TIDMHIK
RNS Number : 4724L
Hikma Pharmaceuticals Plc
19 April 2018
Hikma Pharmaceuticals PLC
(the 'Company')
Publication of 2017 Annual Report and Notice of AGM
LEI: 549300BNS685UXH4JI75
The Company will today publish on its website, www.hikma.com,
the Annual Report for the year ended
31 December 2017 (the '2017 Annual Report').
Hard copy versions of the following documents will be sent to
those shareholders who have elected to receive paper communication
on or about 19 April 2018:
-- 2017 Annual Report
-- 2018 Notice of Annual General Meeting
-- Proxy form for the 2018 Annual General Meeting
Shareholders who have not elected to receive paper communication
will be sent communications notifying them of the availability of
these documents on the Company's website.
In compliance with Listing Rule 9.6.1 of the UK Financial
Conduct Authority ('FCA'), the aforementioned documents will be
submitted to the UK Listing Authority and will be available for
public inspection at the National Storage Mechanism ('NSM')
http://www.hemscott.com/nsm.do
The Company's Annual General Meeting will be held at 10:00 am on
Friday 18 May 2018 at Sofitel,
St James, 6 Waterloo Place, London SW14 4AN.
The information included in the unaudited preliminary results
announcement released on 14 March 2018, together with the
information in the Appendices to this announcement which is
extracted from the 2017 Annual Report, constitute the materials
required by the FCA's Disclosure Guidance and Transparency Rule
6.3.5R. This announcement is not a substitute for reading the 2017
Annual Report in full. Page and note references in the Appendices
below refer to page and note references in the 2017 Annual
Report.
Enquiries:
Hikma Pharmaceuticals PLC
Peter Speirs
Company Secretary
19 April 2018
Appendix 1 - Principal Risks and Uncertainties
The Group faces risks and uncertainties that could have a
material impact on its earnings and ability to trade in the future.
These are determined via robust assessment considering our risk
context by the Board of Directors with input from executive
management. These risks and uncertainties are set out below. The
contents of this table should not be considered as an exhaustive
list of all the risks and uncertainties the Group faces.
The Board is satisfied that these risks are being managed
appropriately and consistently with the target risk appetite.
Risk and description Mitigating actions
-------------------------- -------------------------------------------------------------
Industry earnings
-----------------------------------------------------------------------------------------
The commercial
viability of * Securing of key talent to manage complex commercial
the industry environment and develop business
and business
model we operate
may change significantly * Growth and expansion in new markets, with new
as a result products and in new therapeutic areas
of political
action, economic
factors, societal * Portfolio management programme to focus on strategic
pressures, regulatory products that support revenue, profit and margin
interventions targets
or changes to
participants
in the value * Development of capacity, diversification of
chain of the capability through differentiated technology, and
industry. investment in local markets
* Active product life cycle and pricing management
across all regions
* Continuous alignment of commercial and R&D
organisations to identify market opportunities and
meet demand through internal portfolio
* Collaboration with external partners for development
and in-licensing partnerships
-------------------------- -------------------------------------------------------------
Product pipeline
-----------------------------------------------------------------------------------------
Identifying,
developing and * Partner marketing and business development
registering departments to monitor and assess the market for
supply of new arising opportunities
products from
the pipeline
that meet market * Expansive global product portfolio with increased
needs to provide focus on high value and differentiated products
continuous source
of future growth
* Experienced internal R&D teams developing products
and overseeing joint venture activities
* Product related acquisitions bolster pipeline
* Third party pharmaceutical product specialists
brought in to assist in the development of
manufacturing processes for new generic products.
-------------------------- -------------------------------------------------------------
Organisational development
-----------------------------------------------------------------------------------------
Developing,
maintaining * Strengthening executive experience with key talent to
and adapting fill strategic global positions, including
organisational appointment of new CEO
structures,
management processes
and controls, * Investment in group-wide human capital management
and talent pipeline system
to enable effective
delivery by
the business * Developing global HR programmes that attract, manage
in the face and develop talent within the organisation
of rapid and
constant internal
and external * Review of organisation design, structures and
change accountabilities to maintain empowerment in decision
making and bring appropriate level of governance
-------------------------- -------------------------------------------------------------
Reputation
-------------------------------------------------------------------------------------------
Building and
maintaining trusting * Launch of new corporate brand to better communicate
and successful our values, purpose and strategy
partnerships
with our many
stakeholders * Internal and external monitoring for early detection
relies on developing and monitoring of issues that may impact reputation
and sustaining
our reputation
as one of our * Investment and group alignment of corporate
most valuable responsibility and ethics through transparent
assets. reporting and compliance with global best practices
and strategic industry and community partnerships
* Communication and engagement programmes on
appropriate use of products
* Globalising communication and corporate affairs
capabilities
---------------------------- -------------------------------------------------------------
Ethics and compliance
-------------------------------------------------------------------------------------------
Maintaining a
culture underpinned * Board level oversight from the Compliance,
by ethical decision Responsibility and Ethics Committee
making, with
appropriate internal
controls to ensure * Code of Conduct approved by the Board, translated
staff and third into seven languages and rolled out to all employees
parties comply
with our Code
of Conduct, associated * Active participation in international anti-corruption
principles and initiatives
standards, as
well as all applicable
legislation * Anti-bribery and corruption, Sales and marketing, and
other compliance programmes implemented and monitored
through internal compliance assessments, Sales and
marketing, and other compliance programmes
implemented and monitored through internal compliance
assessments
* Development of third party due diligence and
oversight programme
---------------------------- -------------------------------------------------------------
Information, technology and infrastructure
-------------------------------------------------------------------------------------------
Ensuring integrity
of data, securing * IT organisational structure designed to enable
information stored coordinated, consistent and comprehensive enterprise
and/or processed approach
internally or
externally, maintaining
and developing * Industry-standard information security solutions and
technology systems best practice processes adopted and adapted for local
that enable business and Group requirements
processes, and
in ensuring infrastructure
supports the * Cyber-risk activity monitored and changes implemented
organisation as necessary to combat evolving threats
effectively
* Partnership established with strategic third parties
to implement and maintain a robust Group wide
information security programme
* Investment in enterprise-wide standardisation
initiative incorporating data management, access and
process control and risk management
---------------------------- -------------------------------------------------------------
Legal, regulatory and intellectual property
----------------------------------------------------------------------------------------
Adapting to changes
in laws, regulations * Internal expertise drives awareness and understanding
and their application, through policies, processes, and compliance culture
managing litigation,
governmental
investigations, * Staff trained and contractual terms established to
sanctions, contractual mitigate or lower risks where possible
terms and conditions
and potential
business disruptions * Expert external advice procured to provide
independent services and ensure highest standards
* Board of Directors and executive management provide
leadership and take action
------------------------- -------------------------------------------------------------
Inorganic growth
----------------------------------------------------------------------------------------
Identifying,
accurately pricing * The mergers and acquisitions team undertake extensive
and/or realising due diligence of each acquisition in partnership with
expected benefits external advisors including financial and legal
from acquisitions advisors, investment banks, and industry specialists
or divestments, in order to strategically identify, value, and
licensing, or execute transactions.
other business
development activities
* Executive Committee reviews major acquisitions before
they are considered by the Board
* The Board is willing and has demonstrated its ability
to refuse acquisitions where it considers the price
or risk 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
* Post-transaction reviews highlight opportunities to
improve effectiveness of processes
------------------------- -------------------------------------------------------------
Supply chain and API sourcing
----------------------------------------------------------------------------------------
Maintaining continuity
of supply of * Implementing comprehensive group wide third party
finished product management solution
and managing
cost, quality
and appropriate * Maintaining alternative API suppliers for the Group's
oversight of top strategic products, where possible
third parties
in our supply
chain * Rigorous selection process for API suppliers and
focus on building long-term supply contracts
API and raw materials
represent one
of the Group's * The Group has a dedicated plant in Jordan that can
largest cost synthesise strategic injectable APIs where
components. As appropriate
is typical in
the pharmaceuticals
industry, a significant * Utilising supply chain models to maintain adequate
proportion of API levels
the Group's API
requirements
is provided by * Strengthening trade compliance capability to ensure
a small number compliance and drive efficiency
of API suppliers
* Serialisation programme ensuring roll out across the
group
------------------------- -------------------------------------------------------------
Crisis response and continuity management
---------------------------------------------------------------------------------------------
Preparedness,
response, continuity * Central oversight being established of systems,
and recovery processes, and capabilities to enhance our Group-wide
from crisis events resilience and preparedness
such as natural
catastrophe,
economic turmoil, * Programme being rolled out to enhance our ability to
operational issues, respond effectively to crises, and to expedite the
political crisis, restoration of critical processes after disruption.
regulatory intervention
* Engagement with key third parties involved in
preparedness, response and recovery
* Corporate insurance programme reviewed and updated to
ensure appropriate coverage of high impact low
likelihood events
------------------------------ -------------------------------------------------------------
Product Quality
---------------------------------------------------------------------------------------------
Maintaining compliance
with current * Quality culture driven throughout the organisation by
Good Practices global Quality office initiatives, and regularly
for Manufacturing reinforced by communication from senior executives
(cGMP), Laboratory
(cGLP), Distribution
(cGDP) and pharmacovigilance * Global implementation of quality systems that
(GVP) by staff, guarantee valid consistent manufacturing processes
and ensuring leading to the production of quality products
compliance is
maintained by
all relevant * Facilities are maintained as inspection ready for
third parties assessment by relevant regulators
involved in these
processes
* Documented procedures are continuously improved and
staff receive training on those procedures on a
regular basis
* Continued environment and health certifications
* Global pharmacovigilance programme in place and being
enhanced
------------------------------ -------------------------------------------------------------
Financial control and reporting
---------------------------------------------------------------------------------------------
Effectively managing
treasury activities, * Extensive financial control procedures implemented
tax position, and assessed annually as part of the internal audit
income, expenditure, programme
assets and liabilities,
and debtors,
and in reporting * A network of banking partners is maintained for
accurately and lending and deposits
in a timely manner
in compliance
with statutory * Management monitors debtor payments and takes
requirements precautionary measures and action where necessary
and accounting
standards.
* Where it is economic and possible to do so, the Group
hedges its exchange rate and interest rate exposure
* Management obtains external advice to help manage tax
exposures and has upgraded internal tax control
systems
* Introduction of new automated financial consolidation
module
------------------------------ -------------------------------------------------------------
Appendix 2 - Directors' Responsibility Statement
Directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable laws and
regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and Article 4 of the IAS
Regulation and have also chosen to prepare the Parent Company
financial statements under FRS 101 'Reduced Disclosure Framework'
and applicable law. Under company law the Directors must not
approve the accounts unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period. In preparing
these financial statements, International Accounting Standard 1
requires that Directors:
-- Properly select and apply accounting policies
-- Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information
-- Provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance
-- Make an assessment of the Company's ability to continue as a going concern
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for protecting shareholder investments and
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
We confirm to the best of our knowledge:
-- The financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole
-- The Strategic report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face
-- The Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy
By order of the Board
Said Darwazah
Executive Chairman
13 March 2018
Mazen Darwazah
Executive Vice Chairman
13 March 2018
Appendix 3 - Related Party Transactions
Related party transactions: Note 40 of the financial statements,
page 167.
Transactions between Hikma Pharmaceuticals PLC ("Hikma") and its
subsidiaries (together, the "Group") have been eliminated on
consolidation and are not disclosed in this note. Transactions
between the Group and its associates, joint ventures and other
related parties are disclosed below.
Trading transactions:
During the year ended 31 December 2017, the Group entered into
the following transactions with related parties:
Boehringer Ingelheim GmbH ('BI'): is a related party of Hikma
because BI owns 16.6% (2016: 16.7%) of the share capital of Hikma,
controls 11.7% (2016: 11.7%) of the voting capital of Hikma, has
the right to appoint a director of Hikma and a senior executive of
BI holds a directorship of Hikma. During the year, the Group
acquired six products from BI which amounted to an aggregate
consideration of $3.0 million, the Group total sales to BI amounted
to $79.1 million (2016: $90.1 million) and the Group total
purchases from BI amounted to $10.6 million (2016: $10.3 million).
As at the year end, the amount owed from BI to the Group was $43.8
million (2016: $45.2 million). Additionally, balances arising from
the acquisition of West-Ward Columbus from BI relating to
contingent consideration.
Capital Bank, Jordan: is a related party of Hikma because one
director of Hikma is the founder and former Chief Executive Officer
of Capital Bank. At the year end, total cash balance at Capital
Bank was $11.8 million (2016: $11.3 million) and utilisation of
facilities granted by Capital Bank to the Group amounted to $nil
(2016: $8.3 million). The interest expense/income is within market
rate.
Darhold Limited ('Darhold'): is a related party of Hikma because
three directors of Hikma jointly constitute the majority of
directors and shareholders (with immediate family members) in
Darhold and because Darhold owns 24.93% (2016: 25.00%) of the share
and voting capital of Hikma. Other than dividends (as paid to all
shareholders), there were no transactions between the Group and
Darhold Limited during the year.
Hikmacure Limited ('Hikmacure'): is a related party of Hikma
because Hikmacure is a 50:50 joint venture (JV) with MIDROC
Pharmaceuticals Limited ('MIDROC'). Hikma and MIDROC have invested
in Hikmacure in equal proportions of $2.5 million each in cash
(2016: $2.5 million). During 2017 Hikma and MIDROC have agreed not
to proceed with and to liquidate the venture. During the year,
Hikmacure granted two loans of $2.3 million each to the Group and
MIDROC.
HMS Holdings SAL ('HMS): HMS is a related party of Hikma because
HMS is owned by the family of two directors of Hikma. Other than
dividends (as paid to all shareholders), there were no transactions
between the Group and HMS during the year.
Hubei Haosun Pharmaceutical Co. Ltd ('Haosun'): is a related
party of Hikma because the Group holds a non-controlling interest
of 30.1% (2016: 30.1%) in Haosun. During 2017, total purchases from
Haosun were $1.4 million (2016: $0.4 million). At 31 December 2017,
the amount owed from Hubei Haosun Pharmaceutical to the Group
amounted to $1.6 million (2016: $1.7 million). On 13 February 2018,
Hikma acquired additional stake in Hubei Haosun Pharmaceutical Co.
Ltd bringing the total ownership to 49%.
Labatec Pharma ('Labatec'): is a related party of the Group
because Labatec is owned by the family of two directors of Hikma.
During 2017, total Group sales to Labatec amounted to $1.8 million
(2016: $1.4 million). As at the year end, the amount owed by
Labatec to the Group was $0.3 million (2016: $0.3 million).
Remuneration of key management personnel
The remuneration of the key management personnel (comprising the
Executive and Non-Executive Directors and certain of senior
management as set out in the Directors' Report) of the Group is set
out below in aggregate for each of the categories specified in IAS
24 Related Party Disclosures. Further information about the
remuneration of the individual Directors is provided in the audited
part of the Remuneration Committee Report on pages 86 to 108.
2017 2016
$m $m
------------------------------ ----- -----
Short-term employee benefits 11.0 14.2
------------------------------ ----- -----
Share-based payments 10.2 11.5
------------------------------ ----- -----
Post-employment benefits 10.3 -
------------------------------ ----- -----
Other benefits 0.6 0.3
------------------------------ ----- -----
32.1 26.0
------------------------------ ----- -----
About Hikma
Hikma helps puts better health within reach every day for
millions of people in more than 50 countries around the world. For
40 years, we've been creating high-quality medicines and making
them accessible to the people who need them. We're a global company
with a local presence across the United States (US), the Middle
East and North Africa (MENA) and Europe, and we use our unique
insight and expertise to transform cutting-edge science into
innovative solutions that transform people's lives. We're committed
to our customers, and the people they care for, and by thinking
creatively and acting practically, we provide them with a broad
range of branded and non-branded generic medicines. Together, our
8,500 colleagues are helping to shape a healthier world that
enriches all our communities. We are a leading licensing partner in
the MENA region, and through our venture capital arm, are helping
bring innovative health technologies to people around the world.
For more information, please visit www.hikma.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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