Hikma Pharmaceutical HIK Annual Financial Report & AGM Notice

  Hikma Pharmaceutical (HIK) - Annual Financial Report & AGM Notice

RNS Number : 2998B
Hikma Pharmaceuticals Plc
13 April 2012






                          Hikma Pharmaceuticals PLC

   2011 Annual Report & Accounts and Notice of 2012 Annual General Meeting

In compliance with Listing Rule 9.6.1, Hikma Pharmaceuticals PLC has submitted
copies of the  documents listed below  to the National  Storage Mechanism  and 
will shortly be available for inspection at http://www.hemscott.com/nsm.do  or 
http://www.morningstar.co.uk:

· Annual Report & Accounts 2011

· Notice of 2012 Annual General Meeting

· Proxy forms for the 2012 Annual General Meeting

Copies of the Annual Report  and Notice of Meeting  will also be available  on 
our website www.hikma.com. Hard copies are available by writing to the Company
Secretary, Hikma Pharmaceuticals PLC, 13 Hanover Square, London W1S 1HW or  by 
attending the office in person.

The Annual General Meeting will be held at 11:00 am on Thursday 17 May 2012 at
The Westbury, Bond Street, Mayfair, London W1S 2YF.

In accordance with DTR  6.3.5, this announcement  contains information in  the 
attached  Appendices  of   the  principal   risk  factors   (Appendix  1),   a 
responsibility  statement   (Appendix  2)   and  details   of  related   party 
transactions (Appendix 3) which has been extracted in full unedited text  from 
the Annual  Report  and Accounts  2011.  Where  page numbers  and  notes  are 
mentioned in the Appendix these refer to page numbers and notes in the  Annual 
Report and Accounts 2011.



Enquiries:

Hikma Pharmaceuticals PLC  Tel: +44
(0)20 7399 2760

Peter Speirs, Company Secretary 

Susan Ringdal, Investor Relations Director

Financial Dynamics  Tel: +44
(0)20 7831 3113

Ben Atwell /Julia Phillips/Jonathan Birt/Matthew Cole



About Hikma

Hikma  is  a  fast  growing  multinational  pharmaceutical  group  focused  on 
developing, manufacturing  and marketing  a broad  range of  both branded  and 
non‐branded generic and in‐licensed products. Hikma's operations are conducted
through  three  businesses:  "Branded",  "Injectables"  and  "Generics"  based 
principally in the Middle East and North Africa ("MENA") region, where it is a
market leader, the United States and  Europe. In 2011, Hikma achieved  revenue 
of $918.0 million and profit attributable to shareholders of $80.1 million.

Appendix 1 - Principal Risks and Uncertainties

The Group's business faces risks and uncertainties.



The section  below includes  the principal  risks and  uncertainties that  the 
Group considers could have  a significant effect  on its financial  condition, 
results of operations or future performance. The list is not set out in order
of priority and  other risks,  currently unknown or  not considered  material, 
could have a similar effect.



Operational risks



Risk                           Potential impact      Mitigation
Compliance with regulatory requirements
> Failure to comply   > Delays in  > Commitment to
with applicable regulatory     supply or an          maintain the highest
requirements and manufacturing inability to market   levels of quality across
standards (often referred to   or develop the        all manufacturing
as 'Current Good Manufacturing Group's products      facilities
Practices' or cGMP)
                                                    

                               > Delayed or > Strong global
                               denied approvals for  compliance function that
                               the introduction of   oversees compliance
                               new products          across the Group

                                                    

                               > Product    > Remuneration
                               complaints or recalls and reward structure that
                                                     helps retain experienced
                                                    personnel

                               > Bans on    
                               product sales or
                               importation           > Continuous
                                                     staff training and
                                                    know-how exchange

                               >            
                               Disruptions to
                               operations            > On-going
                                                     development of standard
                                                    operating procedures

                               > Potential  
                               for litigation

                               
Regulation changes
> Unanticipated       >            > Strong
legislative and regulatory     Restrictions on the   oversight of local
actions, developments and      sale of one or more   regulatory environments
changes affecting the Group's  of our products      to help anticipate
operations and products                              potential changes
                               
                                                     
                               >
                               Restrictions on our   > Local
                               ability to sell our   operations in [all] of
                               products at a profit  our key markets

                                                    

                               > Unexpected > Representation
                               additional costs      and/or affiliation with
                               required to produce,  local industry bodies
                               market or sell our
                               products              

                                                    > Diverse
                                                     geographical and
                               > Increased  therapeutic business
                               compliance costs      model

                               
Commercialisation of new products
> Delays in the       > Slowdown   > Experienced
receipt of marketing           in revenue growth     regulatory teams able to
approvals, the authorisation   from new products     accelerate submission
of price and re-imbursement                          processes across all of
                                                    our markets

                               > Inability  
> Lack of approval    to deliver a positive
and acceptance of new         return on investments > Highly
products by physicians,        in R&D, manufacturing qualified sales and
patients and other key         and sales and         marketing teams across
decision-makers                marketing             all markets

                                                   

> Inability to                              > A diversified
confirm safety, efficacy,                            product pipeline with
convenience and/or                                  over [60] new compounds
cost-effectiveness of our                            pending approval,
products as compared to                              covering a broad range of
competitive products                                 therapeutic areas

                                                    

> Inability to                              > A systematic
participate in tender sales                          commitment to quality
                                                     that helps to secure
                                                     approval and acceptance
                                                     of new products and
                                                     mitigate potential safety
                                                     issues
Product safety
> Unforeseen product  >            >
safety issues for marketed     Interruptions to      Diversification of
products, particularly in      revenue flow          product portfolio across
respect of in-licensed                               key markets and therapies
products                       
                                                     
                               > Costs of
                               recall, potential for > Working with
                               litigation            stakeholders to
                                                     understand issues as they
                                                    arise

                               >
                               Reputational damage

                               

                               
Product development
> Failure to secure   > Inability  > Experienced
new products or compounds for  to grow sales and     and successful in-house
development                    increase              R&D team, with
                               profitability for the specifically targeted
                               Group                 product development
                                                     pathways
                               
                                                     
                               > Lower
                               return on investment  > Continually
                               in research and       developing and
                               development           multi-faceted approach to
                                                     new product development
                               
                                                     

                                                     > Strong
                                                     business development team

                                                     

                                                     > Track record
                                                     of building in-licensed
                                                     brands

                                                     

                                                     > Position as
                                                     licensee of choice for
                                                     our key MENA geography

                                                     
Co-operation with Third parties
> Inability to renew  > Loss of    > Investment in
or extend in-licensing or      products from our     long-term relationships
other co-operation            portfolio             with existing
agreements with third parties                       in-licensing partners
                               
                                                     
                               > Revenue
                               interruptions         > Experienced
                                                     legal team capable of
                                                    negotiating robust
                                                     agreements with our
                               > Failure to partners
                               recoup sales and
                               marketing and         
                               business development
                               costs                 > Continuous
                                                     development of new
                                                    partners for licensing
                                                     and co-operation
                               
                                                     

                                                     > Diverse
                                                     revenue model with
                                                     in-house R&D capabilities

                                                     

                                                     
Increased competition
> New market entrants > Loss of    > On-going
in key geographies             market share          portfolio
                                                     diversification,
                                                   differentiation and
                                                     renewal through internal
> On-going pricing    > Decreasing R&D, in-licensing and
pressure in increasingly       revenues on           product acquisition
commoditised markets           established portfolio
                                                     
                              
                                                     > Continuing
                                                     focus on expansion of
                                                     geographies and
                                                     therapeutic areas
Disruptions in the manufacturing supply chain
> Inability to        > Inability  > Alternate
procure active ingredients     to develop and/or     approved suppliers of
from approved sources          commercialise new     active ingredients
                               products
                                                    
                               
> Inability to                              > Long-term
procure active ingredients on  > Inability  relationships with
commercially viable terms      to market existing    reliable raw material
                               products as planned   suppliers

                                                    
> Inability to
procure the quantities of      > Lost      > Corporate
active ingredients needed to  revenue streams on    auditing team
meet market requirements       short notice          continuously monitors
                                                     regulatory compliance of
                                                   API suppliers

>                     > Reduced    
                               service levels and
                               damage to customer    > Focus on
                               relationships         improving service levels
                                                     and optimising our supply
                                                    chain

                               > Inability
                               to supply finished
                               product to our
                               customers in a timely
                               fashion

                               

                               

                               
Economic and political and unforeseen events
> The failure of      >            > Geographic
control, a change in the       Disruptions to        diversification, with 9
economic conditions or         manufacturing and     manufacturing facilities
political environment or       marketing plans       and sales in more than 40
sustained civil unrest in any                        countries
particular market or country   
                                                     
                              > Lost
                               revenue streams       > Product
> Unforeseen events                         diversification, with 423
such as fire or flooding could                      products and 817 dosage
cause disruptions to                                 strengths and forms
manufacturing or supply        > Inability
                               to market or supply   
                               products
Litigation
> Commercial, product > Financial  > In-house legal
liability and other claims     impact on Group       counsel with relevant
brought against the Group      results from adverse  jurisdictional experience
                               resolution of
                               proceedings

                               

                               >
                               Reputational damage





Financial risks



Risk                      Impact                  Mitigation
Foreign exchange risk
> Exposure to    > Fluctuations > Entering into
foreign exchange          in the Group's net      currency derivative
movements, primarily in   asset values and        contracts where possible
the Euro, Algerian dinar, profits upon
Sudanese pound and        translation into US     
Egyptian pound            dollars
                                                  > Foreign currency
                                                  borrowing

                                                  

                                                  > Matching foreign
                                                  currency revenues to
                                                  in-jurisdiction costs
Interest rate risk
> Volatility in  > Fluctuating  > Optimisation of
interest rates            impact on profits       fixed and variable rate debt
                          before taxation         as a proportion of our total
                                                  debt

                                                  

                                                  > Use of interest
                                                  rate swap agreements

                                                  

                                                  
Credit Risk
> Inability to   > Reduced      > Clear credit
recover trade receivables working capital funds   terms for settlement of
                                                  sales invoices
                         
                                                  
> Concentration  > Risk of bad
of significant trade      debt or default         > Group Credit
balances with key                                 policy limiting credit
customers in the MENA                             exposures
region and the US
                                                  

                                                  > Use of various
                                                  financial instruments such
                                                  as letters of credit,
                                                  factoring and credit
                                                  insurance arrangements

                                                  
Liquidity Risk
> Insufficient   > Reduced      > Continual
free cash flow and        liquidity and working   evaluation of headroom and
borrowings headroom       capital funds           borrowing

                                                 

                          > Inability to > Committed debt
                          meet short-term working facilities
                          capital needs and,
                          therefore, to execute   
                          our long term strategic
                          plans                   > Diversity of
                                                  institution, subsidiary and
                                                  geography of borrowings

                                                  
Tax
> Changes to tax     > Negative impact  > Close observation of
laws and regulations in   on the Group's          any intended or proposed
any of the markets in     effective tax rate      changes to tax rules, both
which we operate                                  in the UK and in other key
                                                 countries where the Group
                                                  operates
                          > Costly
                          compliance requirements



Appendix 2 - Responsibility Statement

DIRECTORS' RESPONSIBILITY STATEMENT

The directors  are  responsible  for  preparing  the  Annual  Report  and  the 
financial  statements.  The  Directors  are  required  to  prepare   financial 
statements for the Group in accordance with International Financial  Reporting 
Standards as adopted by the European  Union ("IFRS") and have also elected  to 
prepare financial statements for the Company in accordance with the IFRS under
EU  law.  Company  law  requires  the  Directors  to  prepare  such  financial 
statements in accordance with  IFRS, the Companies Act  2006 and Article 4  of 
the International Accounting Standard ("IAS") Regulations.

IAS 1 requires  that financial  statements present fairly  for each  financial 
year the company's financial position,  financial performance and cash  flows. 
This requires  the faithful  representation of  the effects  of  transactions, 
other events and condition in accordance with the definitions and  recognition 
criteria  for  assets,  liabilities,  income  and  expenses  set  out  in  the 
International Accounting Standards Board's 'Framework for the Preparation  and 
Presentation of Financial Statements'. In virtually all circumstances, a  fair 
presentation  will  be  achieved  by  compliance  with  all  applicable  IFRS. 
Directors are also required to:

· Properly select and apply accounting policies

· Present information,  including accounting policies,  in a  manner 
that provides relevant, reliable, comparable and understandable information

· Provide additional disclosures  when compliance with the  specific 
requirements in IFRS is insufficient to enable users to understand the  impact 
of particular  transactions,  other  events and  conditions  on  the  entity's 
financial position and financial performance

· Make an assessment of the company's ability to continue as a going
concern

The directors are responsible for  keeping proper accounting records that  are 
sufficient to show and  explain the company's  transactions and disclose  with 
reasonable accuracy at  any time the  financial position of  the Company,  for 
safeguarding the assets, for  taking reasonable steps  for the prevention  and 
detection of  fraud and  other irregularities  and for  the preparation  of  a 
directors' report and  directors' remuneration  report which  comply with  the 
requirements of the Companies Act 2006.

The directors  are  responsible  for  the maintenance  and  integrity  of  the 
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of  financial statements differs  from legislation in  other 
jurisdictions.

We confirm to the best of our knowledge:

·  The   financial   statements,   prepared   in   accordance   with 
International Financial Reporting Standards as adopted by the EU, give a  true 
and fair view  of the assets,  liabilities, financial position  and profit  or 
loss of the Company and the  undertakings included in the consolidation  taken 
as a whole; and

· The business  review, which  is incorporated  into the  Directors' 
Report, includes  a fair  review of  the development  and performance  of  the 
business and the position of the Company and the undertakings included in  the 
consolidation taken as a whole, together  with a description of the  principal 
risks and uncertainties they face.



By order of the Board



Said Darwazah Mazen Darwazah

Chief Executive Officer Executive Vice Chairman, CEO MENA

13 March 2012



Appendix 3 - Related Party Transactions

Details of related party transactions are included in Note 38 of the Financial
Statements on pages 138 to 139.

Transactions between the Company and its subsidiaries have been eliminated  on 
consolidation and are  not disclosed  in this note.  Transactions between  the 
Group and its associate and other related parties are disclosed below.



Trading transactions:

During the year, Group companies entered into the following transactions  with 
related parties:



Darhold Limited: is a related party of the Group because it is considered  one 
of  the  major  shareholders  of  Hikma  Pharmaceuticals  PLC  with  ownership 
percentage of 29.2% at the end of  2011 (2010: 29.5%). Further details on  the 
relationship between Mr. Samih Darwazah, Mr. Said Darwazah, Mr. Mazen Darwazah
and Mr. Ali Al-Husry, and Darhold Limited are given in the Directors'  Report. 
Other than dividends (as paid to all shareholders), there were no transactions
between the Group and Darhold Limited in the year.



Capital Bank - Jordan: is a related party of the Group because during the year
two board members of the Bank were also Board members at Hikma Pharmaceuticals
PLC. Total cash balances at Capital Bank - Jordan were US D 610,000 (2010: USD
2,169,000). Loans and overdrafts granted by Capital Bank to the Group amounted
to US D  3,841,000 (2010:  US D 48,000)  with interest  rates ranging  between 
8.25% and  3MLI  BOR  +  1. Total  interest  expense  incurred  against  Group 
facilities was US D 7,000 (2010: US D 18,000). Total interest income  received 
was Nil (2010:  US D 8,000)  and total commission  paid in the  year was US  D 
8,000 (2010: US D 76,000).



Jordan International  Insurance  Company: is  a  related party  of  the  Group 
because one  Board member  of the  Company is  also a  Board member  at  Hikma 
Pharmaceuticals PLC.  Total insurance  premiums paid  by the  Group to  Jordan 
International Insurance Company during the year were US D 3,035,000 (2010:  US 
D 2,166,000). The Group's insurance expense for Jordan International Insurance
Company contracts in the year 2011 was US D 2,902,000 (2010: US D  2,481,000). 
The amounts due from  Jordan International Insurance Company  at the year  end 
were US D 109,000 (2010: Due to US D 66,000).



Mr. Yousef  Abd Ali:  is a  related  party of  the Group  because he  holds  a 
non-controlling interest  in Hikma  Lebanon of  33%, the  amount owed  to  Mr. 
Yousef by the  Group as  at 31  December 2011  was US  D 150,000  (2010: US  D 
161,000).



Labatec Pharma: is a  related party of  the Group because it  is owned by  Mr. 
Samih Darwazah. During 2011 the Group  total sales to Labatec Pharma  amounted 
to US  D 338,000  (2010: US  D 414,000)  and the  Group total  purchases  from 
Labatec amounted to US D 3,805,000 (2010: US D 1,373,000). At 31 December 2011
the amount owed to Labatec Pharma from the Group was US D 753,000 (2010: US  D 
193,000).



King and Spalding: is a related party of the Group because the partner of  the 
firm is  a board  member and  the  company secretary  of West-Ward.  King  and 
Spalding is an outside legal counsel  firm that handles general legal  matters 
for West-Ward. During 2011 fees  of US D 1,216,000  (2010: US D 927,000)  were 
paid for legal services provided.



Remuneration of key management personnel

The remuneration of the key management personnel (comprising the Executive and
Non-Executive Directors' and certain  of senior management as  set out in  the 
Directors' Report) of the Group is set out below in aggregate for each of  the 
categories specified in IAS 24 Related Party Disclosures. Further  information 
about the remuneration of the individual directors is provided in the  audited 
part of the Remuneration Committee Report on pages 76 to 90.



                               2011   2010

                               $000   $000
Short-term employee benefits  8,474  9,749

                                         
Share-based payments          3,196  2,074

                                         
Post-employment benefits        102     79
Other benefits                  428    230
                             12,200 12,132



* See Note 2.





                     This information is provided by RNS
           The company news service from the London Stock Exchange

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