TIDMHIK
RNS Number : 0448C
Hikma Pharmaceuticals Plc
10 April 2013
Hikma Pharmaceuticals PLC
2012 Annual Report & Accounts and Notice of 2013 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 2012
-- Notice of 2013 Annual General Meeting
-- Proxy forms for the 2013 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
16 May 2013 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
2012. Where page numbers and notes are mentioned in the Appendix
these refer to page numbers and notes in the Annual Report and
Accounts 2012.
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 Pharmaceuticals PLC is a fast growing 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 2012, Hikma achieved
revenues of $1,108.7 million and profit attributable to
shareholders of $100.3 million.
Appendix 1 - Principal Risks and Uncertainties
The Group's business faces 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 future performance and could cause actual results to
differ materially from expected and historical results.
Operational risks
Risk Potential impact Mitigation
Compliance with regulatory
requirements
----------------------------------------- ----------------------------------
> Failure to comply > Delays in supply or > Commitment to maintain
with applicable regulatory an inability to market the highest levels of
requirements and or develop the Group's quality across all manufacturing
manufacturing standards products facilities
(often referred to > Delayed or denied approvals > Strong global compliance
as 'Current Good for the introduction of function that oversees
Manufacturing Practices' new products compliance across the
or cGMP) > Product complaints or Group
recalls > Remuneration and reward
> Bans on product sales structure that helps
or importation retain experienced personnel
> Disruptions to operations > Continuous staff training
> Plant closure and know-how exchange
> Potential for litigation > On-going development
of standard operating
procedures
----------------------------------------- ----------------------------------
Regulation changes
----------------------------------------- ----------------------------------
> Unanticipated legislative > Restrictions on the > Strong oversight of
and regulatory actions, sale of one or more of local regulatory environments
developments and our products to help anticipate potential
changes affecting > Restrictions on our changes
the Group's operations ability to sell our products > Local operations in
and products at a profit all of our key markets
> Unexpected additional > Representation and/or
costs required to produce, affiliation with local
market or 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 > Inability to deliver submission processes
of price and re-imbursement a positive return on investments across all of our markets
> Lack of approval in R&D, manufacturing > Highly qualified sales
and acceptance of and sales and marketing and marketing teams across
new products by physicians, all markets
patients and other > A diversified product
key decision-makers pipeline with 250 compounds
> Inability to confirm pending approval, covering
safety, efficacy, a broad range of therapeutic
convenience and/or areas
cost-effectiveness > A systematic commitment
of our products as to quality that helps
compared to competitive to secure approval and
products acceptance of new products
> Inability to participate and mitigate potential
in tender sales safety issues
----------------------------------------- ----------------------------------
Product safety
----------------------------------------- ----------------------------------
> Unforeseen product > Interruptions to revenue > Diversification of
safety issues for flow product portfolio across
marketed products, > Costs of recall, potential key markets and therapies
particularly in respect for litigation > Working with stakeholders
of in-licensed products > Reputational damage to understand issues
as they arise
----------------------------------------- ----------------------------------
Product development
----------------------------------------- ----------------------------------
> Failure to secure > Inability to grow sales > Experienced and successful
new products or compounds and increase profitability in-house R&D team, with
for development for the Group specifically targeted
> Lower return on investment product development pathways
in research and development > Continually developing
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 > Loss of products from > Investment in long-term
or extend in-licensing our portfolio relationships with existing
or other co-operation > Revenue interruptions in-licensing partners
agreements with third > Failure to recoup sales > Experienced legal team
parties and marketing and business capable of negotiating
development costs robust agreements with
our partners
> Continuous development
of new partners for licensing
and co-operation
> Diverse revenue model
with in-house R&D capabilities
----------------------------------------- ----------------------------------
Integration of acquisitions
----------------------------------------- ----------------------------------
> Difficulties in > Inability to obtain > Extensive due diligence
integrating any technologies, the advantages that the undertaken as part of
products or businesses acquisitions were intended any acquisition process
acquired to create > Track record of acquisitions
> Adverse impact on our and subsequent business
business, financial condition integration
and results of operations > Human resources personnel
> Significant transaction focussed on managing
and integration costs employee integration
could adversely impact following acquisitions
our financial results > Close monitoring of
acquisition and integration
costs
----------------------------------------- ----------------------------------
Increased competition
----------------------------------------- ----------------------------------
> New market entrants > Loss of market share > On-going portfolio
in key geographies > Decreasing revenues diversification, differentiation
> On-going pricing on established portfolio and renewal through internal
pressure in increasingly R&D, in-licensing and
commoditised markets product acquisition
> 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 and/or commercialise new suppliers of active ingredients
from approved sources products > Long-term relationships
> Inability to procure > Inability to market with reliable raw material
active ingredients existing products as planned suppliers
on commercially viable > Lost revenue streams > Corporate auditing
terms on short notice team continuously monitors
> Inability to procure > Reduced service levels regulatory compliance
the quantities of and damage to customer of API suppliers
active ingredients relationships > Focus on improving
needed to meet market > Inability to supply service levels and optimising
requirements finished product to our our supply chain
customers in a timely
fashion
----------------------------------------- ----------------------------------
Economic and political
and unforeseen events
----------------------------------------- ----------------------------------
> The failure of > Disruptions to manufacturing > Geographic diversification,
control, a change and marketing plans with 26 manufacturing
in the economic conditions > Lost revenue streams facilities and sales
(including the Middle > Inability to market in more than 40 countries
East, North Africa or supply products > Product diversification,
and the Eurozone), with 826 products and
political environment 2,094 dosage strengths
or sustained civil and forms
unrest in any particular
market or country
> Unforeseen events
such as fire or flooding
could cause disruptions
to manufacturing
or supply
----------------------------------------- ----------------------------------
Litigation
----------------------------------------- ----------------------------------
> Commercial, product > Financial impact on > In-house legal counsel
liability and other Group results from adverse with relevant jurisdictional
claims brought against resolution of proceedings experience
the Group > Reputational damage
----------------------------------------- ----------------------------------
Financial risks
Risk Impact Mitigation
Foreign exchange
risk
---------------------------------- ------------------------------
> Exposure to foreign > Fluctuations in the > Entering into currency
exchange movements, Group's net asset values derivative contracts
primarily in the and financial results where possible
European, Algerian, upon translation into > Foreign currency borrowing
Sudanese and Egyptian US dollars > Matching foreign currency
currencies revenues to in-jurisdiction
costs
---------------------------------- ------------------------------
Interest rate risk
---------------------------------- ------------------------------
> Volatility in interest > Fluctuating impact on > Optimisation of fixed
rates profits before taxation and variable rate debt
as a proportion of our
total debt
> Use of interest rate
swap agreements
---------------------------------- ------------------------------
Credit Risk
---------------------------------- ------------------------------
> Inability to recover > Reduced working capital > Clear credit terms
trade receivables funds for settlement of sales
> Concentration of > Risk of bad debt or invoices
significant trade default > Group Credit policy
balances with key limiting credit exposures
customers in the > Use of various financial
MENA region and the instruments such as letters
US of credit, factoring
and credit insurance
arrangements
---------------------------------- ------------------------------
Liquidity Risk
---------------------------------- ------------------------------
> Insufficient free > Reduced liquidity and > Continual evaluation
cash flow and borrowings working capital funds of headroom and borrowing
headroom > Inability to meet short-term > Committed debt facilities
working capital needs > Diversity of institution,
and, therefore, to execute subsidiary and geography
our long term strategic of borrowings
plans
---------------------------------- ------------------------------
Tax
---------------------------------- ------------------------------
> Changes to tax > Negative impact on the > Close observation of
laws and regulations Group's effective tax any intended or proposed
in any of the markets rate changes to tax rules,
in which we operate > Costly compliance requirements both in the UK and in
other 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
Hikma 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 Hikma'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 Hikma's ability to continue as a going concern
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain Hikma's
transactions and disclose with reasonable accuracy at any time the
financial position of Hikma, 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 Hikma'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
European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of Hikma 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 Hikma 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
12 March 2013
Appendix 3 - Related Party Transactions
Details of related party transactions are included in Note 37 of
the Financial Statements on page 155.
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 an ownership percentage of 29.0% at the end of 2012 (2011:
29.2%). 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 $2,977,000 (2011: $610,000). Loans and
overdrafts granted by Capital Bank to the group amounted to $Nil
(2011: $3,841,000) with interest rates ranging between 8.25% and
3MLIBOr + 1%. Total interest expense incurred against group
facilities was $344,000 (2011: $7,000). Total interest income
received was $Nil (2011: $Nil) and total commission paid in the
year was $91,000 (2011: $8,000).
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 $3,423,000 (2011: $3,035,000). The group's insurance
expense for jordan International Insurance Company contracts in the
year 2012 was $2,806,000 (2011: $2,902,000). The amounts due to
jordan International Insurance Company at the year-end were
$154,000 (2011: Due from $109,000).
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 2012 was
$150,000 (2011: $150,000).
Labatec Pharma: is a related party of the group because it is
owned by Mr. Samih Darwazah. During 2012, the group total sales to
Labatec Pharma amounted to $282,000 (2011: $338,000) and the group
total purchases from Labatec Pharma amounted to $1,179,000 (2011:
$3,805,000). At 31 December 2012, the amount owed from Labatec
Pharma to the group was $211,000 (2011: Owed to $753,000).
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 2012 fees of
$45,000 (2011: $1,216,000) were paid for legal services
provided.
Jordan Resources & Investments Company: is a related party
of the group because three Board members of the group are
shareholders in the firm. During 2012 fees of $151,000 (2011: $Nil)
were paid for training services provided.
American University of Beirut: is a related party of the group
because one Board member of the group is also a trustee of the
University. During 2012 fees of $125,000 (2011: $Nil) were paid for
training 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 82 to 103.
2012 2011
$000 $000
Short-term employee benefits 10,460 8,474
------- -------
Share-based payments 3,716 3,196
------- -------
Post-employment benefits 211 102
------- -------
Other benefits 204 428
------- -------
14,591 12,200
------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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