TIDMHIK
RNS Number : 2998B
Hikma Pharmaceuticals Plc
13 April 2012
Hikma Pharmaceuticals PLC
2011 Annual Report & Accounts and Notice of 2012 Annual
General Meeting
In compliance with Listing Rule 9.6.1, Hikma Pharmaceuticals PLC
has submitted copies of the documents listed below to the National
Storage Mechanism and will shortly be available for inspection at
http://www.hemscott.com/nsm.do or http://www.morningstar.co.uk:
-- Annual Report & Accounts 2011
-- Notice of 2012 Annual General Meeting
-- Proxy forms for the 2012 Annual General Meeting
Copies of the Annual Report and Notice of Meeting will also be
available on our website www.hikma.com. Hard copies are available
by writing to the Company Secretary, Hikma Pharmaceuticals PLC, 13
Hanover Square, London W1S 1HW or by attending the office in
person.
The Annual General Meeting will be held at 11:00 am on Thursday
17 May 2012 at The Westbury, Bond Street, Mayfair, London W1S
2YF.
In accordance with DTR 6.3.5, this announcement contains
information in the attached Appendices of the principal risk
factors (Appendix 1), a responsibility statement (Appendix 2) and
details of related party transactions (Appendix 3) which has been
extracted in full unedited text from the Annual Report and Accounts
2011. Where page numbers and notes are mentioned in the Appendix
these refer to page numbers and notes in the Annual Report and
Accounts 2011.
Enquiries:
Hikma Pharmaceuticals PLC Tel: +44 (0)20 7399 2760
Peter Speirs, Company Secretary
Susan Ringdal, Investor Relations Director
Financial Dynamics Tel: +44 (0)20 7831 3113
Ben Atwell /Julia Phillips/Jonathan Birt/Matthew Cole
About Hikma
Hikma is a fast growing multinational 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 principally in the
Middle East and North Africa ("MENA") region, where it is a market
leader, the United States and Europe. In 2011, Hikma achieved
revenue of $918.0 million and profit attributable to shareholders
of $80.1 million.
Appendix 1 - Principal Risks and Uncertainties
The Group's business faces risks and uncertainties.
The section below includes the principal risks and uncertainties
that the Group considers could have a significant effect on its
financial condition, results of operations or future performance.
The list is not set out in order of priority and other risks,
currently unknown or not considered material, could have a similar
effect.
Operational risks
Risk Potential impact Mitigation
-------------------------------------- -------------------------------------- --------------------------------------
Compliance with regulatory requirements
----------------------------------------------------------------------------------------------------------------------
> Failure to comply with > Delays in supply > Commitment to maintain
applicable regulatory or an inability to the highest levels
requirements and manufacturing market or develop of quality across
standards (often referred the Group's products all manufacturing
to as 'Current Good Manufacturing facilities
Practices' or cGMP) > Delayed or denied
approvals for the > Strong global compliance
introduction of new function that oversees
products compliance across
the Group
> Product complaints
or recalls > Remuneration and
reward structure that
> Bans on product helps retain experienced
sales or importation personnel
> Disruptions to > Continuous staff
operations training and know-how
exchange
> Potential for litigation
> On-going development
of standard operating
procedures
-------------------------------------- -------------------------------------- --------------------------------------
Regulation changes
----------------------------------------------------------------------------------------------------------------------
> Unanticipated legislative > Restrictions on > Strong oversight
and regulatory actions, the sale of one or of local regulatory
developments and changes more of our products environments to help
affecting the Group's anticipate potential
operations and products > Restrictions on changes
our ability to sell
our products at a > Local operations
profit in [all] of our key
markets
> Unexpected additional
costs required to > Representation and/or
produce, market or affiliation with local
sell our products industry bodies
> Increased compliance > Diverse geographical
costs and therapeutic business
model
-------------------------------------- -------------------------------------- --------------------------------------
Commercialisation of new products
----------------------------------------------------------------------------------------------------------------------
> Delays in the receipt > Slowdown in revenue > Experienced regulatory
of marketing approvals, growth from new products teams able to accelerate
the authorisation of price submission processes
and re-imbursement > Inability to deliver across all of our
a positive return markets
> Lack of approval and on investments in
acceptance of new products R&D, manufacturing > Highly qualified
by physicians, patients and sales and marketing sales and marketing
and other key decision-makers teams across all markets
> Inability to confirm > A diversified product
safety, efficacy, convenience pipeline with over
and/or cost-effectiveness [60] new compounds
of our products as compared pending approval,
to competitive products covering a broad range
of therapeutic areas
> Inability to participate
in tender sales > A systematic commitment
to quality that helps
to secure approval
and acceptance of
new products and mitigate
potential safety issues
-------------------------------------- -------------------------------------- --------------------------------------
Product safety
----------------------------------------------------------------------------------------------------------------------
> Unforeseen product safety > Interruptions to > Diversification
issues for marketed products, revenue flow of product portfolio
particularly in respect across key markets
of in-licensed products > Costs of recall, and therapies
potential for litigation
> Working with stakeholders
> Reputational damage to understand issues
as they arise
-------------------------------------- -------------------------------------- --------------------------------------
Product development
----------------------------------------------------------------------------------------------------------------------
> Failure to secure new > Inability to grow > Experienced and
products or compounds sales and increase successful in-house
for development profitability for R&D team, with specifically
the Group targeted product development
pathways
> Lower return on
investment in research > Continually developing
and development and multi-faceted
approach to new product
development
> Strong business
development team
> Track record of
building in-licensed
brands
> Position as licensee
of choice for our
key MENA geography
-------------------------------------- -------------------------------------- --------------------------------------
Co-operation with Third parties
----------------------------------------------------------------------------------------------------------------------
> Inability to renew or > Loss of products > Investment in long-term
extend in-licensing or from our portfolio relationships with
other co-operation agreements existing in-licensing
with third parties > Revenue interruptions partners
> Failure to recoup > Experienced legal
sales and marketing team capable of negotiating
and business development robust agreements
costs with our partners
> Continuous development
of new partners for
licensing and co-operation
> Diverse revenue
model with in-house
R&D capabilities
-------------------------------------- -------------------------------------- --------------------------------------
Increased competition
----------------------------------------------------------------------------------------------------------------------
> New market entrants > Loss of market > On-going portfolio
in key geographies share diversification, differentiation
and renewal through
> On-going pricing pressure > Decreasing revenues internal R&D, in-licensing
in increasingly commoditised on established portfolio and product acquisition
markets
> Continuing focus
on expansion of geographies
and therapeutic areas
-------------------------------------- -------------------------------------- --------------------------------------
Disruptions in the manufacturing supply chain
----------------------------------------------------------------------------------------------------------------------
> Inability to procure > Inability to develop > Alternate approved
active ingredients from and/or commercialise suppliers of active
approved sources new products ingredients
> Inability to procure > Inability to market > Long-term relationships
active ingredients on existing products with reliable raw
commercially viable terms as planned material suppliers
> Inability to procure > Lost revenue streams > Corporate auditing
the quantities of active on short notice team continuously
ingredients needed to monitors regulatory
meet market requirements > Reduced service compliance of API
levels and damage suppliers
> to customer relationships
> Focus on improving
> Inability to supply service levels and
finished product optimising our supply
to our customers chain
in a timely fashion
-------------------------------------- -------------------------------------- --------------------------------------
Economic and political and unforeseen events
----------------------------------------------------------------------------------------------------------------------
> The failure of control, > Disruptions to > Geographic diversification,
a change in the economic manufacturing and with 9 manufacturing
conditions or political marketing plans facilities and sales
environment or sustained in more than 40 countries
civil unrest in any particular > Lost revenue streams
market or country > Product diversification,
> Inability to market with 423 products
> Unforeseen events such or supply products and 817 dosage strengths
as fire or flooding could and forms
cause disruptions to
manufacturing
or supply
-------------------------------------- -------------------------------------- --------------------------------------
Litigation
----------------------------------------------------------------------------------------------------------------------
> Commercial, product > Financial impact > In-house legal counsel
liability and other claims on Group results with relevant jurisdictional
brought against the Group from adverse resolution experience
of proceedings
> Reputational damage
-------------------------------------- -------------------------------------- --------------------------------------
Financial risks
Risk Impact Mitigation
------------------------------------- ------------------------------- ----------------------------------------
Foreign exchange risk
----------------------------------------------------------------------------------------------------------------
> Exposure to foreign > Fluctuations in > Entering into currency
exchange movements, primarily the Group's net asset derivative contracts
in the Euro, Algerian values and profits where possible
dinar, Sudanese pound upon translation
and Egyptian pound into US dollars > Foreign currency
borrowing
> Matching foreign
currency revenues
to in-jurisdiction
costs
------------------------------------- ------------------------------- ----------------------------------------
Interest rate risk
----------------------------------------------------------------------------------------------------------------
> Volatility in interest > Fluctuating impact > Optimisation of
rates on profits before fixed and variable
taxation rate debt as a proportion
of our total debt
> Use of interest
rate swap agreements
------------------------------------- ------------------------------- ----------------------------------------
Credit Risk
----------------------------------------------------------------------------------------------------------------
> Inability to recover > Reduced working > Clear credit terms
trade receivables capital funds for settlement of
sales invoices
> Concentration of significant > Risk of bad debt
trade balances with key or default > Group Credit policy
customers in the MENA limiting credit exposures
region and the US
> Use of various financial
instruments such as
letters of credit,
factoring and credit
insurance arrangements
------------------------------------- ------------------------------- ----------------------------------------
Liquidity Risk
----------------------------------------------------------------------------------------------------------------
> Insufficient free cash > Reduced liquidity > Continual evaluation
flow and borrowings headroom and working capital of headroom and borrowing
funds
> Committed debt facilities
> Inability to meet
short-term working > Diversity of institution,
capital needs and, subsidiary and geography
therefore, to execute of borrowings
our long term strategic
plans
------------------------------------- ------------------------------- ----------------------------------------
Tax
----------------------------------------------------------------------------------------------------------------
> Changes to tax laws > Negative impact > Close observation
and regulations in any on the Group's effective of any intended or
of the markets in which tax rate proposed changes to
we operate tax rules, both in
> Costly compliance the UK and in other
requirements key countries where
the Group operates
------------------------------------- ------------------------------- ----------------------------------------
Appendix 2 - Responsibility Statement
DIRECTORS' RESPONSIBILITY STATEMENT
The directors are responsible for preparing the Annual Report
and the financial statements. The Directors are required to prepare
financial statements for the Group in accordance with International
Financial Reporting Standards as adopted by the European Union
("IFRS") and have also elected to prepare financial statements for
the Company in accordance with the IFRS under EU law. Company law
requires the Directors to prepare such financial statements in
accordance with IFRS, the Companies Act 2006 and Article 4 of the
International Accounting Standard ("IAS") Regulations.
IAS 1 requires that financial statements present fairly for each
financial year the company's financial position, financial
performance and cash flows. This requires the faithful
representation of the effects of transactions, other events and
condition in accordance with the definitions and recognition
criteria for assets, liabilities, income and expenses set out in
the International Accounting Standards Board's 'Framework for the
Preparation and Presentation of Financial Statements'. In virtually
all circumstances, a fair presentation will be achieved by
compliance with all applicable IFRS. Directors are also required
to:
-- Properly select and apply accounting policies
-- Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information
-- Provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance
-- Make an assessment of the company's ability to continue as a going concern
The directors are responsible for keeping proper accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company, for safeguarding the assets, for
taking reasonable steps for the prevention and detection of fraud
and other irregularities and for the preparation of a directors'
report and directors' remuneration report which comply with the
requirements of the Companies Act 2006.
The directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
differs from legislation in other jurisdictions.
We confirm to the best of our knowledge:
-- The financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
-- The business review, which is incorporated into the
Directors' Report, includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties they face.
By order of the Board
Said Darwazah Mazen Darwazah
Chief Executive Officer Executive Vice Chairman, CEO MENA
13 March 2012
Appendix 3 - Related Party Transactions
Details of related party transactions are included in Note 38 of
the Financial Statements on pages 138 to 139.
Transactions between the Company and its subsidiaries have been
eliminated on consolidation and are not disclosed in this note.
Transactions between the Group and its associate and other related
parties are disclosed below.
Trading transactions:
During the year, Group companies entered into the following
transactions with related parties:
Darhold Limited: is a related party of the Group because it is
considered one of the major shareholders of Hikma Pharmaceuticals
PLC with ownership percentage of 29.2% at the end of 2011 (2010:
29.5%). Further details on the relationship between Mr. Samih
Darwazah, Mr. Said Darwazah, Mr. Mazen Darwazah and Mr. Ali
Al-Husry, and Darhold Limited are given in the Directors' Report.
Other than dividends (as paid to all shareholders), there were no
transactions between the Group and Darhold Limited in the year.
Capital Bank - Jordan: is a related party of the Group because
during the year two board members of the Bank were also Board
members at Hikma Pharmaceuticals PLC. Total cash balances at
Capital Bank - Jordan were US D 610,000 (2010: USD 2,169,000).
Loans and overdrafts granted by Capital Bank to the Group amounted
to US D 3,841,000 (2010: US D 48,000) with interest rates ranging
between 8.25% and 3MLI BOR + 1. Total interest expense incurred
against Group facilities was US D 7,000 (2010: US D 18,000). Total
interest income received was Nil (2010: US D 8,000) and total
commission paid in the year was US D 8,000 (2010: US D 76,000).
Jordan International Insurance Company: is a related party of
the Group because one Board member of the Company is also a Board
member at Hikma Pharmaceuticals PLC. Total insurance premiums paid
by the Group to Jordan International Insurance Company during the
year were US D 3,035,000 (2010: US D 2,166,000). The Group's
insurance expense for Jordan International Insurance Company
contracts in the year 2011 was US D 2,902,000 (2010: US D
2,481,000). The amounts due from Jordan International Insurance
Company at the year end were US D 109,000 (2010: Due to US D
66,000).
Mr. Yousef Abd Ali: is a related party of the Group because he
holds a non-controlling interest in Hikma Lebanon of 33%, the
amount owed to Mr. Yousef by the Group as at 31 December 2011 was
US D 150,000 (2010: US D 161,000).
Labatec Pharma: is a related party of the Group because it is
owned by Mr. Samih Darwazah. During 2011 the Group total sales to
Labatec Pharma amounted to US D 338,000 (2010: US D 414,000) and
the Group total purchases from Labatec amounted to US D 3,805,000
(2010: US D 1,373,000). At 31 December 2011 the amount owed to
Labatec Pharma from the Group was US D 753,000 (2010: US D
193,000).
King and Spalding: is a related party of the Group because the
partner of the firm is a board member and the company secretary of
West-Ward. King and Spalding is an outside legal counsel firm that
handles general legal matters for West-Ward. During 2011 fees of US
D 1,216,000 (2010: US D 927,000) were paid for legal services
provided.
Remuneration of key management personnel
The remuneration of the key management personnel (comprising the
Executive and Non-Executive Directors' and certain of senior
management as set out in the Directors' Report) of the Group is set
out below in aggregate for each of the categories specified in IAS
24 Related Party Disclosures. Further information about the
remuneration of the individual directors is provided in the audited
part of the Remuneration Committee Report on pages 76 to 90.
2011 2010
$000 $000
------------------------------ ------- -------
Short-term employee benefits 8,474 9,749
------------------------------ ------- -------
Share-based payments 3,196 2,074
------------------------------ ------- -------
Post-employment benefits 102 79
------------------------------ ------- -------
Other benefits 428 230
------------------------------ ------- -------
12,200 12,132
------------------------------ ------- -------
* See Note 2.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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