Hikma Pharmaceutical - Annual Financial Report
Publication of 2019 Annual Report and Notice of AGM
The Company will today publish on its website, www.hikma.com, the Annual Report for the year ended
Hard copy versions of the following documents will be sent to those shareholders who have elected to receive paper communication on or about
· 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
The information included in the unaudited preliminary results announcement released on
The Company's Annual General Meeting ('AGM') will be held at
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 ([email protected]) - 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
Other international numbers available: https://hikma.zoom.us/zoomconference
Meeting ID: 577 822 004
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
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 [email protected]
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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
The commercial viability of the industry and business model we operate may change significantly as a result of political action, economic factors, societal pressures, regulatory interventions or changes to participants in the value chain of the industry.
· Growth and expansion in existing markets with new products and in new
· therapeutic areas
· Portfolio management programmes to focus on strategic 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
Identifying, developing and registering new products that meet market needs and are aligned with
· Established Chief Scientific Officer role and globalised R&D function
· Integrated selection process for pipeline products with commercial teams
· Optimise use of our expansive global product portfolio with increased focus on
· specialty products with high value and differentiation
· Strategic oversight of pipeline delivery through dedicated global project
· management office
· Product-related acquisitions to bolster pipeline
Developing, maintaining and adapting organisational structures, management processes and controls, and talent pipeline to enable effective delivery by the business in the face of rapid and constant internal and external change.
· Strengthened teams with key talent appointed to fill strategic regional and
· global positions
· 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 governance
Building and maintaining trusted and successful partnerships with our stakeholders relies on developing and sustaining our reputation as one of our most valuable assets.
· Active external communications, and investor engagement programme, to build awareness of Group strategy and purpose
· Internal and external monitoring and management of issues that may impact reputation (including complex business and stakeholder environment related to drug pricing,
· and the manufacture, sale and distribution of opioid products)
· 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 decision-making, with appropriate internal controls to ensure staff and third parties comply with our Code of Conduct, associated policies and procedures, as well as all applicable legislation.
· Board level oversight from the
· (see page 73 for details)
· Code of Conduct approved by the Board and delivered 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 initiatives
· 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 of data, securing information stored and/or processed internally or externally from cyber and non-cyber threats, maintaining and developing technology systems that enable business processes, and ensuring infrastructure supports the organisation effectively.
· IT organisational structure designed to enable coordinated, consistent and comprehensive enterprise approach
· Industry-standard information security solutions and best practice processes adopted and adapted for local and Group requirements
· 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 control
Legal, regulatory and intellectual property
Complying with laws and regulations, and their application. Managing litigation, governmental investigations, sanctions, contractual terms and conditions and adapting to their changes while preserving shareholder values, business integrity and reputation.
· Appropriate response to complex litigation activity related to the manufacture, sale and distribution of opioid products
· Rigorous assessment and monitoring of litigation activity in US pharmaceutical environment
· 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
Identifying, accurately pricing and realising expected benefits from acquisitions or divestments, licensing,
or other business development activities.
· Extensive due diligence of each acquisition in partnership with external support in order to strategically identify, value, and execute transactions
· 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 competitiveness of API purchases and ensuring proper understanding and control of third-party risks.
· Continuity of API supply maintained for high-value products through alternative API suppliers, stocking strategies, and supply chain modelling
· Rigorous selection process for API suppliers and focus on building long-term supply contracts
· Vertically integrated plant in
· Benchmarking, price negotiation and alternate sourcing programmes ensure competitiveness
Crisis response and business continuity
Preparedness, response, continuity and recovery from crisis events, such as natural catastrophe, economic turmoil, operational issues, political crisis, and regulatory intervention.
· Continued strengthening of central oversight of systems, processes, and capabilities
· to enhance our Group-wide resilience and crisis 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:
· 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 events
Product quality and safety
Maintaining compliance with current Good Practices for Manufacturing (cGMP), Laboratory (cGLP), Distribution (cGDP) and Pharmacovigilance (cGVP) by staff, and ensuring compliance is maintained by all relevant third parties involved in these processes.
· Establishment of a
· best practice across the Group
· Quality and safety culture driven throughout the 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 liabilities, liquidity, exchange rates, tax uncertainty, debtor and associated activities, and in reporting accurately, in a timely manner and in compliance with statutory requirements and accounting standards.
· Extensive financial control procedures implemented, including increased proportion of automated controls, assessed annually as part of the financial compliance monitoring programme
· Network of banking partners maintained for lending and deposits
· Management monitors debtor payments and takes precautionary measures and action where necessary
· Selected hedging of exchange rate and interest rate exposure
· 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
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
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
· 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
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 Strategic report includes a fair review of the development and performance of the business and the position of
· the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess
By order of the Board
Chief Executive Officer
Appendix 3 - Related Party Transactions
39. Related parties
During the year ended
HMS Holdings SAL (HMS): is a related party of
Labatec Pharma (Labatec): is a related party of the Group because Labatec is owned by the family of two directors of
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.
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Short-term employee benefits
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This information is provided by RNS, the news service of the
Quick facts: Hikma Pharmaceuticals plc.