TIDMHIK
RNS Number : 7275J
Hikma Pharmaceuticals Plc
09 April 2015
Hikma Pharmaceuticals PLC
2014 Annual Report & Accounts and Notice of 2015 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 2014
-- Notice of 2015 Annual General Meeting
-- Proxy forms for the 2015 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
14 May 2015 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
2014. Where page numbers and notes are mentioned in the Appendix
these refer to page numbers and notes in the Annual Report and
Accounts 2014.
Enquiries:
Hikma Pharmaceuticals PLC Tel: +44 (0)20 7399 2760
Peter Speirs, Company Secretary
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 2014, Hikma achieved
revenues of $1,489 million and profit attributable to shareholders
of $278 million.
Appendix 1 - Principal Risks and Uncertainties
The Group's business faces risks and uncertainties that could
have a significant effect on its financial condition, results of
operations or future performance and could cause actual results to
differ materially from expected and historical results. The Board
has resolved that the principal risks and uncertainties facing the
Group are:
Risk Description Mitigation and control
---------------------------- ------------------------------------------------------------------ ------------------------------------------------------------
* Manufacturing quality * Situations resulting in poor manufacturing quality of * Global quality programme which leads the
products have the potential to lead to: manufacturing processes in all sites
* Harm to end users resulting in liability and * The 11 FDA approved facilities are regularly assessed
reputational issues by the regulator
* Regulatory action that could result in the closure of * Documented procedures are continuously improved and
facilities and consequential loss of opportunity and staff receive training on those procedures on a
potential failure to supply obligations regular basis
* Delayed or denied approvals for new products * Global quality issues team with extensive experience
of implementing corrective action when issues arise
* Product recalls
* Global product liability insurance and crisis
management team
---------------------------- ------------------------------------------------------------------ ------------------------------------------------------------
* API sourcing * API and raw materials represent one of the Group's * Maintaining alternative API suppliers for each of the
largest cost components Group's products, where possible
* As is typical in the pharmaceuticals industry, a * API suppliers are carefully selected and the Group
significant proportion of the Group's API endeavours to build long-term partnerships with
requirements is provided by a small number of API exclusive supply
suppliers
* The Group has a dedicated plant in Jordan which can
* There is a risk that it will not be possible to synthesise API, where appropriate
secure or maintain adequate levels of API supplies in
the future
* Regulatory approval of a new supplier can be lengthy
and supplies may be disrupted if the Group is forced
to replace a supplier which failed to meet applicable
regulatory standards or terminated its arrangements
with the Group
---------------------------- ------------------------------------------------------------------ ------------------------------------------------------------
* Political and social * Hikma operates in MENA and emerging markets which * Geographic diversity reduces the impact of issues
have historically higher levels of political and arising in one jurisdiction
social instability which can result in an inability
to conduct business in those markets for a
substantial period of time * Extensive experience of operating in these
environments and developing opportunities from change
* Contingency plans in place to transfer manufacture if
key sites are affected
---------------------------- ------------------------------------------------------------------ ------------------------------------------------------------
* Product concentration * A significant proportion of Group profits derive from * Internal marketing and business development
a relatively small portfolio of higher margin departments monitor and assess the market for arising
products opportunities
* Prices of these products are subject to market and * Expansive product portfolio
regulatory forces, which are often difficult to
predict
* Experienced internal regulatory teams developing
products and overseeing joint venture activities
* Prices can change suddenly, which could lead to
significant fluctuations in profitability and
uncertainty about the level of rebates to suppliers * Product related acquisitions (e.g. Bedford
laboratories in 2014)
* Third party pharmaceutical product specialists are
assisting in the development of manufacturing
processes for new generic products where the patent
has recently expired
---------------------------- ------------------------------------------------------------------ ------------------------------------------------------------
* Acquisitions * The Group strategy is to pursue value adding * The mergers and acquisitions team undertake extensive
acquisitions to expand the product portfolio, acquire due diligence of each acquisition, including legal,
manufacturing capabilities and expand in existing and financial and compliance
emerging markets. There is risk of misjudging key
elements of an acquisition or failing to integrate
the assets, particularly where they are distressed * Executive Committee reviews and tests major
acquisitions before they are considered by the Board
* An acquisition of a large-scale target may entail
financing-related risks and operating expenses and * The Board is willing and has demonstrated its ability
significantly increase the Group's leverage if to refuse acquisitions where it considers the price
financed with debt is too high
* Dedicated integration project teams are assigned for
the acquisition, which are led by the business head
responsible for proposing the opportunity
* Following the acquisition of a target, the finance
team, the management team and the Audit Committee
closely monitor its financial and non-financial
performance
* A variety of funding options are available to the
Group to finance acquisitions
---------------------------- ------------------------------------------------------------------ ------------------------------------------------------------
* Conduct * The pharmaceutical industry and certain MENA markets * Code of Conduct approved by the Board, translated
are considered to be higher risk in relation to sales into 7 languages and signed by all employees
practices. Improper conduct by employees could
seriously damage the reputation and licence to do
business * ABC compliance programme monitored by the CREC
* 2,200 employees received ABC compliance training in
2014
---------------------------- ------------------------------------------------------------------ ------------------------------------------------------------
* Financial * The Group is exposed to a variety of financial risks * Extensive financial control procedures have been
similar to most major international manufacturers implemented and are assessed annually as part of the
such as liquidity, exchange rates, tax uncertainty internal audit programme
and debtor default
* A network of banking partners is maintained for
lending and deposits
* Management monitors debtor payments and takes action
where necessary
* Expert external advice is procured to test and
enhance processes and ensure compliance
* Where it is economic and possible to do so, the Group
hedges its exchange rate and interest rate exposure
---------------------------- ------------------------------------------------------------------ ------------------------------------------------------------
Appendix 2 - Directors' Responsibility Statement
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union and Article 4 of the IAS
Regulation and have also chosen to prepare the Parent Company
financial statements under IFRSs as adopted by the EU. Under
company law the Directors must not approve the accounts unless they
are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for
that period. In preparing these financial statements, International
Accounting Standard 1 requires that Directors:
-- 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 IFRSs are 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 adequate 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 and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for protecting shareholder investments and
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
We confirm to the best of our knowledge:
-- The financial statements, prepared in accordance with
International Financial Reporting Standards, 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
-- The strategic 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 that they face
-- The Annual Report and Financial Statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy
By order of the Board
Said Darwazah Mazen Darwazah
Chief Executive Officer Executive Vice Chairman
11 March 2015
Appendix 3 - Related Party Transactions
Details of related party transactions are included in Note 38 of
the Financial Statements on page 162.
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 28.8% at the end of 2014 (2013:
28.9%). 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
one Hikma Pharmaceuticals PLC Board member is also a board member
of Capital Bank - Jordan. Total cash balances at Capital Bank -
Jordan were $5.7 million (31 December 2013: $17.2 million).
Facilities granted by Capital Bank to the Group amounted to $nil
(31 December 2013: $4.7 million). Interest expense/income is within
the market rate.
Arab Bank: is a related party of the Group because one senior
management member in Hikma Pharmaceuticals PLC is also a board
member of Arab Bank PLC. Total cash balances at Arab Bank were
$90.4 million (31 December 2013: $51.5 million). Facilities granted
by Arab Bank to the Group amounted to $115.0 million (31 December
2013: $169.4 million). Interest expense/income is within the market
rate.
Jordan International Insurance Company: is a related party of
the Group because one board member of the company is also a Board
member of Hikma Pharmaceuticals PLC. Total insurance premiums paid
by the Group to Jordan International Insurance Company during the
year were $0.1 million (2013: $0.2 million). The Group's insurance
expense for Jordan International Insurance Company contracts in the
year 2014 was $0.1 million (2013: $0.4 million). The amounts due to
Jordan International Insurance Company at the year end were $nil
(2013: Due to $0.1 million).
Labatec Pharma: is a related party of the Group because it is
owned by Mr Samih Darwazah. During 2014, the Group total sales to
Labatec Pharma amounted to $0.5 million (2013: $0.4 million). At 31
December 2014, the amount owed from Labatec Pharma to the Group
was
$0.1 million (2013: Owed from $nil).
Jordan Resources & Investments Company: is a related party
of the Group because three Board members of the Group are
shareholders in the firm. During 2014, fees of $nil (2013: $0.2
million) 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 2014, fees of $0.1 million (2013: $0.2 million)
were paid. At 31 December 2014, the amount owed to American
University of Beirut
from the Group amounted to $nil (2013: owed $0.1 million).
HikmaCure: the Group held a 50:50 joint venture ('JV') agreement
with MIDROC pharmaceuticals Limited. The JV is called HikmaCure.
Hikma and MIDROC will invest in HikmaCure in equal proportions and
have committed to provide up to $22 million each in cash, of which
$2.5 million has been paid in previous periods.
Unimark: the Group held a non-controlling interest of 23.1% in
the Indian company Unimark Remedies Limited ('Unimark') at 31
December 2014 (31 December 2013: 23.1%). During 2014, the Group
paid an amount of $2.5 million in relation to a products
development agreement (31 December 2013: $3.0 million).
Haosun: the Group held a non-controlling interest of 30.1% in
Hubei Haosun Pharmaceutical Co., Ltd ('Haosun') at 31 December 2014
(31 December 2013: 30.1%). During 2014, the total purchases from
Haosun were $1.0 million (31 December 2013: $0.2 million).
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 90 to 109.
2014 2013
$m $m
------------------------------ ----- -----
Short-term employee benefits 15.7 14.9
------------------------------ ----- -----
Share-based payments 2.4 2.4
------------------------------ ----- -----
Post-employment benefits 0.1 0.2
------------------------------ ----- -----
Other benefits 0.2 0.2
------------------------------ ----- -----
18.4 17.7
------------------------------ ----- -----
This information is provided by RNS
The company news service from the London Stock Exchange
END
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