilities | | | | | | | | | | |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
| Segment liabilities | | 260,265 | | 73,852 | | 19,743 | | 12,188 | | 366,048 |
+-------------------------+----------+-----------+----------+-----------------+----------+-------------+----------+-----------+----------+--------------+
Six months ended 30 June 2009 (unaudited)
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| | Branded | | Injectables | | Generic | | Others | | Group |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| | $000's | | $000's | | $000's | | $000's | | $000's |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Revenue | 190,179 | | 67,689 | | 61,775 | | 1,852 | | 321,495 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Cost of sales | (89,324) | | (38,453) | | (40,894) | | (1,641) | | (170,312) |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Gross profit | 100,855 | | 29,236 | | 20,881 | | 211 | | 151,183 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Result | | | | | | | | | |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Adjusted segment result | 55,233 | | 10,381 | | 9,209 | | (1,934) | | 72,889 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| | | | | | | | | | |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Intangible amortisation* | (2,210) | | (1,440) | | (66) | | | | (3,716) |
| | | | | | | | - | | |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| | | | | | | | | | |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Segment result | 53,023 | | 8,941 | | 9,143 | | (1,934) | | 69,173 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Unallocated corporate | | | | | | | | | (11,959) |
| expenses | | | | | | | | | |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Operating profit | | | | | | | | | 57,214 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Finance income | | | | | | | | | 226 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Finance expense | | | | | | | | | (6,923) |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Other expense | | | | | | | | | (64) |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Profit before tax | | | | | | | | | 50,453 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Tax | | | | | | | | | (6,493) |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Profit for the period | | | | | | | | | 43,960 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Attributable to: | | | | | | | | | |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Non-controlling interest | | | | | | | | | 730 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| Equity holders of the | | | | | | | | | 43,230 |
| parent | | | | | | | | | |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
| | | | | | | | | | 43,960 |
+----------------------------+-----------+----------+---------------+----------+------------+----------+---------+----------+--------------+
*Intangible amortisation comprises the amortisation on intangible assets other
than software.
"Others" mainly comprise Arab Medical Containers Ltd, International
Pharmaceutical Research Centre 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.
3. Business and geographical segments (continued)
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Other information 30 June 2009 | Branded | | Injectables | | Generic | | Other | | Group |
| (unaudited) | | | | | | | | | |
+-----------------------------------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| | | $000's | | $000's | | $000's | | $000's | | $000's |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| | | | | | | | | | | |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Additions to property, | | 9,679 | | 4,332 | | 1,629 | | 215 | | 15,855 |
| plant and equipment | | | | | | | | | | |
| (cost) | | | | | | | | | | |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Additions/(disposals) | | 1,426 | | 733 | | 656 | | (721) | | 2,094 |
| to intangible assets | | | | | | | | | | |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Total property, plant | | 336,528 | | 151,262 | | 31,955 | | 8,923 | | 528,668 |
| and equipment and | | | | | | | | | | |
| intangible assets (net | | | | | | | | | | |
| book value) | | | | | | | | | | |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Depreciation | | 7,120 | | 2,358 | | 2,331 | | 618 | | 12,427 |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Amortisation | | 2,656 | | 1,408 | | 184 | | 25 | | 4,273 |
| (including software) | | | | | | | | | | |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Balance sheet | | | | | | | | | | |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Total assets | | | | | | | | | | |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Segment assets | | 664,165 | | 201,581 | | 117,213 | | 20,769 | | 1,003,728 |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Total liabilities | | | | | | | | | | |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
| Segment liabilities | | 221,012 | | 87,052 | | 31,599 | | 18,686 | | 358,349 |
+------------------------+----------+---------+----------+-------------+----------+-----------+----------+---------+----------+-----------+
Year ended 31 December 2009 (audited)
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| | Branded | | Injectables | | Generic | | Others | | Group |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| | $000's | | $000's | | $000's | | $000's | | $000's |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Revenue | 352,674 | | 144,069 | | 135,060 | | 5,081 | | 636,884 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Cost of sales | (165,066) | | (81,162) | | (82,524) | | (3,707) | | (332,459) |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Gross profit | 187,608 | | 62,907 | | 52,536 | | 1,374 | | 304,425 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| | | | | | | | | | |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Result | | | | | | | | | |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Adjusted segment result | 96,029 | | 17,859 | | 25,360 | | (2,345) | | 136,903 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| | | | | | | | | | |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Intangible amortisation* | (4,580) | | (2,526) | | (343) | | | | (7,449) |
| | | | | | | | - | | |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Segment result | 91,449 | | 15,333 | | 25,017 | | (2,345) | | 129,454 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Unallocated corporate | | | | | | | | | (22,161) |
| expenses | | | | | | | | | |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| | | | | | | | | | |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Operating profit | | | | | | | | | 107,293 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Finance income | | | | | | | | | 514 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Finance expense | | | | | | | | | (12,827) |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Other expense | | | | | | | | | (193) |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Profit before tax | | | | | | | | | 94,787 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Tax | | | | | | | | | (15,469) |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Profit for the year | | | | | | | | | 79,318 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Attributable to: | | | | | | | | | |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Non-controlling interest | | | | | | | | | 1,635 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| Equity holders of the | | | | | | | | | 77,683 |
| parent | | | | | | | | | |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
| | | | | | | | | | 79,318 |
+---------------------------+-------------+----------+----------------+----------+------------+-+---------+----------+-------------+
*Intangible amortisation comprises the amortisation on intangible assets other
than software.
"Others" mainly comprise Arab Medical Containers Ltd, International
Pharmaceutical Research Centre 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.
3. Business and geographical segments (continued)
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| | | Branded | | Injectables | | Generic | | Other | | Group |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Other information 31 December 2009 | $000's | | $000's | | $000's | | $000's | | $000's |
| (audited) | | | | | | | | | |
+--------------------------------------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| | | 23,827 | | 9,594 | | 2,925 | | 609 | | 36,955 |
| Additions to property, | | | | | | | | | | |
| plant and equipment | | | | | | | | | | |
| (cost) | | | | | | | | | | |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Additions to intangible | | 1,889 | | 2,591 | | 709 | | 24 | | 5,213 |
| assets | | | | | | | | | | |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Total property, plant and | | 341,548 | | 157,938 | | 30,815 | | 8,766 | | 539,067 |
| equipment and intangible | | | | | | | | | | |
| assets (net book value) | | | | | | | | | | |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Depreciation | | 14,715 | | 4,730 | | 4,567 | | 1,187 | | 25,199 |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Amortisation (including | | 5,509 | | 2,956 | | 434 | | 50 | | 8,949 |
| software) | | | | | | | | | | |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Balance sheet | | | | | | | | | | |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Total assets | | | | | | | | | | |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Segment assets | | 679,112 | | 204,220 | | 119,093 | | 20,296 | | 1,022,721 |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Total liabilities | | | | | | | | | | |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
| Segment liabilities | | 203,750 | | 91,104 | | 30,567 | | 14,043 | | 339,464 |
+---------------------------+----------+---------+----------+-------------+----------+---------+----------+--------+----------+-----------+
The following table provides an analysis of the Group's sales by geographic
destination:
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
| | | Sales revenue by geographical market |
+--------------------------------------+----------+-------------------------------------------------------------+
| | | H1 | | H1 | | FY |
| | | 2010 | | 2009 | | 2009 |
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
| | | $000's | | $000's | | $000's |
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
| Middle East and North Africa | | 218,047 | | 218,288 | | 404,689 |
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
| United States | | 100,116 | | 67,333 | | 152,406 |
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
| Europe and Rest of the World | | 39,243 | | 35,620 | | 78,981 |
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
| United Kingdom | | 288 | | 254 | | 808 |
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
| | | 357,694 | | 321,495 | | 636,884 |
+--------------------------------------+----------+-------------+----------+-------------+----------+-----------+
4. Tax
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| | | H1 2010 | | H1 2009 | | FY |
| | | | | | | 2009 |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| | | $000's | | $000's | | $000's |
+ +--------------------------------+-------------------+----------+--------------------+----------+----------------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| Current tax: | | | | | | |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| UK current tax | | | | 570 | | 560 |
| | | - | | | | |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| Double tax relief | | | | (570) | | (560) |
| | | - | | | | |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| Foreign tax | | 15,007 | | 10,728 | | 19,988 |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| Prior year adjustments | | (882) | | 103 | | 1,035 |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| Deferred tax | | (1,269) | | (4,338) | | (5,554) |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
| | | 12,856 | | 6,493 | | 15,469 |
+--------------------------------+--------------------------------+-------------------+----------+--------------------+----------+----------------+
5. Dividends
+--------------------------------+----------+--------------------------------+----------+-------------+----------+-----------+
| | | H1 | | H1 | | FY |
| | | 2010 | | 2009 | | 2009 |
+--------------------------------+----------+--------------------------------+----------+-------------+----------+-----------+
| | | $000's | | $000's | | $000's |
+ + +--------------------------------+----------+-------------+----------+-----------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+--------------------------------+----------+--------------------------------+----------+-------------+----------+-----------+
| Amounts recognised as | | | | | | |
| distributions to equity | | | | | | |
| holders in the year: | | | | | | |
+--------------------------------+----------+--------------------------------+----------+-------------+----------+-----------+
| Final dividend for the year | | 12,474 | | 7,575 | | 7,575 |
| ended 31 December 2009 of 6.5 | | | | | | |
| cents (2008: 4.0 cents) per | | | | | | |
| share | | | | | | |
+--------------------------------+----------+--------------------------------+----------+-------------+----------+-----------+
| Interim dividend for the year | | | | | | 8,543 |
| ended 31 December 2009 of 4.5 | | - | | - | | |
| cents per share | | | | | | |
+--------------------------------+----------+--------------------------------+----------+-------------+----------+-----------+
| | | 12,474 | | 7,575 | | 16,118 |
+--------------------------------+----------+--------------------------------+----------+-------------+----------+-----------+
The proposed interim dividend for the period ended 30 June 2010 is 5.5 cents (30
June 2009: 4.5 cents) per share.
6. Earnings per share
Earnings per share are calculated by dividing the profit attributable to equity
holders of the parent by the weighted average number of ordinary shares. The
number of ordinary shares used for the basic and diluted calculations are shown
in the table below. Adjusted basic earnings per share and adjusted diluted
earnings per share are intended to highlight the adjusted results of the Group
before exceptional items and intangible amortisation. A reconciliation of the
basic and adjusted earnings used is also set out below:
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| | | H1 | | H1 | | FY |
| | | 2010 | | 2009 | | 2009 |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| | | $000's | | $000's | | $000's |
+ + +------------------------------------+----------+-------------------+--+---------------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Earnings for the purposes of basic | | 54,671 | | 43,230 | | 77,683 |
| and diluted earnings per share | | | | | | |
| being net profit attributable to | | | | | | |
| equity holders of the parent | | | | | | |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Exceptional items | | (4,870) | | | | |
| | | | | - | | - |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Intangible amortisation* | | 3,746 | | 3,716 | | 7,449 |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Tax effect of adjustments | | (775) | | (580) | | (1,531) |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Adjusted earnings for the purposes | | 52,772 | | 46,366 | | 83,601 |
| of adjusted basic and diluted | | | | | | |
| earnings per share being adjusted | | | | | | |
| net profit attributable to equity | | | | | | |
| holders of the parent | | | | | | |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| | | | | | | |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| | | Number | | Number | | Number |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Number of shares | | '000 | | '000 | | '000 |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Weighted average number of | | 191,792 | | 189,254 | | 189,757 |
| Ordinary Shares for the purposes | | | | | | |
| of basic earnings per share | | | | | | |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Effect of dilutive potential | | | | | | |
| Ordinary Shares : | | | | | | |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Share options | | 4,059 | | 4,377 | | 3,968 |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Weighted average number of | | 195,851 | | 193,631 | | 193,725 |
| Ordinary Shares for the purposes | | | | | | |
| of diluted earnings per share | | | | | | |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| | | | | | |
+-----------------------------------------------+------------------------------------+----------+-------------------+--+---------------+
| | | | | | | |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| | | H1 | | H1 | | FY |
| | | 2010 | | 2009 | | 2009 |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| | | Earnings | | Earnings | | Earnings |
| | | per | | per | | per |
| | | share | | share | | share |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| | | Cents | | Cents | | Cents |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Basic | 28.5 | | 22.8 | | 40.9 |
+-----------------------------------------------+------------------------------------+----------+-------------------+--+---------------+
| Diluted | 27.9 | | 22.3 | | 40.1 |
+-----------------------------------------------+------------------------------------+----------+-------------------+--+---------------+
| Adjusted basic | | 27.5 | | 24.5 | | 44.1 |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
| Adjusted diluted | | 26.9 | | 23.9 | | 43.2 |
+------------------------------------+----------+------------------------------------+----------+-------------------+--+---------------+
*Intangible amortisation comprises the amortisation of intangible assets other
than software.
7. Inventories
+-----------------------------+----+-----------------------------+----+-----------------+--+-------------+
| | | H1 2010 | | H1 2009 | | FY |
| | | | | | | 2009 |
+-----------------------------+----+-----------------------------+----+-----------------+--+-------------+
| | | $000's | | $000's | | $000's |
+ + +-----------------------------+----+-----------------+--+-------------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+-----------------------------+----+-----------------------------+----+-----------------+--+-------------+
| Finished goods | | 55,942 | | 46,048 | | 41,453 |
+-----------------------------+----+-----------------------------+----+-----------------+--+-------------+
| Work-in-progress | | 30,816 | | 23,476 | | 28,074 |
+-----------------------------+----+-----------------------------+----+-----------------+--+-------------+
| Raw and packing materials | | 70,794 | | 87,042 | | 79,040 |
+-----------------------------+----+-----------------------------+----+-----------------+--+-------------+
| Goods in transit | | 13,893 | | 10,069 | | 11,942 |
+-----------------------------+----+-----------------------------+----+-----------------+--+-------------+
| | | 171,445 | | 166,635 | | 160,509 |
+-----------------------------+----+-----------------------------+----+-----------------+--+-------------+
Goods in transit include inventory held at third parties whilst in transit
between Group companies.
8. Trade and other receivables
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
| | | 30 June | | 30 June | | 31 |
| | | | | | | December |
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
| | | 2010 | | 2009 | | 2009 |
+----------------------------+ +-------------------+----------+-------------+----------+-----------+
| | | $000's | | $000's | | $000's |
+----------------------------+ +-------------------+----------+-------------+----------+-----------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
| Trade receivables | | 210,187 | | 202,512 | | 203,250 |
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
| Prepayments | | 19,644 | | 20,024 | | 16,063 |
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
| Value added tax | | 6,383 | | 4,407 | | 5,569 |
| recoverable | | | | | | |
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
| Interest receivable | | 217 | | 157 | | 49 |
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
| Employee advances | | 2,513 | | 2,131 | | 1,910 |
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
| | | 238,944 | | 229,231 | | 226,841 |
+----------------------------+---------+-------------------+----------+-------------+----------+-----------+
9. Trade and other payables
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| | | 30 June | | 30 June | | 31 |
| | | | | | | December |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| | | 2010 | | 2009 | | 2009 |
+----------------------------+ +-------------+----------+-------------+----------+-----------+
| | | $000's | | $000's | | $000's |
+----------------------------+ +-------------+----------+-------------+----------+-----------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| | | | | | | |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| Trade payables | | 74,675 | | 60,333 | | 57,307 |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| Accrued expenses | | 30,484 | | 30,310 | | 35,602 |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| Employees' provident fund | | 1,943 | | 3,532 | | 4,049 |
| * | | | | | | |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| VAT and sales tax payables | | 3,496 | | 3,625 | | 3,033 |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| Dividends payable ** | | 2,320 | | 2,411 | | 2,348 |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| Social security | | 795 | | 775 | | 856 |
| withholdings | | | | | | |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| Income tax withholdings | | 1,434 | | 1,442 | | 1,456 |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| Other payables | | 2,670 | | 1,666 | | 2,967 |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
| | | 117,817 | | 104,094 | | 107,618 |
+----------------------------+----------+-------------+----------+-------------+----------+-----------+
* The employees' provident fund liability represents outstanding contributions
to Hikma Pharmaceuticals Limited - Jordan retirement benefit plan, on which the
fund receives 5% interest.
** Dividends payable includes $2,100,000 (30 June 2009: $2,219,000 and 31
December 2009: $2,165,000) due to the previous shareholders of Arab
Pharmaceutical Manufacturing.
10. Net cash from operating activities
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| | | H1 | | H1 | | FY |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| | | 2010 | | 2009 | | 2009 |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| | | $000's | | $000's | | $000's |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Profit before tax | | 67,474 | | 50,453 | | 94,787 |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Adjustments for: | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Depreciation, amortisation and | | | | | | |
| impairment of: | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Property, plant | | 14,138 | | 12,428 | | 25,199 |
| and equipment | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Intangible | | 4,657 | | 4,272 | | 8,949 |
| assets | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Gain on revaluation of | | (7,176) | | | | |
| previously held equity interest | | | | - | | - |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Gains on disposal of property, | | 57 | | 161 | | 236 |
| plant and equipment | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Losses/(gains) on disposal of | | 56 | | (425) | | (903) |
| intangible assets | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Movement on provisions | | 681 | | 386 | | 761 |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Movement on deferred income | | (146) | | (107) | | (201) |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Cost of equity settled employee | | 2,090 | | 2,170 | | 4,616 |
| share scheme | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Finance income | | (98) | | (226) | | (514) |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Interest and bank charges | | 6,519 | | 6,923 | | 12,827 |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Cash flow before working capital | | 88,252 | | 76,035 | | 145,757 |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Change in trade and other | | (5,152) | | (34,137) | | (29,949) |
| receivables | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Change in other current assets | | 208 | | (103) | | (190) |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Change in inventories | | (9,144) | | (12,804) | | (8,278) |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Change in trade and other | | 5,998 | | 20,654 | | 24,262 |
| payables | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Change in other current | | 817 | | (3,730) | | 3,164 |
| liabilities | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Cash generated by operations | | 80,979 | | 45,915 | | 134,766 |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Income tax paid | | (17,979) | | (9,669) | | (15,787) |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
| Net cash generated from | | 63,000 | | 36,246 | | 118,979 |
| operating activities | | | | | | |
+----------------------------------+--+-----------------------+----------+-------------+----------+----------------+
11. Exceptional items and intangible amortisation
Exceptional items are disclosed separately in the condensed consolidated
statement of comprehensive income to assist in the understanding of the Group's
underlying performance.
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| | | H1 | | H1 | | FY |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| | | 2010 | | 2009 | | 2009 |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| | | $000's | | $000's | | $000's |
| | | | | | | |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| Acquisition related expenses | | (2,306) | | | | |
| | | | | - | | - |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| Gains on revaluation of | | 7,176 | | | | |
| previously held equity interests | | | | - | | - |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| Exceptional items | | 4,870 | | | | |
| | | | | - | | - |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| Intangible amortisation * | | (3,746) | | (3,716) | | (7,449) |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| Exceptional items and intangible | | 1,124 | | (3,716) | | (7,449) |
| amortization | | | | | | |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| Tax effect | | 775 | | 580 | | 1,531 |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
| Impact on profit for the period | | 1,899 | | (3,136) | | (5,918) |
+-----------------------------------+----------+-------------------+----------+------------------+----------+---------------------+
*Intangible amortisation comprises the amortisation of intangible assets other
than software.
Acquisition related expenses relate to transaction costs incurred in acquiring
Ibn Al Baytar and Al Dar Al Arabia into the Group. These are included within
other operating income/(expense).
Gains on revaluation of previously held equity interests relate to gains arising
from the remeasurement to fair value of the previously held equity interests in
Ibn Al Baytar and Al Dar Al Arabia. These are included within other operating
income/(expense). Further details are set out in note 13 "Acquisition of
subsidiaries".
12. Related party balances
Intra-group transactions have been eliminated on consolidation and are not
disclosed in this note.
During the period, the Group entered into the following transactions with
related parties:
Darhold Limited: is a related party of the Group because it is one of the major
shareholders of Hikma Pharmaceuticals PLC with ownership percentage of 29.6% at
30 June 2010 (30 June 2009: 30.1% and 31 December 2009: 29.8%).
Other than dividends (as paid to all shareholders), there were no transactions
between the Group and Darhold Limited during the period.
Capital Bank - Jordan: is a related party of the Group because during the period
one board member of the Bank is also a board member of Hikma Pharmaceuticals
PLC. Total cash balances at Capital Bank - Jordan were USD 233,000 (30 June
2009: USD 391,000 and 31 December 2009: USD 3,294,000). Loans and overdrafts
granted by Capital Bank to the Group amounted to USD 125,000 (30 June 2009: USD
143,000 and 31 December 2009: USD 77,000) with interest rates ranging between
8.25% and 3 month LIBOR + 3. Total interest expense incurred against Group
facilities was USD 6,000 (H1 2009: USD 17,000 and FY 2009: USD 28,000). Total
interest income received was Nil (H1 2009: Nil and 2009 FY: USD 37,000) and
total commission paid in the period was USD 14,000 (H1 2009: USD 9,000 and 2009:
USD 17,000).
Jordan International Insurance Co: is a related party of the Group because one
board member of the insurance company is also a board member of Hikma
Pharmaceuticals PLC. Total insurance premiums paid by the Group to Jordan
International Insurance Co during the period were USD 1,868,000 (H1 2009: USD
516,000 and FY 2009: USD 1,686,000). The Group's insurance expense for Jordan
International Insurance Co contracts in the period was USD 1,548,000 (H1 2009:
USD 641,000 and FY 2009: USD 2,006,000). The amounts due to Jordan International
Insurance Co at 30 June 2010 were USD 74,000 (30 June 2009: USD 99,000 and 31
December 2009: USD 129,000).
Tunisian Companies: were related parties to the Group because the Group used to
hold a minority interest in Societe D'Industries Pharmaceutiques Ibn Al Baytar
S.A- Tunisia. This company owns another Tunisian company Societe Hikma Medicef
Limited - Tunisia, which was therefore a related party as well. During March
2010, the Company increased its equity interest in Societe D'Industries
Pharmaceutiques Ibn Al Baytar S.A- Tunisia to a controlling interest. As a
result, the results of those companies were consolidated within Hikma Group
consolidated financial statements and are therefore no longer considered to be
related parties.
In previous periods, amounts due from the two Tunisian companies, net of
provisions were 30 June 2009: USD 627,000 and 31 December 2009: USD 491,000 and
30 June 2009: USD 784,000 and 31 December 2009: USD 1,052,000 from Societe
Hikma Medicef Limited - Tunisia and Societe D'Industries Pharmaceutiques Ibn Al
Baytar S.A. - Tunisia, respectively. The corresponding Group's provision for
doubtful debts related to balances above was 30 June 2009: USD 303,000 and 31
December 2009: USD 327,000.
Labatec Pharma: is a related party of the Group because it is owned by Mr. Samih
Darwazah. During the period to 30 June 2010 the Group total sales to Labatec
Pharma amounted to USD Nil (H1 2009: USD 19,000 and FY 2009: USD 42,000) and the
Group total purchases from Labatec amounted to USD 139,000 (H1 2009: USD 186,000
and FY 2009 USD 393,000). At 30 June 2010 the amount owed by Labatec Pharma to
the Group was USD 5,000 (30 June 2009: USD Nil and 31 December 2009: USD Nil)
while the amount owed to Labatec was USD Nil (30 June 2009: USD 78,000 and 31
December 2009: USD 149,000).
Mr. Yousef Abd Ali: Mr. Yousef Abd Ali is a related party of the Group because
he holds 33% of Hikma Liban SARL in Lebanon. The amount owed to Mr. Yousef by
the Group as at 30 June 2010 was USD 202,000 (30 June 2009: USD 161,000 and 31
December 2009: USD 279,000).
King and Spalding: is a related party of the Group because the partner of the
firm is a board member and company secretary of West-ward Pharmaceutical Corp.
King and Spalding is an outside legal counsel firm that handles general legal
matters for West-ward. During the period to June 2010 fees of USD 47,000 (H1
2009: USD 30,000 and FY 2009: USD 55,000) were paid for legal services provided.
13. Acquisition of subsidiaries
During the period, Hikma acquired additional shareholdings in two businesses:
Societe D'Industries Pharmaceutiques Ibn Al Baytar ("Ibn Al Baytar") in Tunisia
and Al Dar Al Arabia in Algeria.
Details of the provisional goodwill and gain on the previously held equity
interests arising on both acquisitions are as below:
+--------------------------------------------+-+----------------+--+-------------------+
| | | Goodwill | | Gain |
| | | | | on the |
| | | | | previously |
| | | | | held |
| | | | | equity |
| | | | | interests |
+--------------------------------------------+-+----------------+--+-------------------+
| Subsidiary | | $000's | | $000's |
+--------------------------------------------+-+----------------+--+-------------------+
| Ibn Al Baytar | | 11,873 | | 2,679 |
+--------------------------------------------+-+----------------+--+-------------------+
| Al Dar Al Arabia | | 14,986 | | 4,497 |
+--------------------------------------------+-+----------------+--+-------------------+
| | | 26,859 | | 7,176 |
+--------------------------------------------+-+----------------+--+-------------------+
The movement in goodwill in the period is as follows:
+---------------------------------------------------------+-+-----------+
| Cost | | $000's |
| | | |
+---------------------------------------------------------+-+-----------+
| As at 1 January 2010 | | 156,066 |
+---------------------------------------------------------+-+-----------+
| Acquisition of subsidiaries | | 26,859 |
+---------------------------------------------------------+-+-----------+
| Translation adjustment | | (8,680) |
+---------------------------------------------------------+-+-----------+
| Balance at 30 June 2010 | | 174,245 |
+---------------------------------------------------------+-+-----------+
| | | |
+---------------------------------------------------------+-+-----------+
| Amortisation | | |
+---------------------------------------------------------+-+-----------+
| As at 1 January 2010 and as at 30 June 2010 | | (608) |
+---------------------------------------------------------+-+-----------+
| Carrying amount at 30 June 2010 | | 173,637 |
+---------------------------------------------------------+-+-----------+
None of the goodwill recognised is expected to be deductible for tax purposes.
Details are as follows:
Ibn Al Baytar
On 26 March 2010 the Group increased its voting equity interest in Ibn Al Baytar
from 32.125% to 66% to obtain control and thereby develop its activity in the
North Africa region. In addition 29.05% of the non-controlling interests in the
company have waived the voting rights attached to these shares. A call option
over this 29.05% shareholding is held by the other 4.95% non-controlling
interest until 24 September 2010.
The total fair value of the consideration is deemed to be $9,295,000, 50% of
which is deferred. $5,000,000 is cash consideration and the balance of
$4,295,000 has been treated as a financial liability and deemed consideration in
accordance with IAS 32 Financial Instruments: Presentation and IFRS 3 revised
(2008): Business Combinations.
As a consequence of the transaction, the previously held equity interest was
re-valued to $3,164,000. The resulting gain of $2,679,000 has been recognised in
other operating income in the period.
The net assets acquired in the transaction and the provisional goodwill arising
are set out below:
13. Acquisition of subsidiaries - continued
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Ibn Al Baytar | | Book | | Fair | | Fair |
| | | value | | value | | value |
| | | | | adjustment | | |
+--------------------------------+---+ +------+ +---+ +
| | | | | | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| | | $000's | | $000's | | $000's |
| | | | | | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Net assets acquired: | | | | | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Trade name | | 144 | | 1,063 | a | 1,207 |
| | | | | | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Cash and cash equivalent | | 263 | | | | 263 |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Accounts receivable, net | | 5,997 | | | | 5,997 |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Other current assets | | 1,747 | | | | 1,747 |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Inventories | | 3,066 | | | | 3,066 |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Financial assets | | 2 | | | | 2 |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Deferred taxes asset | | 33 | | | | 33 |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Property, plant and equipment | | 6,030 | | 2,173 | b | 8,203 |
| | | | | | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Financial debts | | (7,267) | | | | (7,267) |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Trade accounts payable | | (3,844) | | | | (3,844) |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Other current liabilities | | (1,317) | | | | (1,317) |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Income tax provision | | | | (591) | c | (591) |
| | | - | | | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Provisions | | (1,879) | | (1,405) | d | (3,284) |
| | | | | | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Long-term financial debts | | (2,535) | | | | (2,535) |
| | | | | - | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Deferred taxes liabilities | | (92) | | (971) | e | (1,063) |
| | | | | | | |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
| Identifiable net assets | | 348 | | 269 | | 617 |
+--------------------------------+---+----------------+------+-------------------+---+----------------+
+------------------------------------------------------+------+---------------+
| Consideration | | 9,295 |
+------------------------------------------------------+------+---------------+
| Fair value of previously held equity interest | | 3,164 |
| (32.125%) | | |
+------------------------------------------------------+------+---------------+
| Non-controlling interest (4.95%)* | | 31 |
+------------------------------------------------------+------+---------------+
| | | 12,490 |
+------------------------------------------------------+------+---------------+
| Less: identifiable net assets | | (617) |
+------------------------------------------------------+------+---------------+
| Goodwill | | 11,873 |
+------------------------------------------------------+------+---------------+
| | | |
+------------------------------------------------------+------+---------------+
| Consideration is satisfied by : | | |
+------------------------------------------------------+------+---------------+
| Cash | | 4,648 |
+------------------------------------------------------+------+---------------+
| Deferred consideration | | 4,647 |
+------------------------------------------------------+------+---------------+
| | | 9,295 |
+------------------------------------------------------+------+---------------+
| | | |
+------------------------------------------------------+------+---------------+
| Cash consideration | | 4,648 |
+------------------------------------------------------+------+---------------+
| Cash and cash equivalents acquired | | (263) |
+------------------------------------------------------+------+---------------+
| Net cash outflow arising on acquisition | | 4,385 |
+------------------------------------------------------+------+---------------+
*The non-controlling interest has been valued at 4.95% of the fair value of the
identifiable net assets.
13. Acquisition of subsidiaries - continued
Gain on revaluation of previously held interest was calculated as follows:
+--------------------------------------------------------+----------+--------------+
| | | |
+--------------------------------------------------------+----------+--------------+
| Ibn Al Baytar | | $000's |
| | | |
+--------------------------------------------------------+----------+--------------+
| Fair value of previously held equity interest | | 3,164 |
| (32.125%) | | |
+--------------------------------------------------------+----------+--------------+
| Book value of previously held equity interest | | (485) |
| (32.125%) | | |
+--------------------------------------------------------+----------+--------------+
| Gain on revaluation of previously held interest | | 2,679 |
+--------------------------------------------------------+----------+--------------+
a. Seven trade names relating to generic products and an under licence contract
have been valued using the relief from royalty method.
b. The property, plant and equipment acquired have been re-valued upwards to
their fair value.
c. Certain tax exposures have been identified as a result of open tax positions
with the tax authorities.
d. This mainly comprises of retrospective compensation for employees as a result
of review by the local authorities with relation to compliance with certain
labour laws. In addition to certain employees related business commitment
adhered to before the acquisition date.
e. Taxable temporary differences have been identified by reference to IAS 12
"income tax".
The revenue and net profit of Ibn Al Baytar from the date of the acquisition
that is included in the Groups' income statement for the year amounted to
$3,677,000 and $558,000 respectively.
13. Acquisition of subsidiaries - continued
Al Dar Al Arabia
On 20 April 2010, the Group completed the acquisition of 100% of the issued
share capital of Al Dar Al Arabia for cash consideration of $18,740,000 and
deferred consideration of $1,153,000. The deferred consideration relates to the
estimated currency exchange movement payable to the vendor on conversion of the
consideration from Algerian Dinars into US Dollars six months after completion.
The Al Dar Al Arabia plant will double Hikma's manufacturing capacity in Algeria
and will provide significant scope for further expansion both in Algeria and in
the MENA region. As a consequence of the transaction, the previously held equity
interest was re-valued to $9,947,000. The resulting gain of $4,497,000 has been
recognised in other operating income in the period.
The net assets acquired in the transaction and the provisional goodwill arising
are set out below:
Al Dar Al Arabia
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| | | Book | | Fair | | Fair |
| | | value | | value | | value |
| | | | | adjustment | | |
+----------------------------------+----------+ +----------+ +----------+ +
| | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| | | $000's | | $000's | | $000's |
| | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Net assets acquired: | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Cash and cash equivalents | | 329 | | | | 329 |
| | | | | - | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Property, plant and equipment | | 9,730 | | 6,504 | a | 16,234 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Other current liabilities | | (83) | | | | (83) |
| | | | | - | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Deferred tax liability | | - | | (1,626) | b | (1,626) |
| | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Identifiable net assets | | 9,976 | | 4,878 | | 14,854 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Consideration | | | | | | 19,893 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Fair value of previously held | | | | | | 9,947 |
| equity interest (50%) | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| | | | | | | 29,840 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Less identifiable net assets | | | | | | (14,854) |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Goodwill | | | | | | 14,986 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Consideration is satisfied by : | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Cash | | | | | | 18,740 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Deferred consideration | | | | | | 1,153 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| | | | | | | 19,893 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Cash consideration | | | | | | 18,740 |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Cash and cash equivalents | | | | | | (329) |
| acquired | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
| Net cash outflow arising on | | | | | | 18,411 |
| acquisition | | | | | | |
+----------------------------------+----------+--------------------+----------+------------------------+----------+--------------------------+
Gain on revaluation of previously held equity interest was calculated as
follows:
+------------------------------------------------------+----------+--------------+
| | | |
+------------------------------------------------------+----------+--------------+
| Al Dar Al Arabia | | $000's |
+------------------------------------------------------+----------+--------------+
| Fair value of previously held equity interest (50%) | | 9,947 |
+------------------------------------------------------+----------+--------------+
| Book value of previously held equity interest (50%) | | (5,450) |
+------------------------------------------------------+----------+--------------+
| Gain on revaluation of previously held interest | | 4,497 |
+------------------------------------------------------+----------+--------------+
a. The property, plant and equipment acquired has been re-valued
upwards to this fair value.
b. Taxable temporary differences have been identified by reference
to IAS 12 "income tax".
13. Acquisition of subsidiaries - continued
Full year impact of acquisitions:
If the acquisition of Ibn Al Baytar and Al Dar Al Arabia had been completed on
the first day of the financial year, the Group's revenues for the period would
have been approximately $360,126,000 and the Group's profit attributable to
equity holders of the parent would have been approximately $54,324,000.The
appropriate additional contribution by entity for the period from the beginning
of the year up to the acquisition date is illustrated in the table below:
+------------------------------------------+-+-------------------+--+--------------------+
| Subsidiary | | Effect | | Effect |
| | | on | | on |
| | | Group's | | Group's |
| | | revenues | | profit |
+------------------------------------------+-+-------------------+--+--------------------+
| | | $000's | | $000's |
| | | | | |
+------------------------------------------+-+-------------------+--+--------------------+
| Ibn Al Baytar | | 2,432 | | (289) |
+------------------------------------------+-+-------------------+--+--------------------+
| Al Dar Al Arabia | | | | (58) |
| | | - | | |
+------------------------------------------+-+-------------------+--+--------------------+
| | | 2,432 | | (347) |
+------------------------------------------+-+-------------------+--+--------------------+
14. Contingent liabilities
In common with many other companies in the pharmaceutical industry the Group is
involved in various legal proceedings considered typical to its business,
including litigation relating to employment, product liability and other
commercial disputes.
In particular, West-ward Pharmaceutical Corp. is a co-defendant in litigation
brought by Mutual Pharmaceutical Company, Inc. ("Mutual") regarding the
continued sale by West-ward and the others of generic oral colchicine in the
United States, following the approval by the FDA of Mutual's 'Colcrys' (TM)
colchicine product (the "Claim"). Pursuant to the Claim, Mutual alleges unfair
competition and false advertising by the Defendants in respect of their sale of
oral colchicine, and seeks damages for loss of sales. The Claim was filed in the
United States District Court for the Central District of California and
subsequently, on petition by the Defendants, transferred to the United States
District Court for the District of New Jersey. At the same time as the transfer
of the Claim to the District of New Jersey, the Court denied a preliminary
injunction that Mutual had sought to prevent the Defendants from continuing
their alleged unfair competition and false advertising pending the final outcome
of the Claim, finding that Mutual had not demonstrated a substantial likelihood
of success on the merits. Discovery in the Claim remains ongoing.
This matter remains subject to substantial uncertainties. As this litigation is
at an early stage, it is also not practicable to make a reasonable estimate of
the possible financial effect, if any, that could arise. Management has assessed
and considered all of the relevant facts of the litigation and having done so
does not consider that a provision is required to be made in respect of the
Claim.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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