TIDMHIK
RNS Number : 4236W
Hikma Pharmaceuticals Plc
19 August 2015
PRESS RELEASE
Hikma delivers solid H1 performance in line with expectations
and excellent strategic progress
Group on track to achieve guidance for 2015
Strategic acquisition and strong recovery in MENA create
momentum for future growth
London, 19 August 2015 - Hikma Pharmaceuticals PLC ("Hikma")
(LSE: HIK) (NASDAQ Dubai: HIK) (OTC: HKMPY), the fast growing
multinational pharmaceutical group, today reports its interim
results for the six months ended 30 June 2015.
H1 2015 financial highlights
-- Group revenue of $709 million, in line with H1 2014 in
constant currency,[1] or down 4% on a reported basis, with good
performances from Branded and Injectables, offset by the expected
decline in specific market opportunities in Generics
-- Full year Group revenue guidance maintained at around 6%
growth in constant currency, or 2% on a reported basis
-- Group adjusted operating profit of $204 million, compared with $244 million in H1 2014,
-- Basic EPS of 67.3 cents per share, down 21%
-- Interim dividend of 11.0 cents per share, in line with total dividend paid in H1 2014
H1 2015 strategic highlights
-- Roxane acquisition will transform Hikma's US business,
establishing Hikma as the sixth[2] largest US generics company
-- Successful integration of Bedford is delivering new approvals for US Injectables
-- Inaugural bond issue raised $500 million, providing financial
flexibility to support future growth
-- Partnership with Vitabiotics, announced today, broadens
Hikma's MENA portfolio with leading OTC brands
-- New product introductions across all countries and markets -
launched 40 products and received 118 product approvals, expanding
and enhancing Hikma's global product portfolio
H1 2015 business segment highlights
Branded
-- Branded revenue of $282 million, up 16% in constant currency,
or 9% on a reported basis, with a good performance in most markets
and a strong recovery in Algeria
-- Branded adjusted operating profit of $58 million, up 24% in
constant currency, or 7% on a reported basis
-- On track to deliver full year guidance of high single digit
revenue growth, or low-teens in constant currency, and an
improvement in adjusted operating margin
Injectables
-- Global Injectables revenue of $344 million, in line with H1
2014, as expected, due to continued success in capturing specific
market opportunities
-- Injectables adjusted operating margin remains extremely
strong at 42.4%, compared with 41.0% in H1 2014
-- Continue to expect full year revenue in line with 2014 and a
robust adjusted operating margin of around 35%
Generics
-- Generics revenue of $79 million, down 38%, reflects the expected decline in specific market opportunities
-- Generics adjusted operating profit of $33 million, with an
adjusted operating margin of 41.8%
-- Expect full year revenue to be in the range of $175 million
to $200 million depending on the growth of colchicine sales over
the second half of the year
Said Darwazah, Chief Executive Officer of Hikma, said:
"We have had an excellent start to the year. Our financial
results are in line with expectations and we are making strong
strategic progress across the Group.
The acquisition of Roxane, agreed in July, will transform our
business in the US, adding complementary and well differentiated
products, an attractive pipeline, proven R&D capabilities and
greater overall scale. It also provides an excellent opportunity to
expand our product portfolio in other markets, particularly the
MENA region.
Bedford is now well integrated, we have launched the first of
their generic injectable products and we are confident that we will
continue to bring a steady stream of these products back to the
market. The addition of Bedford and Roxane to our US businesses
will enable us to capture growth opportunities in more specialised
segments of the US generics market.
Our businesses in MENA are performing very well and we are
strongly positioned for continued growth. Our partnership with
Vitabiotics, announced today, will leverage our marketing and sales
capabilities in MENA and broaden our product portfolio, and is a
great example of how we are implementing our growth strategy in the
region.
We have taken important strategic steps this year and we are
very excited about the opportunities these bring to the Group.
Across our geographies, we have strong market positions, we are
executing well and we are very confident in the outlook for 2015
and beyond."
Group financial highlights
Summary P&L H1 2015 H1 2014 Change
$ million
----------------------------------------- -------- -------- -------
Revenue 709 738 -4%
----------------------------------------- -------- -------- -------
Gross profit 400 441 -9%
----------------------------------------- -------- -------- -------
Gross margin 56.4% 59.8% -3.4pp
----------------------------------------- -------- -------- -------
Operating profit 194 236 -18%
----------------------------------------- -------- -------- -------
Adjusted operating profit ([3]) 204 244 -16%
----------------------------------------- -------- -------- -------
Adjusted operating margin 28.8% 33.1% -4.3pp
----------------------------------------- -------- -------- -------
EBITDA([4]) 227 269 -16%
----------------------------------------- -------- -------- -------
Profit attributable to shareholders 134 169 -21%
----------------------------------------- -------- -------- -------
Adjusted profit attributable to
shareholders(3) 142 176 -19%
----------------------------------------- -------- -------- -------
Basic earnings per share (cents) 67.3 85.4 -21%
----------------------------------------- -------- -------- -------
Adjusted basic earnings per share
(cents) (3) 71.4 88.9 -20%
----------------------------------------- -------- -------- -------
Dividend per share (cents) 11.0 7.0 +57%
----------------------------------------- -------- -------- -------
Special dividend per share (cents) -- 4.0 -100%
----------------------------------------- -------- -------- -------
Total dividend per share (cents) 11.0 11.0 --
----------------------------------------- -------- -------- -------
Net cash flow from operating activities 125 200 -38%
----------------------------------------- -------- -------- -------
Enquiries
Hikma Pharmaceuticals PLC
Susan Ringdal, VP Corporate Strategy and Director of Investor
Relations +44 (0)20 7399 2760/ +44 7776 477050
Lucinda Henderson, Deputy Director of Investor Relations +44
(0)20 7399 2765/ +44 7818 060211
Zeena Murad, Investor Relations Manger +44 (0)20 7399 2768/ +44
7771 665277
FTI Consulting
Ben Atwell/ Matthew Cole +44 (0)20 3727 1000
A presentation for analysts and investors will be held today at
09:30 at FTI Consulting, 200 Aldersgate, Aldersgate Street London
EC1A 4HD. To join via conference call please dial: +44 (0) 20 3003
2666 or 0808 109 0700 (UK toll free). Alternatively you can listen
live via our website at www.hikma.com. A recording of both the
meeting and the call will be available on the Hikma website. The
contents of this website do not form part of this interim
management report.
Interim management report
The interim management report set out below summarises the
performance of Hikma's three main business segments, Branded,
Injectables and Generics, for the six months ended 30 June
2015.
Group revenue by business segment
$ million H1 2015 H1 2014
------------- ---------- ----------
Branded 282 40% 259 35%
------------- ---- ---- ---- ----
Injectables 344 48% 346 47%
------------- ---- ---- ---- ----
Generics 79 11% 128 17%
------------- ---- ---- ---- ----
Others 4 1% 5 1%
------------- ---- ---- ---- ----
Group revenue by region
$ million H1 2015 H1 2014
---------------- ---------- ----------
MENA 322 45% 296 40%
---------------- ---- ---- ---- ----
US 344 49% 396 54%
---------------- ---- ---- ---- ----
Europe and ROW 43 6% 46 6%
---------------- ---- ---- ---- ----
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
Constant currency impact
Summary P&L H1 2015 H1 2015 H1 2014 Actual Constant
$ million Actual Constant Actual change currency
currency change
-------------------- -------- ---------- -------- -------- ----------
Group
-------------------- -------- ---------- -------- -------- ----------
Revenue 709 739 738 -4% 0%
-------------------- -------- ---------- -------- -------- ----------
Adjusted operating
profit 204 213 244 -16% -15%
-------------------- -------- ---------- -------- -------- ----------
Adjusted operating
margin 28.8% 28.8% 33.1% -4.3pp -4.3pp
-------------------- -------- ---------- -------- -------- ----------
Branded
-------------------- -------- ---------- -------- -------- ----------
Revenue 282 301 259 +9% +16%
-------------------- -------- ---------- -------- -------- ----------
Adjusted operating
profit 58 67 54 +7% +24%
-------------------- -------- ---------- -------- -------- ----------
Adjusted operating
margin 20.6% 22.3% 20.8% -0.2pp +1.5pp
-------------------- -------- ---------- -------- -------- ----------
Injectables
-------------------- -------- ---------- -------- -------- ----------
Revenue 344 355 346 -1% +3%
-------------------- -------- ---------- -------- -------- ----------
Adjusted operating
profit 146 146 142 +3% +3%
-------------------- -------- ---------- -------- -------- ----------
Adjusted operating
margin 42.4% 41.1% 41.0% +1.4pp +0.1pp
-------------------- -------- ---------- -------- -------- ----------
Generics
-------------------- -------- ---------- -------- -------- ----------
Revenue 79 79 128 -38% -38%
-------------------- -------- ---------- -------- -------- ----------
Adjusted operating
profit 33 33 78 -58% -58%
-------------------- -------- ---------- -------- -------- ----------
Adjusted operating
margin 41.8% 41.8% 60.9% -19.1pp -19.1pp
-------------------- -------- ---------- -------- -------- ----------
Branded
Highlights:
-- Branded revenue up 9%, or 16% in constant currency, reflecting a strong recovery in Algeria
-- Adjusted operating profit up 7%, or 24% in constant currency
-- Partnership with Vitabiotics broadens Hikma's MENA portfolio with leading OTC brands
Branded revenue increased 9% to $282 million in H1 2015. On a
constant currency basis, Branded revenue increased 16%, before the
impact of adverse movements in the Algerian dinar, Moroccan dirham,
Tunisian dinar, Egyptian pound and Sudanese pound against the US
dollar.
During the period, we achieved good growth across most markets
through our strategic focus on higher value products, continued new
product launches and focused sales and promotion strategies. This
more than offset lower sales in Iraq and Libya, which continue to
be impacted by political disruptions.
We performed very well in the Gulf Cooperation Council ("GCC")
and Algeria, our two largest MENA markets. In the GCC, revenue grew
in the high teens, driven by stronger distribution capabilities,
the broadening of our customer base with increased focus on
institutions and the prioritisation of strategic products. In
Algeria we had a strong recovery, growing revenue by over 30%. We
are benefitting from the successful restructuring implemented in
2014 and recent product launches.
During H1 2015, the Branded business launched a total of 23
products across all markets, including one new compound and two new
dosage forms and strengths. The Branded business also received 70
regulatory approvals across the MENA region.
Revenue from in-licensed products increased from $106 million to
$112 million in H1 2015, representing 40% of Branded revenue,
compared with 41% in H1 2014. We signed two new licensing
agreements during H1 2015, which will support our continued focus
on higher value products in growing therapeutic areas. One of these
agreements, announced today, is with Vitabiotics, the UK's largest
nutraceutical and vitamin company. Under the terms of the
agreement, Hikma has the exclusive rights to register, market,
distribute, and sell five of Vitabiotics' leading specialist
products in 15 of its MENA markets. In addition, Hikma will have
the exclusive rights to market, distribute and sell the full
Vitabiotics product range in five of these markets. Hikma's large
sales and marketing teams are well positioned to drive strong
demand for Vitabiotics' rich portfolio of products, which include
some of the fastest growing supplements in the UK and eight brand
leaders.
Branded gross profit increased 5% to $136 million. Gross margin
was 48.2%, compared with 49.8% in H1 2014. Adverse currency
movements, slightly higher tender sales and a small increase in
overhead costs impacted gross profit and margin during the
period.
Adjusted operating profit increased 7% to $58 million in H1
2015, after excluding amortisation of intangibles of $4 million and
one-off severance costs of $5 million. In constant currency,
adjusted operating profit increased 24% to $67 million. Adjusted
operating margin was 20.6%, or 22.3% in constant currency, compared
with 20.8% in H1 2014. This margin improvement primarily reflects
the significant growth in revenue achieved in H1 2015.
For the full year, we continue to expect reported Branded
revenue growth in the high single digits and a slight improvement
in adjusted operating margin. On a constant currency basis, we
continue to expect Branded revenue growth in the low-teens and
adjusted operating margin to improve by around 200 basis
points.
Injectables
Highlights:
-- Global Injectables revenue of $344 million and an extremely
strong adjusted operating margin of 42.4%
-- Maintained good performance in the US and achieved good
growth in MENA and Europe in constant currency
-- Received approvals for the first two Bedford products, ahead of schedule
Injectables revenue by region
$ million H1 2015 H1 2014
---------------- ---------- ----------
US 266 77% 268 77%
---------------- ---- ---- ---- ----
MENA 43 13% 40 12%
---------------- ---- ---- ---- ----
Europe and ROW 35 10% 38 11%
---------------- ---- ---- ---- ----
Total 344 346
---------------- ---- ---- ---- ----
Global Injectables revenue was $344 million in H1 2015, in line
with $346 million in H1 2014 and our expectations, following the
extremely strong performance in the prior year. On a constant
currency basis, global Injectables revenue increased 3%.
US Injectables revenue was $266 million, in line with $268
million in H1 2014. Despite increased competition on certain higher
value products, we have been able to sustain strong sales across
our broad portfolio and have continued to be successful in
capturing specific market opportunities.
In MENA, Injectables revenue grew 8% to $43 million. In constant
currency, revenue grew by 15%. We have enhanced our focus on sales
and marketing for injectable products in MENA and expanded our
dedicated Injectables team.
In Europe, revenue decreased 8% to $35 million, but increased
13% in constant currency, reflecting strong growth in both own drug
and contract manufacturing sales. During the period, we expanded
our EU registration teams and sales and marketing capabilities in
order to cover new European markets. These efforts are expected to
start generating sales from 2016.
Injectables gross profit was $215 million, in line with H1 2014,
and gross margin was 62.5%, compared with 62.1% in H1 2014. The
benefit of favourable currency movements was partially offset by a
slight change in the mix of sales in the US.
Operating profit increased 4% and adjusted operating profit
increased 3% to $146 million. We maintained good control of
operating costs, even after absorbing the increase in R&D
investment related to the transfer of the Bedford products and the
additional costs of maintaining the Ben Venue manufacturing site,
which remains dormant. Adjusted operating margin increased to
42.4%, up from 41.0% in H1 2014.
During H1 2015, the Injectables business launched a total of 16
products across all markets, including three new compounds and
three new dosage forms and strengths. The Injectables business also
received a total of 46 regulatory approvals across all regions and
markets, namely 23 in MENA, 19 in Europe, and four in the US.
Bedford is now well integrated into our global Injectables
business and we are ahead of schedule with the transfer of the
Bedford products to our manufacturing sites. We received approvals
for the first two Bedford products in May and July, demonstrating
the strength of our R&D and regulatory capabilities, and we are
confident that we will achieve our target of 20 Bedford product
launches by 2017.
In October 2014 we received a warning letter from the US Food
and Drug Administration ("US FDA") relating to an inspection of our
Portuguese facility in March 2014. This has not impacted the
manufacture or distribution of products from this facility and we
have not incurred any material remediation costs. The facility was
re-inspected by the US FDA in June 2015 and we are awaiting further
communication from the US FDA regarding the status of the
facility.
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
Following the extremely strong performance in 2014, which
included the benefit from a number of high value products, we
continue to expect global Injectables revenue to be maintained at
the same level in 2015. Although we expect a shift in product mix
in the second half, with lower revenue from specific market
opportunities, we continue to expect a robust adjusted operating
margin of around 35%, even after including the Bedford R&D
costs and the costs of maintaining the manufacturing site.
Generics
Highlights:
-- Agreed to acquire Roxane Laboratories, which will transform
our position in the US generics market
-- Generics revenue of $79 million and adjusted operating profit
of $33 million, with an adjusted operating margin of 41.8%
Generics revenue was $79 million, compared with $128 million in
H1 2014. As expected, revenue from the specific market
opportunities that drove the exceptionally strong performance in H1
2014 declined substantially in H1 2015, due to greater competition
in the market. Across the rest of the Generics business, revenue
from legacy products grew strongly, reflecting good demand and the
benefit of products launched later in 2014.
In January 2015, we re-launched colchicine 0.6mg capsules under
the brand name Mitigare(TM) alongside an authorised generic of
Mitigare(TM). As we anticipated, sales of these products were
limited in H1 2015. In July 2015, we established a nationwide
salesforce who are now actively promoting these products to doctors
and pharmacists.
Generics gross profit was $48 million in H1 2015, compared with
$95 million in H1 2014, and gross margin was 60.8%, compared with
74.2% in H1 2014. Operating profit was $33 million, compared with
$78 million in H1 2014. Adjusted operating margin was 41.8%,
compared with 60.9% in H1 2014 due to the significant decline in
revenue from specific market opportunities.
In the second half of 2015, we expect a strong performance in
the legacy portfolio and the continued decline of specific market
opportunities. Depending on how quickly sales of colchicine ramp up
in the second half, we expect the Generics business to deliver
revenue in the range of $175 million to $200 million for the full
year in 2015.
In July 2015, we agreed to acquire[5] Roxane Laboratories Inc.
and Boehringer Ingelheim Roxane Inc. (together, "Roxane"), from
Boehringer Ingelheim ("Boehringer").[6] Under the terms of the
acquisition, on closing of the transaction Hikma will pay $1.18
billion in cash and will issue 40 million new Hikma shares to
Boehringer (representing 16.71% of Hikma's issued share capital
immediately following closing and admission). Based on an agreed
issue price for the new Hikma shares of GBP23.50 per share and a
US:GBP exchange rate of 1.56:1, the aggregate value of the gross
consideration payable on closing will be approximately $2.65
billion. Hikma has also agreed to make contingent cash payments of
up to $125 million, subject to the achievement of certain
performance milestones.
The acquisition of Roxane will transform Hikma's position and
scale in the US generics market, establishing Hikma as the sixth
largest company by revenue[7]. It adds significant breadth to our
US portfolio, bringing 88 highly differentiated products in
specialised and niche segments of the market, including oncology,
respiratory, extended release and controlled substances and
enhances our pipeline, adding 89 R&D projects, including 57
Paragraph IV products, 13 of which are first-to-file opportunities.
The acquisition will strengthen our platform for sustainable
long-term growth, adding Roxane's highly experienced R&D team
with a successful track record of bringing new and differentiated
products to market as well as a best-in-class manufacturing
facility and technological capabilities. We expect Roxane to
deliver revenue of $725 million to $775 million in 2017 and an
EBITDA margin of around 35% over the medium-term. We expect the
acquisition to be accretive to adjusted earnings per share ("EPS")
in 2016 and very strongly accretive to adjusted EPS thereafter.
Other businesses
Other businesses, which primarily comprise Arab Medical
Containers, a manufacturer of plastic specialised medicinal sterile
containers, International Pharmaceuticals Research Centre, which
conducts bio-equivalency studies, and the API manufacturing
division of Hikma Pharmaceuticals Limited Jordan, contributed
revenue of $4 million, compared with $5 million in H1 2014. These
other businesses delivered an operating loss of $3 million in H1
2015, in line with H1 2014.
Group
Group revenue decreased 4% to $709 million, compared with $738
million in H1 2014. Group gross profit decreased 9% to $400 million
and Group gross margin was 56.4%, compared with 59.8% in H1
2014.
Group operating expenses were $206 million, in line with H1
2014. Excluding the amortisation of intangible assets (excluding
software) and exceptional items,([8]) adjusted Group operating
expenses were $196 million, in line with $197 million in H1 2014.
The paragraphs below address the Group's main operating expenses in
turn.
Sales and marketing expenses were $81 million, down 11% compared
with H1 2014. The reduction in sales and marketing expenses is due
primarily to the timing of sales and marketing activities in the
MENA region and lower employee benefits and other sales expenses in
the US compared to H1 2014. We expect Group sales and marketing
expenses to be higher in the second half of 2015.
General and administrative expenses were $86 million, up 12%
compared with H1 2014. Excluding one-off severance costs in MENA
and acquisition related expenses, G&A expenses increased by $4
million, or 5%, primarily due to higher corporate costs.
Group R&D expenditure was $20 million, compared with $19
million in H1 2014. We continue to invest in R&D across our
three businesses to drive future growth. In addition, we are
supplementing our internal R&D efforts with other
product-related investments. In H1 2015, these investments amounted
to $11 million and were capitalised on the balance sheet. In total,
R&D and product-related investment represented $31 million (4%
of Group revenue) during the period, in line with H1 2014. We
expect this to increase in H2 2015, as we continue to transfer the
Bedford products and focus on continued new product development
across the Group.
Other net operating expenses increased by $1 million to $19
million. Excluding exceptional items, these expenses increased by
$3 million, primarily reflecting the additional costs of
maintaining the Ben Venue manufacturing facility that was acquired
in H2 2014, partially offset by a reduction in slow moving
inventory provisions.
Operating profit for the Group decreased 18% to $194 million in
H1 2015. Group operating margin decreased to 27.4%, compared with
32.0% in H1 2014. On an adjusted basis, Group operating profit
decreased by $40 million, or 16%, to $204 million and operating
margin decreased to 28.8%, down from 33.1% in H1 2014. Good growth
in the profitability of the Branded business and a slight increase
in the profitably of the Injectables business was offset by the
lower contribution from specific market opportunities for the
Generics business, as expected.
Research & Development([9])
The Group's product portfolio continues to grow as a result of
our in-house product development efforts. During the H1 2015, we
launched five new compounds, expanding the Group portfolio to 587
compounds in 1,678 dosage forms and strengths.([10]) We manufacture
and/or sell 76 of these compounds under license from the
originator.
Across all businesses and markets, a total of 40 products were
launched during H1 2015. In addition, the Group received 118
approvals.
Products
pending
Products approval
Total marketed Products launched in H1 approved as at 30
products 2015 in H1 2015 June 2015
------------- ------------------------- -------------------------------------------- -------------- --------------
Total
Dosage launches Total Total pending
forms New dosage across approvals approvals
and New forms and all across all across all
Compounds strengths compounds strengths countries([11]) countries(11) countries(11)
------------- ---------- ------------- ------------- ----------- ---------------- -------------- --------------
Branded 377(10) 1,125 1 2 23 70 388
Injectables 184 485 3 3 16 46 443
Generics 26 68 1 1 1 2 62
Group 587 1,678 5 6 40 118 893
To ensure the continuous development of our product pipeline, we
submitted 126 regulatory filings in H1 2015 across all regions and
markets. As of 30 June 2015, we had a total of 893 pending
approvals across all regions and markets and a total of 147
products under development.
Results from associated companies
During the H1 2015, we recognised a loss from associated
companies of $2 million related to our minority interest in Unimark
Remedies Limited ("Unimark"). This compared with a loss of $2
million in H1 2014.
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
Net finance expense
Net finance expense during the period was $22 million, up from
$15 million in H1 2014. The increase is due to higher borrowings in
H1 2015 compared with H1 2014, principally the bridge loan entered
into in July 2014 to provide the initial financing for the Bedford
acquisition and the issuance of the $500 million, 4.25% eurobond in
April 2015. We continue to expect net finance expense in 2015 to be
around $54 million.
Profit before tax
Profit before tax for the Group decreased by 22% to $170
million, compared with $219 million in H1 2014. Adjusted profit
before tax decreased by 21% to $180 million.
Tax
The Group incurred a tax expense of $35 million, compared with
$48 million in H1 2014. The effective tax rate was 20.6%, compared
with 21.9% H1 2014. We continue to expect the full year effective
tax rate to be between 21% and 23%.
Profit attributable to equity holders of the parent
The Group's profit attributable to equity holders of the parent
decreased by 21% to $134 million in H1 2015. Adjusted profit
attributable to equity holders of the parent decreased by 19% to
$142 million.
Earnings per share
Basic earnings per share decreased by 21% to 67.3 cents,
compared with 85.4 cents in H1 2014. Diluted earnings per share
decreased by 21% to 67.0 cents, compared with 84.5 cents in H1
2014. Adjusted diluted earnings per share was 71.0 cents, a
decrease of 19% over H1 2014.
Dividend
The Board has declared an interim dividend of 11.0 cents per
share (approximately 7.0 pence per share), in line with the total
dividend per share for H1 2014.[12] The interim dividend will be
paid on 25 September 2015 to eligible shareholders on the register
at the close of business on 28 August 2015. The ex-dividend date is
27 August 2015 and the final date for currency elections is 11
September 2015.
Net cash flow, working capital and net debt
The Group generated operating cash flow of $125 million in H1
2015, down $75 million from $200 million in H1 2014. This reflects
the lower contribution from specific market opportunities for the
Generics business this year. Working capital days improved by 8
days to 192 days in H1 2015, compared with 200 days in H1 2014,
primarily due to lower inventory days in MENA.
Capital expenditure was $31 million, compared with $31 million
in H1 2014. In MENA, $20 million was spent on maintaining and
upgrading our equipment and facilities across a number of markets.
The remaining $11 million was spent in the US and Europe, primarily
to expand our Injectables manufacturing capacity and
capabilities.
Group net debt was $283 million at 30 June 2015, broadly in line
with $274 million at 31 December 2014. In April 2015 we
strengthened our financing capabilities with the issuance of a $500
million, 4.25% eurobond due in April 2020. The proceeds were used
in part to refinance existing debt facilities, including the bridge
loan of $225 million that was used to finance the Bedford
acquisition in 2014.
In July 2015, the Group agreed to acquire Roxane for a gross
cash consideration of $1.2 billion and the issuance of 40 million
new Hikma shares to Boehringer, such that the aggregate value of
the gross consideration is $2.65 billion.[13] The cash
consideration is being funded through a combination of cash and the
utilisation of new and existing bank facilities. The acquisition is
expected to close in the fourth quarter of 2015.
Balance sheet
During the period, shareholder equity was negatively impacted by
an unrealised foreign exchange loss of $40 million, primarily
reflecting adverse movements in the adverse movements in the Euro,
Algerian dinar, Moroccan dirham, Tunisian dinar and Egyptian pound
against the US dollar and the revaluation of net assets denominated
in these currencies.
Summary and outlook
We delivered a good performance in H1 2015, with a strong
recovery in our Branded business and stable sales and profitability
in our Injectables business. This was offset by a lower
contribution from the Generics business due to the decline in
specific market opportunities, as expected.
We continue to expect the Group to grow full year revenue by
around 6% in constant currency, or around 2% reported, assuming the
high end of our guidance range for the Generics business.
For the full year, we continue to expect reported Branded
revenue growth in the high single digits and a slight improvement
in adjusted operating margin. On a constant currency basis, we
continue to expect Branded revenue growth in the low-teens and
adjusted operating margin to improve by around 200 basis
points.
Following the extremely strong performance in 2014, which
included the benefit from a number of high value products, we
continue to expect global Injectables revenue to be maintained at
the same level in 2015. We expect a robust adjusted operating
margin of around 35%, even after including the Bedford R&D
costs and the costs of maintaining the Ben Venue manufacturing
site.
In the second half of 2015 we expect the Generics business to
deliver a strong performance from the legacy portfolio, with a
continued decline of specific market opportunities. Depending on
how quickly sales of colchicine ramp up in the second half, we
expect the Generics business to deliver revenue in the range of
$175 million to $200 million for the full year in 2015.
Overall, we are pleased with the performance of the Group in H1
2015 and we are confident in the outlook for the remainder of the
year, as well as the Group's medium and long term growth
prospects.
Going concern statement
As set out 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' gives a
true and fair view of the assets and liabilities, financial
position and profit or loss of the issuer, or the undertakings
included in the consolidation as a whole as required by DTR
4.2.4R;
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 Khalid Nabilsi
Chief Executive Officer Chief Financial Officer
18 August 2015
Cautionary statement
This interim management report has been prepared solely to
provide additional information to shareholders to assess the
Group's strategies and the potential for those strategies to
succeed. It should not be relied on by any other party or for any
other purpose.
Forward looking statements
This announcement may contain statements which are, or may be
deemed to be, "forward looking statements" which are prospective in
nature. All statements other than statements of historical fact may
be forward-looking statements. Often, but not always,
forward-looking statements can be identified by the use of forward
looking words such as "intends", "believes", "anticipates",
"expects", "estimates", "forecasts", "targets", "aims", "budget",
"scheduled" or words or terms of similar substance or the negative
thereof, as well as variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"should", "would", "might" or "will" be taken, occur or be
achieved.
Where included, such statements have been made by Hikma in good
faith based on the information available to it up to the time of
the approval of this announcement. By their nature, forward looking
statements are based on current expectations, assumptions and
projections about future events and therefore 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 and a variety of factors, many of which are
beyond Hikma's control, could cause actual results to differ
materially from those projected or implied in any forward-looking
statements. 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, Hikma 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. Except as expressly
provided in this announcement, no forward looking or other
statements have been reviewed by the auditors of Hikma. All
subsequent oral or written forward looking statements attributable
to the Hikma or any of its members, directors, officers or
employees or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statement above.
INDEPENDENT REVIEW REPORT TO HIKMA PHARMACEUTICALS PLC
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
We have been engaged by Hikma Pharmaceuticals PLC (the
'Company') to review the condensed set of financial statements in
the half-yearly financial report for the six months ended 30 June
2015 which comprises the condensed consolidated income statement,
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 20. 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 it 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 Kingdom's
Financial Conduct 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 2015 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 Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
18 August 2015
Hikma Pharmaceuticals PLC
Condensed consolidated income statement
H1 H1 FY
Note 2015 2014 2014
$m (Unaudited) $m (Unaudited) $m (Audited)
------------------- -------------------- ------------------
Continuing operations
Revenue 3 709 738 1,489
Cost of sales 3 (309) (297) (638)
------------------- -------------------- ------------------
Gross profit 3 400 441 851
Sales and marketing expenses (81) (91) (171)
General and administrative expenses (86) (77) (185)
Research and development expenses (20) (19) (55)
Other operating expenses (net) (19) (18) (38)
------------------- -------------------- ------------------
Total operating expenses (206) (205) (449)
Adjusted operating profit 204 244 427
Exceptional items
- Severance costs 4 (5) - -
- Proceeds from legal claims 4 2 - -
- Acquisition related expenses 4 (1) (1) (11)
Other adjustments:
Intangible amortisation* 4 (6) (7) (14)
------------------------------------ ----- ------------------- -------------------- ------------------
Operating profit 3 194 236 402
Share of results of associated
companies 8 (2) (2) (6)
Finance income 1 1 4
Finance expense (23) (16) (38)
Profit before tax 170 219 362
Tax 5 (35) (48) (80)
Profit for the period/year 135 171 282
------------------- -------------------- ------------------
Attributable to:
Non-controlling interests 1 2 4
Equity holders of the parent 134 169 278
------------------- -------------------- ------------------
135 171 282
=================== ==================== ==================
Earnings per share (cents)
Basic 7 67.3 85.4 140.4
=================== ==================== ==================
Diluted 7 67.0 84.5 139.0
=================== ==================== ==================
Adjusted basic 7 71.4 88.9 151.0
=================== ==================== ==================
Adjusted diluted 7 71.0 88.0 149.5
=================== ==================== ==================
On this page and throughout this interim financial information
"H1 2015" refers to the six months ended 30 June 2015, "H1 2014"
refers to the six months ended 30 June 2014 and "FY 2014" refers to
the year ended 31 December 2014.
* Intangible amortisation comprises the amortisation of
intangible assets other than software.
Hikma Pharmaceuticals PLC
Condensed consolidated statement of comprehensive income
H1 H1 FY
2015 2014 2014
$m (Unaudited) $m (Unaudited) $m (Audited)
------------------- ------------------- -----------------
Profit for the period/year 135 171 282
Items that may be reclassified subsequently
to profit or loss:
-Cumulative effect of change in fair
value of financial derivatives - - 1
-Exchange difference on translation
of foreign operations (40) (7) (53)
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
Total comprehensive income for the period/year 95 164 230
=================== =================== =================
Attributable to:
Non-controlling interests 1 2 3
Equity holders of the parent 94 162 227
------------------- ------------------- -----------------
95 164 230
=================== =================== =================
Hikma Pharmaceuticals PLC
Condensed consolidated balance sheet
Note 30 June 30 June 31 December
2015 2014 2014
Non-current assets $m (Unaudited) $m (Unaudited) $m (Audited)
------------------- -------------------- ----------------------
Intangible assets 585 444 602
Property, plant and equipment 504 447 514
Investment in associates and joint
ventures 8 14 20 16
Deferred tax assets 64 92 67
Financial and other non-current
assets 43 38 39
-------------------
1,210 1,041 1,238
------------------- -------------------- ----------------------
Current assets
Inventories 9 280 309 273
Income tax asset 16 3 10
Trade and other receivables 10 484 418 439
Collateralised and restricted cash 5 7 8
Cash and cash equivalents 490 282 280
Other current assets 11 22 3 3
1,297 1,022 1,013
------------------- -------------------- ----------------------
Total assets 2,507 2,063 2,251
=================== ==================== ======================
Current liabilities
Bank overdrafts and loans 14 165 203 393
Obligations under finance leases 1 1 1
Trade and other payables 12 234 219 248
Income tax provision 64 58 65
Other provisions 25 20 25
Other current liabilities 13 107 109 109
596 610 841
------------------- -------------------- ----------------------
Net current assets 701 412 172
------------------- -------------------- ----------------------
Non-current liabilities
Long-term financial debts 14 589 237 145
Obligations under finance leases 23 23 23
Deferred tax liabilities 23 25 25
Derivative financial instruments 1 1 -
Other non-current liabilities 1 - 1
-------------------
637 286 194
------------------- -------------------- ----------------------
Total liabilities 1,233 896 1,035
=================== ==================== ======================
Net assets 1,274 1,167 1,216
=================== ==================== ======================
Equity
Share capital 35 35 35
Share premium 281 281 281
Own shares (1) (3) (1)
Other reserves 941 836 882
------------------- -------------------- ----------------------
Equity attributable to equity holders
of the parent 1,256 1,149 1,197
Non-controlling interests 18 18 19
------------------- -------------------- ----------------------
Total equity 1,274 1,167 1,216
=================== ==================== ======================
The financial statements of Hikma Pharmaceuticals PLC,
registered number 5557934, were approved by
the Board of Directors and signed on its behalf by:
Said Darwazah Mazen Darwazah
Director Director
18 August 2015
Hikma Pharmaceuticals PLC
Condensed consolidated statement of changes in equity
Total
equity
attributable
Merger to equity
and shareholders
Revaluation Translation Retained Total Share Share Own of the Non-controlling Total
reserves reserves earnings reserves capital premium shares parent interests equity
$m $m $m $m $m $m $m $m $m $m
Balance
at 1
January
2014
(Audited) 38 (46) 712 704 35 281 (3) 1,017 17 1,034
Profit
for the
period - - 169 169 - - - 169 2 171
Currency
translation
loss - (7) - (7) - - - (7) - (7)
Total
comprehensive
income
for the
period - (7) 169 162 - - - 162 2 164
Cost
of equity
settled
employee
share
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
schemes - - 4 4 - - - 4 - 4
Dividends
on ordinary
shares
(note
6) - - (34) (34) - - - (34) (1) (35)
-----------------
Balance
at 30
June
2014
(Unaudited) 38 (53) 851 836 35 281 (3) 1,149 18 1,167
====================== ======================= ================= ============== ============= =============== =========== ===================== ====================== ==========
Balance
at 1
January
2014
(Audited) 38 (46) 712 704 35 281 (3) 1,017 17 1,034
Profit
for the
year - - 278 278 - - - 278 4 282
Cumulative
effect
of change
in fair
value
of financial
derivatives - - 1 1 - - - 1 - 1
Currency
translation
loss - (52) - (52) - - - (52) (1) (53)
Total
comprehensive
income
for the
year - (52) 279 227 - - - 227 3 230
Cost
of equity
settled
employee
share
schemes - - 8 8 - - - 8 - 8
Exercise
of
equity-settled
employee
share
scheme - - (2) (2) - - 2 - - -
Dividends
on ordinary
shares
(note
6) - - (55) (55) - - - (55) (1) (56)
Balance
at 31
December
2014
(Audited) 38 (98) 942 882 35 281 (1) 1,197 19 1,216
====================== ======================= ================= ============== ============= =============== =========== ===================== ====================== ==========
Profit
for the
period - - 134 134 - - - 134 1 135
Currency
translation
loss - (40) - (40) - - - (40) - (40)
Total
comprehensive
income
for the
period - (40) 134 94 - - - 94 1 95
Cost
of equity
settled
employee
share
schemes - - 7 7 - - - 7 - 7
Dividends
on ordinary
shares
(note
6) - - (42) (42) - - - (42) (2) (44)
Balance
at 30
June
2015
(Unaudited) 38 (138) 1,041 941 35 281 (1) 1,256 18 1,274
====================== ======================= ================= ============== ============= =============== =========== ===================== ====================== ==========
Hikma Pharmaceuticals PLC
Condensed consolidated cash flow statement
Note H1 H1 FY
2015 2014 2014
$m (Unaudited) $m (Unaudited) $m (Audited)
-------------------- -------------------- -----------------
Net cash from operating activities 15 125 200 425
Investing activities
Purchases of property, plant and
equipment (37) (43) (91)
Proceeds from disposal of property,
plant and equipment 2 - 1
Purchase of intangible assets (16) (13) (27)
Proceeds from disposal of
intangible
assets - - 1
Investment in financial and other
non-current assets - (4) (5)
Investments designated at fair
value (20) - -
Acquisition of subsidiary
undertakings,
net of cash acquired - - (225)
Finance income 1 1 4
-------------------- -------------------- -----------------
Net cash used in investing
activities (70) (59) (342)
Financing activities
Increase/(decrease) in
collateralised
and restricted cash 3 - (1)
Increase in long-term financial
debts 505 5 5
Repayment of long-term financial
debts (65) (31) (121)
(Decrease)/increase in short-term
borrowings (222) 45 241
Increase in obligations under
finance
leases - 4 -
Dividends paid (42) (34) (55)
Dividends paid to non-controlling
shareholders of subsidiaries (2) (1) (1)
Interest paid (18) (16) (38)
Net cash generated from/(used in)
financing activities 159 (28) 30
Net increase in cash and cash
equivalents 214 113 113
Cash and cash equivalents at
beginning
of period/year 280 168 168
Foreign exchange translation
movements (4) 1 (1)
Cash and cash equivalents at end
of period/year 490 282 280
==================== ==================== =================
Hikma Pharmaceuticals PLC
Notes to the condensed set of financial statements
1. General information
The financial information for the year ended 31 December 2014
does not constitute statutory accounts within the meaning of
Section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2014, 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 auditor's 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
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
The unaudited condensed set of financial statements for the six
months ended 30 June 2015 has been prepared using the same
accounting policies and on a basis consistent with the audited
financial statements of Hikma Pharmaceuticals PLC (the 'Group') for
the year ended 31 December 2014 which are prepared in accordance
with IFRSs as adopted by the European Union.
Basis of preparation
The currency used in the preparation of the accompanying
condensed set of financial statements is the US Dollar ($) as the
majority of the Group's business is conducted in US Dollars.
The Group's condensed set of financial statements included in
this half-yearly financial report have been prepared in accordance
with International Accounting Standards 34 'Interim Financial
Reporting' as adopted by the European Union. They were approved by
the Board on 18 August 2015.
Taxes on income for interim periods are accrued using the
effective tax rate that would be applicable to expected total
annual earnings.
Going concern
The Directors believe that the Group is well diversified due to
its geographic spread, product diversity and large customer and
supplier base. The Group operates in the generic pharmaceuticals
industry which the Directors expect to be insulated from wider
economic conditions.
The $500 million bond issuance was utilised to repay the Bedford
acquisition bridge loan of $225 million and the remaining $58
million of the $180 million syndicate facility. The Group net debt
position was $283 million (30 June 2014: $175 million and 31
December 2014: $274 million). Operating cash flow in 2015 was $125
million (30 June 2014: $200 million and 31 December 2014: $425
million). The Group has $824 million (30 June 2014: $330 million
and 31 December 2014: $839 million) of undrawn short term and long
term banking facilities, in addition to $170 million (30 June 2014:
$143 million and 31 December 2014: $180 million) of unutilised
import and export financing limits. These facilities are
diversified across the subsidiaries of the Group and are with a
number of financial institutions. The Group's forecasts, taking
into account reasonable possible changes in trading performance,
facility renewal sensitivities, maturities of long--term debt and
the acquisition of Roxane, show that the Group should be able to
operate within the levels of its available facilities. The
acquisition of Roxane will be financed through a combination of
cash reserves, existing and additional bank financing. After making
enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. The Directors therefore continue to
adopt the going concern basis in preparing the financial
statements.
Changes in accounting policies
The same accounting policies, presentation and method of
computation are followed in the condensed set of financial
statements as has been applied in the Group's latest annual audited
financial statements.
There have been no changes to the accounting standards in the
current year that have materially impacted the Group financial
statements.
3. Business and geographical segments
For management purposes, the Group is organised into three
principal operating divisions - Branded, Injectables and Generics.
These divisions are the basis on which the Group reports its
segmental information.
The Group discloses underlying operating profit as the measure
of segmental result, as this is the measure used in the
decision-making and resource allocation process of the chief
operating decision maker, who is the Group's Chief Executive
Officer.
Information regarding the Group's operating segments is reported
below.
The following is an analysis of the Group's revenue and results
by reportable segment for the period ended June 30 2015:
Six months ended
30 June 2015
(Unaudited)
Branded Injectables Generics Others Group
$m $m $m $m $m
---------------- ----------------- ---------------- ---------------- ---------------
Revenue 282 344 79 4 709
Cost of sales (146) (129) (31) (3) (309)
Gross profit 136 215 48 1 400
---------------- ----------------- ---------------- ---------------- ---------------
Adjusted segment
result 58 146 33 (3) 234
Exceptional
items :
- Severance
costs (5) - - - (5)
- Proceeds from
legal
claims - 2 - - 2
Intangible
amortisation* (4) (2) - - (6)
------------------ ---------------- ----------------- ---------------- ---------------- ---------------
Segment result 49 146 33 (3) 225
---------------- ----------------- ---------------- ---------------- ---------------
Adjusted Unallocated corporate
expenses (30)
Exceptional
items :
- Acquisition
related
expenses (1)
------------------ ---------------- ----------------- ---------------- ---------------- ---------------
Unallocated
corporate
expenses (31)
Adjusted
operating
profit 204
------------------ ---------------- ----------------- ---------------- ---------------- ---------------
Operating profit 194
---------------
Share of results of associated
companies (2)
Finance income 1
Finance expense (23)
Profit before tax 170
Tax (35)
---------------
Profit for the
period 135
===============
Attributable to:
Non-controlling
interest 1
Equity holders of
the
parent 134
135
===============
Segment result is defined as operating profit for each
segment.
*Intangible amortisation comprises the amortisation of
intangible assets other than software.
"Others" mainly comprise Arab Medical Containers Ltd,
International Pharmaceutical Research Center Ltd and the chemicals
division of Hikma Pharmaceuticals Ltd (Jordan).
Unallocated corporate expenses are primarily made up of employee
costs, professional fees and travel expenses.
3. Business and geographical segments (continued)
Segment assets and Liabilities
30 June 2015 (Unaudited)
Corporate
Branded Injectables Generics and Others Group
$m $m $m $m $m
------------- ----------------- -------------- ----------------- -------------
Additions to property,
plant and equipment
(cost) 15 11 5 - 31
Subsequent
re-measurement
of acquired property,
plant and equipment
(net book value) - (1) - - (1)
Additions to intangible
assets (cost) 2 9 3 2 16
Subsequent
re-measurement
of acquired intangible
assets - (8) - - (8)
Total property, plant
and equipment and
intangible
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
assets (net book
value) 491 511 80 7 1,089
Depreciation 12 8 4 1 25
Amortisation (including
software) 4 4 - - 8
Investment in
associates
and joint ventures - - - 14 14
Balance sheet
Total assets 1,173 832 159 343 2,507
============= ================= ============== ================= =============
Total liabilities 494 389 79 271 1,233
============= ================= ============== ================= =============
3. Business and geographical segments (continued)
Six months ended
30 June 2014 (Unaudited)
Branded Injectables Generics Others Group
$m $m $m $m $m
------------- ----------------- -------------- -------------- -------------
Revenue 259 346 128 5 738
Cost of sales (130) (131) (33) (3) (297)
Gross profit 129 215 95 2 441
------------- ----------------- -------------- -------------- -------------
Adjusted segment result 54 142 78 (3) 271
Intangible amortisation* (5) (2) - - (7)
--------------------------- ------------- ----------------- -------------- -------------- -------------
Segment result 49 140 78 (3) 264
------------- ----------------- -------------- -------------- -------------
Adjusted Unallocated corporate
expenses (27)
Exceptional items :
-- Acquisition related
expenses (1)
--------------------------- ------------- ----------------- -------------- -------------- -------------
Unallocated corporate
expenses (28)
-------------
Adjusted operating
profit 244
--------------------------- ------------- ----------------- -------------- -------------- -------------
Operating profit 236
-------------
Share of results of associated
companies (2)
Finance income 1
Finance expense (16)
Profit before tax 219
Tax (48)
-------------
Profit for the period 171
=============
Attributable to:
Non-controlling interest 2
Equity holders of the
parent 169
171
=============
Segment result is defined as operating profit for each
segment.
*Intangible amortisation comprises the amortisation of
intangible assets other than software.
"Others" mainly comprise Arab Medical Containers Ltd,
International Pharmaceutical Research Center Ltd and the chemicals
division of Hikma Pharmaceuticals Ltd (Jordan).
Unallocated corporate expenses are primarily made up of employee
costs, office costs, professional fees, donations and travel
expenses.
3. Business and geographical segments (continued)
Segment assets and
Liabilities
30 June 2014
(Unaudited)
Corporate
Branded Injectables Generics and Others Group
$m $m $m $m $m
------------- ----------------- -------------- ----------------- ------------
Additions to property,
plant and equipment
(cost) 19 10 2 - 31
Additions to intangible
assets (cost) 3 6 1 - 10
Total property, plant
and equipment and
intangible
assets (net book value) 519 314 52 6 891
Depreciation 12 7 4 1 24
Amortisation (including
software) 5 4 - - 9
Investment in associates
and joint ventures - - - 20 20
Balance sheet
Total assets 1,266 583 136 78 2,063
============= ================= ============== ================= ============
Total liabilities 567 202 47 80 896
============= ================= ============== ================= ============
3. Business and geographical segments (continued)
Year ended
31 December 2014
(Audited)
Branded Injectables Generics Others Group
$m $m $m $m $m
-------------- ---------------- ---------------- ---------------- ---------------
Revenue 551 713 216 9 1,489
Cost of sales (284) (282) (66) (6) (638)
Gross profit 267 431 150 3 851
-------------- ---------------- ---------------- ---------------- ---------------
Adjusted segment
result 111 265 113 (5) 484
Intangible
amortisation* (9) (5) - - (14)
--------------------- -------------- ---------------- ---------------- ---------------- ---------------
Segment result 102 260 113 (5) 470
-------------- ---------------- ---------------- ---------------- ---------------
Adjusted Unallocated corporate
expenses (57)
Exceptional items
:
- Acquisition
related
expenses (11)
--------------------- -------------- ---------------- ---------------- ---------------- ---------------
Unallocated
corporate
expenses (68)
Adjusted operating
profit 427
--------------------- -------------- ---------------- ---------------- ---------------- ---------------
Operating profit 402
Share of results of associated
companies (6)
Finance income 4
Finance expense (38)
Profit before tax 362
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
---------------
Tax (80)
---------------
Profit for the year 282
===============
Attributable to:
Non-controlling
interest 4
Equity holders of
the parent 278
282
===============
Segment result is defined as operating profit for each
segment.
*Intangible amortisation comprises the amortisation of
intangible assets other than software.
"Others" mainly comprise Arab Medical Containers Ltd,
International Pharmaceutical Research Center Ltd and the chemicals
division of Hikma Pharmaceuticals Ltd (Jordan).
Unallocated corporate expenses are primarily made up of employee
costs, professional fees, travel expenses and donations.
3. Business and geographical segments (continued)
Segment assets and Liabilities
31 December 2014 (Audited)
Corporate
Branded Injectables Generics and Others Group
$m $m $m $m $m
------------- ----------------- -------------- ----------------- -----------
Additions to property,
plant and equipment
(cost) 48 31 8 2 89
Acquisition of
subsidaries'
property, plant and
equipment (net book
value) - 53 - - 53
Additions to intangible
assets 4 16 4 1 25
Intangible assets arising
on acquisition - 174 - - 174
Total property, plant
and equipment and
intangible
assets (net book value) 511 528 70 7 1,116
Depreciation and
impairment 22 18 7 2 49
Amortisation and
impairment
(including software) 10 13 - - 23
Investment in associates
and joint ventures - - - 16 16
Balance sheet
Total assets 1,123 770 175 183 2,251
============= ================= ============== ================= ===========
Total liabilities 481 405 92 57 1,035
============= ================= ============== ================= ===========
The following table provides an analysis of the Group's sales by
geographical market, irrespective of the origin of the
goods/services:
H1 2015 H1 2014 FY 2014
$m $m $m
------------------- ------------------- --------------
(Unaudited) (Unaudited) (Audited)
------------------- ------------------- --------------
Middle East and North Africa 322 296 633
United States 344 396 763
Europe and Rest of the World 40 45 89
United Kingdom 3 1 4
709 738 1,489
=================== =================== ==============
The top selling markets were as below:
H1 2015 H1 2014 FY 2014
$m $m $m
------------------ ------------------ --------------
(Unaudited) (Unaudited) (Audited)
------------------ ------------------ --------------
United States 344 396 763
Saudi Arabia 80 68 146
Algeria 58 40 86
482 504 995
================== ================== ==============
Included in revenues arising from the Generics and Injectables
segments are revenues of approximately $86 million (H1 2014: $121
million and FY 2014: $221 million) which arose from the Group's
largest customer which is located in the United States.
4. Exceptional items and intangible amortisation
Exceptional items are disclosed separately in the condensed
consolidated income statement to assist in the understanding of the
Group's underlying performance.
H1 2015 H1 2014 FY 2014
$m $m $m
------------- -------------- ---------------
Severance costs (5) - -
Proceeds from legal claims 2 - -
Acquisition related expenses (1) (1) (11)
Exceptional items included in operating
profit (4) (1) (11)
Intangible amortisation* (6) (7) (14)
Exceptional items and intangible amortisation (10) (8) (25)
Tax effect 2 1 4
Impact on profit for the period/ year (8) (7) (21)
*Intangible amortisation comprises the amortisation of
intangible assets other than software.
- Severance expenses in 2015 related to restructuring of
management teams in MENA.
- Legal claims refers to proceeds received in settlement of an
indemnification claim in the US.
- Acquisition related expenses are costs incurred in relation to
the acquisition of Roxane laboratories Inc. and
Boehringer Ingelheim "Roxane Inc.", the process of which is
ongoing.
In previous periods exceptional items relate to the
following:
Acquisition related expenses were costs incurred from acquiring
Bedford Laboratories, these expenses were included in the
unallocated corporate expenses and mainly comprise third party
consulting services, legal and professional fees.
5. Tax
H1 2015 H1 2014 FY 2014
$m $m $m
----------------- ------------------ --------------
(Unaudited) (Unaudited) (Audited)
----------------- ------------------ --------------
Current tax:
Foreign tax 28 54 82
Prior year adjustments 3 - (9)
Deferred tax 4 (6) 7
35 48 80
Tax for the six month period is charged at 20.6% (H1 2014:
21.9%; FY 2014: 22.1%).
The application of tax law and practice is subject to some
uncertainty and amounts are provided where the likelihood of a cash
outflow is probable.
6. Dividends
H1 2015 H1 2014 FY 2014
$m $m $m
(Unaudited) (Unaudited) (Audited)
Amounts recognised as distributions
to equity holders in the period:
Final dividend for the year ended 31
December 2014 of 15.0 cents (2013:
13.0 cents) per share 30 26 26
Interim dividend for the year ended
31 December 2014
of 7.0 cents per share - - 14
Special final dividend for the year
ended 31 December 2014 of 6.0 cents
(2013: 4.0 cents) per share 12 8 8
Special interim dividend for the year
ended 31 December 2014 of 4.0 cents
(2013: 3.0 cents) per share - - 7
42 34 55
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
The proposed interim dividend for the period ended 30 June 2015
is 11.0 cents (30 June 2014: 7.0 cents plus 4.0 cents as a special
dividend, and 31 December 2014: 15.0 cents plus 6.0 cents as a
special dividend) per share.
Based on the number of shares in issue at 30 June 2015
(199,343,000), the unrecognised liability is $21,928,000.
7. Earnings per share
Earnings per share is 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 is 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, intangible amortisation* and
the tax effect of these adjustments. A reconciliation of the basic
and adjusted earnings used is also set out below:
H1 2015 H1 2014 FY 2014
$m $m $m
(Unaudited) (Unaudited) (Audited)
Earnings for the purposes of basic
and diluted earnings per share being
net profit attributable to equity
holders of the parent 134 169 278
Exceptional items 4 1 11
Intangible amortisation* 6 7 14
Tax effect of adjustments (2) (1) (4)
Adjusted earnings for the purposes
of adjusted basic and diluted earnings
per share being adjusted net profit
attributable to equity holders of
the parent 142 176 299
Number Number Number
Number of shares: m m m
Weighted average number of Ordinary
Shares for the purposes of basic earnings
per share 199 198 198
Effect of dilutive potential Ordinary
Shares :
Share-based awards 1 2 2
Weighted average number of Ordinary
Shares for the purposes of diluted
earnings per share 200 200 200
H1 2015 H1 2014 FY 2014
Earnings Earnings Earnings
per share per share per share
Cents Cents Cents
Basic 67.3 85.4 140.4
Diluted 67.0 84.5 139.0
Adjusted basic 71.4 88.9 151.0
Adjusted diluted 71.0 88.0 149.5
*Intangible amortisation comprises the amortisation of
intangible assets other than software.
8. Investments in associates and joint ventures
A loss of $2 million, representing the Group's share of the
result of Unimark Remedies Limited and Hubei Haosun Pharmaceutical
Co., Ltd, is included in the condensed consolidated income
statement.
For the period ended For the period ended For the year ended
30 June 2015 30 June 2014 31 December 2014
Joint Joint Joint
Ventures Associates Total Ventures Associates Total Ventures Associates Total
$m $m $m $m $m $m $m $m $m
------------------
Balance
at 1
January 3 13 16 3 19 22 3 19 22
Share
of loss - (2) (2) - (2) (2) - (6) (6)
------------------
Balance
at end
of
period/year 3 11 14 3 17 20 3 13 16
9. Inventories
30 June 30 June 31 December
2015 2014 2014
$m $m $m
----------------- -----------------
(Unaudited) (Unaudited) (Audited)
----------------- -----------------
Finished goods 50 87 60
Work-in-progress 36 38 33
Raw and packing materials 158 169 159
Goods in transit 36 15 21
280 309 273
================= =================
Goods in transit include inventory held at third parties whilst
in transit between Group companies.
10. Trade and other receivables
30 June 30 June 31 December
2015 2014 2014
$m $m $m
------------------ ------------------
(Unaudited) (Unaudited) (Audited)
------------------ ------------------
Trade receivables 421 358 384
Prepayments 46 47 42
VAT and sales tax recoverable 14 9 12
Employee advances 3 4 1
484 418 439
11. Other current assets
The Group entered into an agreement with an asset management
firm to manage a $20 million portfolio. This investment is measured
at fair value through Other Comprehensive Income.
The fair value of financial assets and liabilities is included
at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced
or liquidation sale. Management classifies items that are
recognised at fair value based on the level of inputs used in their
fair value determination.
This asset is classified as level 1 "quoted prices in active
markets".
12. Trade and other payables
30 June 30 June 31 December
2015 2014 2014
$m $m $m
------------------ ------------------
(Unaudited) (Unaudited) (Audited)
------------------ ------------------
Trade payables 126 122 129
Accrued expenses 94 82 105
Other payables 14 15 14
234 219 248
13. Other current liabilities
30 June 30 June 31 December
2015 2014 2014
$m $m $m
(Unaudited) (Unaudited) (Audited)
Deferred revenue 26 56 46
Return and free goods provision 50 28 35
Other provisions 31 25 28
107 109 109
14. Current and Non-current financial debts
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
Short-term financial debts
30 June 30 June 31 December
2015 2014 2014
$m $m $m
(Unaudited) (Unaudited) (Audited)
Bank overdrafts 12 25 19
Import and export financing 110 114 83
Short-term loans 3 3 227
Current portion of long-term loans 40 61 64
165 203 393
Long-term financial debts
30 June 30 June 31 December
2015 2014 2014
$m $m $m
(Unaudited) (Unaudited) (Audited)
Long-term loans 135 298 209
Long-term borrowings (Bonds) 494 - -
Less: current portion of loans (40) (61) (64)
Long-term financial loans 589 237 145
Breakdown by maturity:
Within one year 40 61 64
In the second year 39 63 65
In the third year 22 61 51
In the fourth year 13 41 13
In the fifth year 511 62 9
Thereafter 4 10 7
629 298 209
On the first of April 2015, Hikma Pharmaceutical PLC issued a
$500 million 4.25% bond due in April 2020, traded on the GEM Market
of the Irish Stock Exchange.
15. Net cash from operating activities
H1 H1 FY
2015 2014 2014
$m (Unaudited) $m (Unaudited) $m (Audited)
-------------------- -------------------- ----------------
Profit before tax 170 219 362
Adjustments for:
Depreciation, amortisation and
impairment of:
Property, plant and equipment 25 24 49
Intangible assets 8 9 23
Loss on disposal of property,
plant and equipment - 1 1
Gain on disposal of intangible
assets - - (1)
Movement on provisions 1 - 5
Cost of equity-settled employee
share schemes 7 4 8
Finance income (1) (1) (4)
Interest and bank charges 23 16 38
Results from associates 2 2 6
Cash flow before working capital 235 274 487
Change in trade and other receivables (57) 19 (16)
Change in other current assets 1 - -
Change in inventories (12) (35) 2
Change in trade and other payables (6) (6) 24
Change in other current liabilities 2 8 7
Cash generated by operations 163 260 504
Income tax paid (38) (60) (79)
Net cash generated from operating
activities 125 200 425
==================== ==================== ================
16. Related party balances
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 period, 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 28.7% at 30 June 2015 (30 June
2014: 28.8% and 31 December 2014: 28.8%). 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
one Hikma Pharmaceuticals PLC board member is also a board member
of Capital Bank - Jordan. Total cash balances at Capital Bank -
Jordan were $4.4 million (30 June 2014: $22.3 million and 31
December 2014: $5.7 million). Facilities granted by Capital Bank to
the Group amounted to $nil at 30 June 2015 (30 June 2014: $4.6
million and 31 December 2014: $nil). Interest income and expense
are at market rates.
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. The Group's insurance expense
for Jordan International Insurance Company contracts in the period
was $0.2 million (H1 2014: $0.2 million and FY 2014: $0.2 million).
The amounts due to Jordan International Insurance Company at 30
June 2015 were $0.1 million (30 June 2014: $0.1 million and 31
December 2014: $nil).
Labatec Pharma: is a related party of the Group because it is
owned by the estate of Mr. Samih Darwazah. During the period, the
Group total sales to Labatec Pharma amounted to $0.3 million (H1
2014: $0.2 million and FY 2014: $0.5 million). At 30 June 2015, the
amount owed from Labatec Pharma to the Group was $nil (30 June
2014: $0.1 million and 31 December 2014: $ 0.1 million).
Jordan Resources & Investments Company: is a related party
of the Group because three Board members of the Group are
shareholders in the firm. During the period, fees of $nil (H1 2014:
$nil and FY 2014: $nil) were paid for training services
provided.
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 $95
million (30 June 2014: $76 million and 31 December 2014: $90.4
million). Facilities granted by Arab Bank to the Group amounted to
$80.5 million (30 June 2014: $161 million and 31 December 2014:
$115 million). Interest expense/income is at market rates.
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 the period, fees of $0.1 million (H1 2014: $nil
and FY 2014: $0.1 million) were paid. At 30 June 2015, the amount
owed to the American University of Beirut from the Group amounted
to $nil (30 June 2014: $nil and 31 December 2014: $0.1
million).
HikmaCure: The Group holds a 50:50 joint venture ("JV")
agreement with MIDROC Pharmaceuticals Limited. The JV is called
HikmaCure. Hikma and MIDROC invested 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 30 June
2015 (30 June 2014: 23.1% and 31 December 2014: 23.1%). During the
period, the Group paid an amount of $nil in relation to a products
development agreement (H1 2014: $0.1 million and FY 2014: $2.5
million).
16. Related party balances - continued
Haosun: The Group held a non-controlling interest of 30.1% in
Hubei Haosun Pharmaceutical Co., Ltd ("Haosun") at 30 June 2015 (30
June 2014: 30.1% and 31 December 2014: 30.1%). During the period
total purchases from Haosun were $0.6 million (H1 2014: $nil and FY
2014: $1.0 million). At 30 June 2015 the amount owed from
("Housen") amounted to $nil (30 June 2014: $0.1 million and 31
December 2014: $nil).
17. Acquisition of a business
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
On 15 July 2014 Hikma completed its acquisition of the US
generic injectables business, Bedford Laboratories ("Bedford") from
Ben Venue Laboratories, Inc. ("Ben Venue"), a member of the
Boehringer Ingelheim Group of Companies. The consideration for the
acquisition comprised of an upfront cash payment of $225 million
which was paid on 15 July 2014 and contingent cash payments which
are, subject to the achievement of performance-related milestones
over a period of five years from closing the transaction.
Hikma acquired Bedford's product portfolio of 82 products,
intellectual property rights, inventories, a strong R&D and
business development pipeline and a number of employees across key
business functions. On 17 September 2014 Hikma completed the
acquisition of all the assets of Ben Venue generics injectables
manufacturing site in Bedford, Ohio, pursuant to the exclusivity
arrangement entered into with Ben Venue on 28 May 2014. No
incremental consideration was payable for the Ben Venue
manufacturing site.
A reduction of $8 million was made to the provisional goodwill
recognised on the acquisition of Bedford as a result of the
adjustments to inventory, property plant and equipment and deferred
tax made prior to the end of the measurement period on 15 July
2015.
18. Contingent Liabilities
A contingent liability existed at the balance sheet date in
respect of external guarantees and letter of credits totalling $131
million (30 June 2014: $132 million, 31 December 2014: $45
million).
The integrated nature of the Group's worldwide operations,
involving significant investment in research and strategic
manufacturing at a limited number of locations, with consequential
cross-border supply routes into numerous end-markets, gives rise to
complexity and delay in negotiations with revenue authorities as to
the profits on which individual Group companies are liable to
tax.
Disagreements with, and between, revenue authorities as to
intra-Group transactions, in particular the price at which goods
and services should be transferred between Group companies in
different tax jurisdictions, have the potential to produce
conflicting claims from revenue authorities as to the profits to be
taxed in individual territories.
The promotion, marketing and sale of pharmaceutical products and
medical devices is highly regulated and the operations of market
participants, such as Hikma, are closely supervised by regulatory
authorities and law enforcement agencies, including the FDA and the
US Department of Justice. As a result the Group is subject to
certain investigations by governmental agencies as well as other
various legal proceedings considered typical to its business
relating to employment, product liability and commercial
disputes.
19. Subsequent events
On 28 July 2015 Hikma announced that it has agreed to acquire
Roxane Laboratories Inc. and Boehringer Ingelheim Roxane Inc.
(together, "Roxane"), from Boehringer Ingelheim ("Boehringer").
Roxane is a well-established US specialty generics company with a
highly differentiated product portfolio and best-in-class R&D
capabilities.
Under the terms of the acquisition, on closing of the
transaction Hikma will pay cash consideration of $1.18 billion and
will issue 40 million new Hikma shares to Boehringer (representing
an estimated 16.71 per cent. of Hikma's issued share capital
immediately following closing and admission). Based on an agreed
issue price for the new Hikma shares of GBP23.50 per share and the
US:GBP exchange rate of 1.56:1, the total consideration payable on
closing will be approximately $2.65 billion. Hikma has also agreed
to make further cash payments of up to $125 million, contingent to
the achievement of certain performance milestones.
20. Foreign exchange rates
Period end rates Average rates
30 June 30 June
2015 2014 31 December 2014 H1 2015 H1 2014 FY 2014
USD/EUR 0.9011 0.7325 0.8226 0.8949 0.7293 0.7523
USD/Sudanese
Pound 6.3171 5.9666 6.2696 6.3171 5.9666 6.0277
USD/Algerian
Dinar 98.9472 79.2555 87.9245 95.7360 78.5767 80.6145
USD/Saudi Riyal 3.7495 3.7495 3.7495 3.7495 3.7495 3.7495
USD/British Pound 0.6361 0.5866 0.6437 0.6562 0.5991 0.6068
USD/Jordanian
Dinar 0.7090 0.7090 0.7090 0.7090 0.7090 0.7090
USD/Egyptian
Pound 7.6278 7.1633 7.1582 7.5700 7.0274 7.0972
USD/Japanese
Yen 122.7400 101.5480 119.9500 120.2700 102.5001 105.8700
USD/Moroccan
Dirham 9.7228 8.1805 9.0154 9.3910 8.4116 9.0155
USD/Tunisian
Dinar 1.9406 1.6866 1.8612 1.9380 1.6126 1.7001
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 future performance and could cause actual results to
differ materially from expected and historical results.
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
* Adopt a "quality by design" approach for all of our
manufacturing facilities
* 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
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
* 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 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
* Sales and marketing and other ABC compliance policies
and procedures are created, updated and rolled out
* 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
* Legal, intellectual property an * The Group is exposed to a variety of legal, IP and * Expert internal departments that enhance policies,
d regulatory regulatory risks similar to most relevant major processes, embed compliance culture, raise awareness
international industries such as litigation, and train staff
investigations, sanctions and potential business
disruptions
* First class expert external advice is procured to
provide independent services and ensure highest
standards
* Board of Directors and management provide leadership
and take action as necessary
(MORE TO FOLLOW) Dow Jones Newswires
August 19, 2015 02:00 ET (06:00 GMT)
Hikma Pharmaceuticals (LSE:HIK)
Historical Stock Chart
From Jun 2024 to Jul 2024
Hikma Pharmaceuticals (LSE:HIK)
Historical Stock Chart
From Jul 2023 to Jul 2024