Hikma Pharmaceuticals Plc Annual Financial Report

Data : 19/03/2020 @ 13:00
Fonte : UK Regulatory (RNS & others)
Titolo : Hikma Pharmaceuticals Plc (HIK)
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Hikma Pharmaceuticals Plc Annual Financial Report

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RNS Number : 7902G

Hikma Pharmaceuticals Plc

19 March 2020

Hikma Pharmaceuticals PLC

(the 'Company')

Publication of 2019 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 2019 (the '2019 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 March 2020:

   --      2019 Annual Report 
   --      2020 Notice of Annual General Meeting 
   --      Proxy form for the 2020 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')   www.morningstar.co.uk/uk/NSM 

The information included in the unaudited preliminary results announcement released on 27 February 2020, together with the information in the Appendices to this announcement which is extracted from the 2019 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 2019 Annual Report in full. Page and note references in the Appendices below refer to page and note references in the 2019 Annual Report.

The Company's Annual General Meeting ('AGM') will be held at 10:00 am on Thursday 30 April 2020 at Sofitel, St James, 6 Waterloo Place, London SW14 4AN.

n light of the Covid-19 situation, the Board is putting in place arrangements for shareholders who may not be able to attend the meeting in person. Shareholders may listen to the meeting remotely using the details below. Please be aware that such remote listening is at the discretion of the AGM Chairman and connectivity cannot be guaranteed. Shareholders listening remotely will not be counted as being present at the meeting and, therefore, will not be able to vote at the meeting and will not have the ability to speak or ask questions. Shareholders listening remotely are encouraged to do the following in advance of the meeting:

1. Lodge your proxy votes with the registrar ( www.hikmashares.com ) in accordance with the instructions contained in the Notice of AGM which has separately been made available to shareholders - these will be counted in the votes for the meeting.

2. Submit any questions to the Company Secretary ( cosec@hikma.uk.com ) - these questions will be answered at the meeting in the normal way.


   1.   Dial the appropriate telephone number from the list below. 
   2.   Enter the meeting ID (577 822 004) followed by #. 
   3.   There is no participant ID, therefore, press #. 
   4.   You will automatically be placed on mute and will not be able to speak 

UK: +442038924456

Jordan: +96265802909

US: +16142414100

Other international numbers available: https://hikma.zoom.us/zoomconference

Meeting ID: 577 822 004

Web-Based Access

   1.   Open a web browser, ideally Chrome 
   2.   Enter the web address https://hikma.zoom.us/j/577822004 
   3.   Choose to 'Join with Computer Audio' 
   4.   You will automatically be placed on mute and will not be able to speak 

Skype Access

   1.   Open a web browser 
   2.   Enter the web address https://hikma.zoom.us/skype/577822004 
   3.   Choose to 'Join Zoom Meeting' 
   4.   You will automatically be placed on mute and will not be able to speak 

The Board encourages shareholders to monitor the Company's website and regulatory news services for any updates in relation to the AGM that may need to be provided and encourages shareholders to submit their proxies as early as possible, as the situation may change. Should shareholders have any questions, please visit the www.hikmashares.com website or contact the Company Secretary at cosec@hikma.uk.com


Hikma Pharmaceuticals PLC

 Peter Speirs 
 Company Secretary 

19 March 2020

Appendix 1 - Principal Risks and Uncertainties

The Group faces risks from a range of sources that could have a material impact on our financial commitments and ability to trade in the future. The Board of Directors has performed a robust assessment to determine the principal risks for the Group considering our risk context and with input from executive management. Effectively managing these risks is directly linked to the performance of our strategic KPIs and the delivery of the strategic priorities outlined on pages 16-19. Our principal risks are set out below with examples of management actions that help to control the risk. The Board recognises that certain risk factors that influence these risks are outside the control of management. The Board is satisfied that the principal risks are being managed appropriately and consistently with the target risk appetite. The set of principal risks should not be considered as an exhaustive list of all the risks the Group faces.

 Risk and description             Mitigating actions 
 Industry dynamics 
 The commercial viability 
  of the industry and business      *    Growth and expansion in existing markets with new 
  model we operate may change            products and in new 
  significantly as a result 
  of political action, economic 
  factors, societal pressures,      *    therapeutic areas 
  regulatory interventions 
  or changes to participants 
  in the value chain of             *    Portfolio management programmes to focus on strategic 
  the industry.                          products that support 
                                    *    revenue, profit and margin targets 
                                    *    Development of capacity and diversification of 
                                         capability through 
                                    *    differentiated technology 
                                    *    Capital investment in the countries in which we 
                                         operate to ensure continued 
                                    *    market access 
                                    *    Active product life cycle and pricing management 
                                    *    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 registering new products      *    Established Chief Scientific Officer role and 
  that meet market needs                 globalised R&D function 
  and are aligned with Hikma's 
  to provide continuous             *    Integrated selection process for pipeline products 
  source of future growth.               with commercial teams 
                                    *    Optimise use of our expansive global product 
                                         portfolio with increased focus on 
                                    *    specialty products with high value and 
                                    *    Strategic oversight of pipeline delivery through 
                                         dedicated global project 
                                    *    management office 
                                    *    Product-related acquisitions to bolster pipeline 
 Organisational development 
 Developing, maintaining 
  and adapting organisational      *    Strengthened teams with key talent appointed to fill 
  structures, management                strategic regional and 
  processes and controls, 
  and talent pipeline to 
  enable effective delivery        *    global positions 
  by the business in the 
  face of rapid and constant 
  internal and external            *    Embedded Group-wide human capital management system 
                                   *    Developed global programmes that attract, manage and 
                                        develop talent within 
                                   *    the organisation, such as the Lead Forward programme 
                                        (see page 41 for details) 
                                   *    Ongoing updates to organisation design, structures 
                                        and accountabilities to maintain empowerment in 
                                        decision-making and bring appropriate level of 
 Building and maintaining 
  trusted and successful           *    Active external communications, and investor 
  partnerships with our                 engagement programme, to build awareness of Group 
  stakeholders relies on                strategy and purpose 
  developing and sustaining 
  our reputation as one 
  of our most valuable assets.     *    Internal and external monitoring and management of 
                                        issues that may impact reputation (including complex 
                                        business and stakeholder environment related to drug 
                                   *    and the manufacture, sale and distribution of opioid 
                                   *    Independent external review of Corporate Social 
                                        Responsibility (CSR) activities 
                                   *    to support continuous improvement and effectiveness 
                                        of programme 
                                   *    Establishment and development of strategic industry 
                                        and community partnerships 
                                   *    Deployment of internal communication programmes to 
                                        support employee engagement 
                                   *    Continuing to strengthen communication and corporate 
                                        affairs capabilities 
 Ethics and compliance 
 Maintaining a culture 
  underpinned by ethical                  *    Board level oversight from the Compliance, 
  decision-making, with                        Responsibility and Ethics Committee 
  appropriate internal controls 
  to ensure staff and third 
  parties comply with our                 *    (see page 73 for details) 
  Code of Conduct, associated 
  policies and procedures, 
  as well as all applicable               *    Code of Conduct approved by the Board and delivered 
  legislation.                                 to all employees 
                                          *    Initiated programme to automate third-party due 
                                               diligence and oversight programme 
                                          *    Developed and implemented policies and procedures to 
                                               ensure compliance with new laws and regulations, 
                                               including US pharmaceutical pricing transparency, 
                                               California Consumer Privacy Act 
                                          *    Active participation in international anti-corruption 
                                          *    Update and implementation of compliance programmes, 
                                               including anti-bribery and corruption, sales and 
                                               marketing practices, data privacy, and other areas 
 Information and cyber security, technology and infrastructure 
 Ensuring integrity, confidentiality, 
  availability and resilience             *    IT organisational structure designed to enable 
  of data, securing information                coordinated, consistent and comprehensive enterprise 
  stored and/or processed                      approach 
  internally or externally 
  from cyber and non-cyber 
  threats, maintaining and                *    Industry-standard information security solutions and 
  developing technology                        best practice processes adopted and adapted for local 
  systems that enable business                 and Group requirements 
  processes, and ensuring 
  infrastructure supports 
  the organisation effectively.           *    Cyber-risk activity monitored and controls updated to 
                                               combat evolving threats 
                                          *    Partnership established with strategic third parties 
                                               to implement and maintain a robust Group-wide 
                                               information security framework 
                                          *    Roll out of enterprise-wide standardisation 
                                               initiative incorporating data management and access 
 Legal, regulatory and intellectual property 
 Complying with laws and 
  regulations, and their                  *    Appropriate response to complex litigation activity 
  application. Managing                        related to the manufacture, sale and distribution of 
  litigation, governmental                     opioid products 
  investigations, sanctions, 
  contractual terms and 
  conditions and adapting                 *    Rigorous assessment and monitoring of litigation 
  to their changes while                       activity in US pharmaceutical environment 
  preserving shareholder 
  values, business integrity 
  and reputation.                         *    Continuous assessment of developments in legal and 
                                               regulatory frameworks and impact on the organisation 
                                          *    Internal communication and training on policies and 
                                               processes drives awareness and understanding and 
                                               builds a compliance culture 
                                          *    External advice procured to provide independent 
                                               services and ensure highest standards 
 Inorganic growth 
 Identifying, accurately 
  pricing and realising             *    Extensive due diligence of each acquisition in 
  expected benefits from                 partnership with external support in order to 
  acquisitions or divestments,           strategically identify, value, and execute 
  licensing,                             transactions 
  or other business development 
                                    *    The Board spends a significant amount of time 
                                         reviewing major acquisitions proposed by the 
                                         Executive Committee to ensure strategic alignment 
                                    *    Post-acquisition performance (financial and 
                                         non-financial) monitored closely to ensure 
                                         integration and delivery on business plan 
                                    *    Post-transaction reviews highlight opportunities to 
                                         improve effectiveness of processes 
 Active pharmaceutical ingredient (API) and third-party risk management 
 Maintaining availability 
  of supply, quality and            *    Continuity of API supply maintained for high-value 
  competitiveness of API                 products through alternative API suppliers, stocking 
  purchases and ensuring                 strategies, and supply chain modelling 
  proper understanding and 
  control of third-party 
  risks.                            *    Rigorous selection process for API suppliers and 
                                         focus on building long-term supply contracts 
                                    *    Vertically integrated plant in Jordan to synthesise 
                                         selected strategic APIs 
                                    *    Benchmarking, price negotiation and alternate 
                                         sourcing programmes ensure competitiveness 
 Crisis response and business continuity 
 Preparedness, response, 
  continuity and recovery           *    Continued strengthening of central oversight of 
  from crisis events, such               systems, processes, and capabilities 
  as natural catastrophe, 
  economic turmoil, operational 
  issues, political crisis,         *    to enhance our Group-wide resilience and crisis 
  and regulatory intervention.           preparedness 
                                    *    Implemented crisis management framework to enhance 
                                         our ability to respond effectively to crises, and to 
                                         expedite the restoration of critical processes after 
                                         disruption (example activations include: Jordan 
                                         warehouse fire incident, COVID-19 outbreak) 
                                    *    Established crisis response training programme to 
                                         develop employee capability across the Group 
                                    *    Identified key third parties involved in preparedness, 
                                         response and recovery 
                                    *    Corporate insurance programme aligned to ensure 
                                         appropriate coverage of high-impact, low-likelihood 
 Product quality and safety 
 Maintaining compliance 
  with current Good Practices          *    Establishment of a Hikma Quality Council (see page 7) 
  for Manufacturing (cGMP),                 to provide oversight and share 
  Laboratory (cGLP), Distribution 
  (cGDP) and Pharmacovigilance 
  (cGVP) by staff, and ensuring        *    best practice across the Group 
  compliance is maintained 
  by all relevant third 
  parties involved in these            *    Quality and safety culture driven throughout the 
  processes.                                organisation by global initiatives, and regularly 
                                            reinforced by communication from senior executives 
                                       *    Global implementation of quality systems that ensure 
                                            valid consistent manufacturing processes leading to 
                                            the production of quality products 
                                       *    Facilities maintained as inspection-ready for 
                                            assessment by relevant regulators 
                                       *    Documented procedures continuously improved and 
                                            regular staff training 
                                       *    Maintained environment and health certifications and 
                                            drove continuous improvements 
                                       *    Continuous monitoring of the safety of products to 
                                            detect any change to risk-benefit 
                                       *    Global pharmacovigilance programme in place 
 Financial control and reporting 
 Effectively managing income, 
  expenditure, assets and              *    Extensive financial control procedures implemented, 
  liabilities, liquidity,                   including increased proportion of automated controls, 
  exchange rates, tax uncertainty,          assessed annually as part of the financial compliance 
  debtor and associated                     monitoring programme 
  activities, and in reporting 
  accurately, in a timely 
  manner and in compliance             *    Network of banking partners maintained for lending 
  with statutory requirements               and deposits 
  and accounting standards. 
                                       *    Management monitors debtor payments and takes 
                                            precautionary measures and action where necessary 
                                       *    Selected hedging of exchange rate and interest rate 
                                       *    External advice to help manage tax exposures and 
                                            upgraded internal tax control systems 

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 have prepared the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting

Standards, comprising FRS 101 "Reduced Disclosure Framework", and applicable law). In preparing the group financial statements, the directors have also elected to comply with IFRSs, issued by the International Accounting Standards Board (IASB). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the

group and company and of the profit or loss of the group and company for that period. In preparing the financial statements, the directors are required to:

   --      select suitable accounting policies and then apply them consistently 

-- state whether applicable IFRSs as adopted by the European Union and IFRSs issued by IASB have been followed for the group financial statements and United Kingdom Accounting Standards, comprising FRS 101, have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial statements

   --      make judgements and accounting estimates that are reasonable and prudent 

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business

The directors are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for keeping adequate accounting recordsthat are sufficient to show and explain the group and company's transactions and disclose with reasonable accuracy at any time the

financial position of the group and company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.

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 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 Hikma 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 Hikma 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 Hikma's performance, business model and strategy

By order of the Board

Said Darwazah

Executive Chairman

26 February 2020

Sigurdur Olafsson

Chief Executive Officer

26 February 2020

Appendix 3 - Related Party Transactions

39. Related parties

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 2019, the Group entered into the following transactions with related parties:

Boehringer Ingelheim GmbH (BI): is a related party of Hikma because BI owns 16.5% (2018: 16.6%) of the share capital of Hikma, controls 11.8% (2018: 11.8%) 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. The Group total sales to BI amounted to $64.7 million (2018: $66.6 million) and the Group total purchases from BI amounted to $1 million (2018: $5.1 million). As at the year end, the amount owed from BI to the Group was $7.3 million (2018: $18.1 million). Additionally, balances arising from the acquisition of the Columbus business from BI relating to contingent consideration are disclosed in Notes 24, 28 and 31.

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 $8 million (2018: $7.5 million) and utilisation of facilities granted by Capital Bank to the Group amounted to $nil (2018: $nil).The interest expenses/commissions amounted to $0.8 million (2018: $0.7 million). The interest 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 24.76% (2018: 24.85%) 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 (2018: $2.5 million). During 2017 Hikma and MIDROC have agreed not to proceed with and to liquidate the venture. During 2018, Hikmacure granted two loans of $2.3 million each to the Group and MIDROC.

HMS Holdings SAL (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 49% joint venture (JV) with Haosun (2018: 49%). During 2019, total purchases from Haosun were $3 million (2018: $2.3 million). At 31 December 2019, the amount owed from Hubei Haosun Pharmaceutical to the Group amounted to $0.2million (2018: $0.2 million).

Labatec Pharma (Labatec): is a related party of the Group because Labatec is owned by the family of two directors of Hikma. During 2019, total Group sales to Labatec amounted to $2 million (2018: $2.9 million), and total Group purchases amounted to $0.3 million (2018: $nil). As at the year end, the amount owed by Labatec to the Group was $0.4 million (2018: $0.3 million).

Remuneration of key management personnel

The remuneration of the key management personnel (comprising the Executive Directors, Non-Executive Directors and the senior management as set out in the Governances' 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 75 to 103.

                                 2019   2018 
                                   $m     $m 
 Short-term employee benefits    16.3   17.4 
                                -----  ----- 
 Share-based payments             9.5      8 
                                -----  ----- 
 Post-employment benefits         0.2    0.1 
                                -----  ----- 
 Other benefits                   0.8    0.8 
                                -----  ----- 
                                 26.8   26.3 
                                -----  ----- 

About Hikma

Hikma helps put better health within reach every day for millions of people in more than 50 countries around the world. For more than 40 years, we've been creating high-quality medicines and making them accessible to the people who need them. Headquartered in the UK, we are 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 8,600 colleagues are helping to shape a healthier world that enriches all our communities. We are a leading licensing partner, 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.



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