Hikma Pharmaceuticals Regulatory News (HIK)

27 Aug 2009 07:00

Hikma Pharmaceuticals PLC

Interim results announcement

for the six months to 30 June 2009

London, 27 August 2009 - Hikma Pharmaceuticals PLC ("Hikma") (LSE: HIK) (NASDAQ DUBAI: HIK), the fast growing multinational pharmaceutical group, today reports its interim results for the six months ended 30 June 2009.

Summary P&L
	H1 2009	H1 2008	Change
	$m	$m
Revenue	321.5	299.9	+7.2%
Gross profit	151.2	135.0	+12.0%
Operating profit	57.2	47.1	+21.5%
Profit attributable to shareholders	43.2	32.9	+31.4%
Diluted earnings per share (cents)	22.3	17.0	+31.2%
Dividend per share (cents)	4.5	3.5	+28.6%

Highlights

Group revenues up 7.2% to $321.5 million

Gross margin improved to 47.0%, compared to 45.0% in H1 2008 

Operating profit up 21.5% to $57.2 million reflecting strong improvement in Generics profitability

Diluted earnings per share up 31.2% to 22.3 cents

Dividend per share up 28.6% to 4.5 cents

Operating cash flow increased by $30.8 million to $36.2 million reflecting working capital improvements

Net debt decreased by $33.2 million to $164.4 million since June 2008

Launched 72 products across the Group, including 12 new compounds1 and 25 new dosage forms and strengths

 

 

Said Darwazah, Chief Executive Officer of Hikma, said:

"Despite difficult economic conditions and a slowing global healthcare market, Hikma has achieved an excellent set of half year results, with 31.2% growth in diluted earnings per share. We have also increased our dividend by 28.6% to 4.5 cents. Our Branded business continues to outperform the market and we have been able to gain market share in key markets. We are very satisfied with the turnaround of our US Generics business, which reflects the direct action we have taken to improve the quality of this business. We remain confident that the performance of our Injectables business will improve in the second half of the year, particularly in the MENA region and the US, and continue to be positive on the long-term prospects for this business. 

We remain confident in the outlook for the full year and we believe that we have the right strategy to continue our track record of growth."

Enquiries

Hikma Pharmaceuticals PLC

Susan Ringdal, Investor Relations Director  Tel: +44 (0)20 7399 2760

Brunswick Group

Jon Coles / Justine McIlroy Tel: +44 (0)20 7404 5959

About Hikma

Hikma Pharmaceuticals PLC is a fast growing multinational 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 2008, Hikma achieved revenues of $581 million and profit attributable to shareholders of $57 million. For news and other information, please visit www.hikma.com.

Interim management report

Group performance

Revenue for the Group increased by 7.2% to $321.5 million, compared to $299.9 million in the first half of 2008. On a constant currency basis, Group revenues increased by 11.0%. During the period our Branded business continued to perform well and we saw a considerable improvement in our US Generics business compared to the first half of 2008. These strong performances were partially offset by a decline in Injectables revenues compared to the first half of 2008, reflecting the impact of negative foreign exchange movements and our strategic decision to reduce private label sales in the US.

Exchange rate movements had a negative impact on Group revenue of approximately $11.5 million, or 3.6%, and on Group operating profit of approximately $3.6 million, or 6.3%. This resulted primarily from the strengthening of the US Dollar relative to the Euro, the Algerian Dinar, the Sudanese Pound and the Egyptian Pound.

The Branded business continues to represent close to 60% of Group sales and the combined Branded and Injectables sales in MENA now make up 68% of total Group sales. 

Revenue by segment	H1 2009	H1 2008
Branded	59.2%	58.0%
Injectables	21.1%	26.9%
Generics	19.2%	14.4%

Revenue by region	H1 2009	H1 2008
MENA	68.0%	67.1%
US	20.9%	18.6%
Europe and rest of world	11.1%	14.2%

The Group's gross profit increased by 12.0% to $151.2 million, compared to $135.0 million in the first half of 2008. Group gross margin for the first half of 2009 was 47.0%, compared to 45.0% in the first half of 2008. This improvement primarily reflects the increase in profitability in our Generics business.

Group operating expenses grew in the first half of 2009 by 6.9% to $94.0 million, compared to $87.9 million in the first half of 2008, but as a percentage of sales remained relatively stable at 29.2%, compared to 29.3% in the first half of 2008.  The paragraphs below address the Group's main operating expenses in turn.

Sales and marketing expenses totalled $47.3 million for the first half of the year, compared to $47.1 million in the first half of 2008, and decreased as a percentage of sales from 15.7% in the first half of 2008 to 14.7%. This improvement was a result of the economies of scale gained from the full integration of our acquisitions and increased Generics sales. 

General and administrative expenses increased by 13.0% to $31.7 million, compared to $28.0 million in the first half of 2008. This increase comes mainly from corporate general and administrative costs, which reached $12.0 million, compared to $8.4 million in the first half of 2008, owing primarily to increased provisions for bad debt and increases in employee benefits. General and administrative expenses as a percentage of sales increased to 9.9%, compared to 9.3% in the first half of 2008.

Investment in R&D decreased by 26.4% to $8.0 million, with total investment in R&D now representing 2.5% of Group revenue, compared to 3.6% in the first half of 2008. This decline comes as a result of our reduced investment in bioequivalence studies for our US Generics business as we re-assessed our priorities in the first half and our increased emphasis on targeting new in-licensing agreements for the Group.

 

Other net operating expenses, which consist mainly of provisions against slow moving inventory items and foreign exchange gains or losses, increased by $5.1 million to $7.0 million. This increase is due primarily to foreign exchange losses of $2.1 million, which resulted mainly from the depreciation in the Algerian and Sudanese currencies, and which compare to a $3.6 million foreign exchange gain in the first half of 2008.

Operating profit for the Group increased by 21.5% to $57.2 million, compared to $47.1 million in the first half of 2008. Our Group operating margin reached 17.8% compared to 15.7% in the first half of 2008.

Branded 

H1 2009 highlights:

Branded revenues up 9.3%, or 12.5% in constant currency, to $190.2 million, outperforming the underlying MENA market 

Successful development of our cardiovascular and diabetes business and excellent progress in the rollout of key in-licensed products 

Branded revenues increased by 9.3% in the first half to $190.2 million, compared to $174.0 million in the first half of 2008. In constant currency, Branded revenues increased by 12.5%.  Importantly, the Branded business continued to grow faster than the underlying MENA market, where growth has slowed compared to the first half of 2008.

Focused sales and marketing efforts helped to increase customer demand across most Branded markets in the first half of the year. Significant focus was put on promoting new and recently launched products, developing our market position in key products and therapeutic areas, and building greater brand recognition.

As a result of these efforts, Hikma is the largest regional pharmaceutical company in the MENA region and the fifth largest international pharmaceutical company in the MENA region, with a market share of 3.8%, up from 3.5% at the end of June 2008.2..

 

 

Sales in Algeria were particularly strong in the first half, as a result of excellent sales efforts, strong brand recognition, and our expanding product portfolio, which now includes an impressive range of cardiovascular products including the antihypertensives Blopress® (candesartan) and Iminopril® (imidapril), the oral diabetes products Actos® (pioglitazone) and Glorion® (glimepiride), and the dyslipidemia product Torvast® (atorvastatin). At the end of June, our market share in Algeria had increased to 7.0%, compared to 5.9% at the end of June 2008. As of June 2009 we have grown to be the third largest pharmaceutical company and the largest generic pharmaceutical manufacturer by value in the Algerian market.

In Saudi Arabia, our specialist cardiovascular sales team is focusing on building a leading position in the treatment of chronic heart conditions and diabetes and is making progress in developing sales of key products like Blopress®, Actos® and Glorion®. We have also seen strong demand from our hospital customers across our product portfolio. At the end of June, our market share in Saudi Arabia had increased to 5.3%, compared to 5.0% at the end of June 2008.  We are now the fourth largest pharmaceutical company by value in the Saudi market, compared to the fifth largest at the end of June 2008.

In Jordan we have maintained our position as the market leader with a market share of 11.9%, down from 12.5% at the end of June 2008.  We delivered a strong performance in Jordan during the period, benefitting from the efficient integration of APM's sales and marketing staff. We also performed extremely well in the tenders awarded in the first half, which will help to drive sales in this market in the second half.

In Egypt, we began the rollout of some of our key Branded products, including Actos® and Tanatril® (imidapril). Six further launches are planned for the second half, including the launch of Blopress®, Omnicef® and Mycamine®.  At the end of June, our market share in Egypt was stable at 1.4%.

Other markets that performed well during the first half were Sudan and Iraq, where we benefited from strong demand for our own brands, and Lebanon, where we launched some of our leading in-licensed products. 

 

Revenue from in-licensed products grew by 24.9% in the first half of 2009 to $73.5 million, representing 38.6% of Branded sales. Actos® and Blopress® have now been launched in 13 markets, Blopress Plus® has been launched in 6 markets and Takepron® has been launched in 9 markets. Our cardiovascular sales team is working hard to establish these products as leading cardiovascular and diabetes brands in the MENA through a combination of medical education programmes, sponsorship of scientific conferences and targeted marketing campaigns.

We continue our efforts to develop our portfolio of in-licensed products and have signed three new licensing agreements since the beginning of the year.  In June we signed an agreement with Teikoku Pharma USA for our own brand of Lidoderm®, the first and only US FDA approved patch for post-herpetic neuralgia. This agreement covers the territories of Algeria, Morocco, Iraq, Libya, Sudan, and Tunisia.  In July, we signed two agreements with Faes Farma SA, a Spanish manufacturing company - one for the manufacturing and marketing of mesalazine, a generic product used for the treatment of inflammatory intestinal disease, and one for the license to manufacture and market the novel anti-histamine Bilastine®. Both of these agreements cover the entire MENA region. All of these agreements reflect our position as the partner of choice for marketing branded products in the region.

During the first half of 2009, the Branded business launched a total of 48 products across all markets, including five new compounds and 12 new dosage forms and strengths. The Branded business also received 22 regulatory approvals across the region, including five for new products. 

Gross profit in the Branded business increased by 7.3% to $100.9 million, compared to $94.0 million in the first half of 2008. Reflecting the depreciation of the Algerian Dinar, the Sudanese Pound and the Egyptian Pound, the Branded business's gross margin declined by one percentage point to 53.0%, compared to 54.0% in the first half of 2008, 

Branded operating profit increased by 5.2% to $53.0 million, compared to $50.4 million in the first half of 2008. Operating margin in the Branded business was 27.9%, compared to 29.0% in 2008. This change is mainly due to the negative impact of exchange rates described above.

Taking into account the seasonality of the Branded business and the first half slowdown in the underlying MENA market, we still expect to deliver strong growth in the Branded business for the full year. 

Injectables

H1 2009 highlights:

Injectables revenues down 16.0% to $67.7 million and down 8.6% on a constant currency basis

Obtained significant new injectable supply agreement in the US, effective from July 2009

Revenue in our global Injectables business decreased by 16.0% to $67.7 million compared $80.6 million in the first half of 2008.  As 44.3% of Injectable sales are Euro denominated, the strengthening of the US Dollar against the Euro, in addition to the depreciation of the Algerian Dinar and the Sudanese Pound, had an adverse impact on the segment's revenue. On a constant currency basis, revenues decreased by 8.9%. In addition to the currency impact, the decline in Injectables sales is due to our strategic decision to reduce private label sales in our US business compared to the same period last year. 

Injectables revenue by region	H1 2009	H1 2008
MENA	47.6%	41.1%
US	8.1%	15.8%
Europe and rest of world	44.3%	43.2%

MENA Injectables sales declined by 2.8% to $32.2 million, compared to $33.1 million in the first half of 2008. This decline is attributed to currency impact and the timing of tender sales. Growth in the second half will be generated by the realisation of these tender sales, an increase in sales in Iraq, an increasing contribution from existing markets like Lebanon and Jordan, and an initial contribution from newly launched oncology products. 

It is our strategy to prioritise our own label sales in the US. We therefore reduced private label sales in our US Injectables business by $7.0 million, whilst our own label sales remained stable during the period. As a result, US injectables sales declined by 56.9% to $5.5 million.  We are limiting private label sales in order to improve the market potential of our own label products. Having successfully built a hospital sales force, we now have a greater capability to market our own label products and drive profitable sales going forward.  We expect to deliver a much stronger performance in the US in the second half of the year from our own label products and also as a result of a new supply agreement signed with a leading group purchasing organisation. Further sales growth will be driven by the four new product launches expected in the second half of the year.

European injectable sales reached $30.0 million in the first half, down 13.6% from $34.8 million in the first half of 2008. The decline is attributed mainly to the foreign exchange rate movements, which had a negative impact of approximately $4.6 million. In addition to the negative impact of exchange rates, price erosion in the German market offset increased sales from new product launches and an increasing market share in some of our newer markets.

During the first half of 2009, the Injectables business launched a total of 21 products across all markets, including 5 new compounds and 10 new dosage forms and strengths. The Injectables business also received a total of 15 regulatory approvals across all regions and markets, including 7 in MENA, 3 in Europe and 4 in the US. In the second half, we expect further sales will be driven by these launches and an additional 19 launches expected in the second half of the year.

Injectables gross profit decreased by 13.6 % to $29.2 million, compared to $33.8 million in the first half of 2008, with gross margin increasing to 43.2%, compared to 42.0% in the first half of 2008. The increase in margin reflects a shift in the mix of Injectables sales towards the MENA region, currency impact and lower private label sales in the US.

Injectables operating profit decreased by 33.6% to $8.9 million, compared to $13.5 million in the first half of 2008. Injectables operating margin decreased to 13.2% in the first half of 2009, down from 16.7% in the first half of 2008. This decline is explained by lower sales compounded by relatively fixed operating expenses. 

We remain confident that the performance of our Injectables business will improve in the second half of the year, particularly in the MENA region and the US, enabling us to deliver full year sales in line with 2008.

Generics

H1 2009 highlights:

Delivered significant improvement in Generics revenues, up 43.2% to $61.8 million

More than doubled gross margin to 33.8%

Revenue in our Generics business increased by 43.2% to $61.8 million, compared to $43.1 million in the first half of 2008. This strong performance reflects the actions of the strengthened management team and in particular focused sales, marketing and operational improvements. It also reflects the changing competitive environment in the US, which has increased demand for our anti-infective products, our ability to successfully supply these products from our FDA-approved manufacturing facilities in the MENA region, and a healthy demand for a number of our US-produced products, including isosorbide mononitrate and digoxin.

Over the past year we have rationalised our product portfolio and increased our focus on our higher margin products. We have seen significant volume increases for a number of our products and have implemented price increases across our portfolio. Through focused sales targeting and improving service levels, we have been developing better relationships with key wholesale and retail customers, and are therefore improving the predictability of our revenue streams.  At the same time our operations have become more efficient.

All of these actions led to an increase in Generics gross profit of 205.7% to $20.9 million, compared to $6.8 million in the first half of 2008. Gross margin more than doubled from 15.8% in the first half of 2008 to 33.8% in the first half of 2009.  Consequently, the Generics segment achieved an operating profit of $9.1 million in the first half of 2009, compared to an operating loss of $6.0 million in the first half of 2008.

During the first half of 2009, the Generics business launched two new compounds in three new dosage forms and strengths. 

We are encouraged by the success we achieved in the Generics business in the first half. We expect an increase in market pressure in the second half of the year, but overall we are confident of delivering a strong performance for the full year.

Other businesses 

Other businesses, which primarily comprise Arab Medical Containers, a manufacturer of plastic specialised packaging, and International Pharmaceuticals Research Centre, which conducts bio-equivalency studies, contributed revenues of $1.9 million, compared to revenue of $2.1 million in the first half of 2008.

These other businesses delivered an operating loss of $1.9 million in the first half of 2009, compared to an operating loss of $2.3 million in the first half of 2008. 

Research & Development3

The Group's product portfolio continues to grow. During the first half of the year, we launched 12 new compounds, expanding the Group portfolio to 379 compounds in 791 dosage forms and strengths. We manufacture and/or sell 40 of these compounds under-license from the originator.

Across all businesses and markets, a total of 72 products were launched during the first half. In addition, the Group received 37 approvals.

	Total marketed products		Products launched in H1 2009
	Compounds	Dosage forms and strengths	New compounds	New dosage forms and strengths	Total launches in H1 2009*
Branded	245	471	5	12	48
Injectables	85	212	5	10	21
Generics	49	108	2	3	3
Group	379	791	12	25	72

 

	Products approved in H1 2009			Products pending approval as of 30 June 2009
	New compounds	New dosage forms and strengths	Total approvals in H1 2009*	New compounds	New dosage forms and strengths	Total pending approvals as of 30 June 2009*
Branded	5	8	22	32	56	525
Injectables	3	6	15	17	29	224
Generics	0	0	0	27	35	35
Group	8	14	37	76	120	784

 

*Totals include all compounds and formulations that are either launched, approved or pending approval across all markets.

 

To ensure the continuous development of our product pipeline, we submitted 165 regulatory filings in the first half of the year across all regions and markets. As of 30 June 2009, we had a total of 784 pending approvals across all regions and markets.

We estimate the approximate addressable market for our portfolio of pending approvals to be approximately $27 billion, based on the 2008 full year sales of the currently marketed equivalent products in the markets covered by the pending approvals.

At 30 June 2009, we had a total of 81 new products under development, the majority of which should receive several marketing authorisations for differing strengths and/or product forms over the next few years. 

Net finance expense

Net finance expense decreased to $6.7 million, compared to $8.2 million in the first half of 2008 due to lower net debt levels as explained in the operating cash flow and investment section below.

Profit before tax

Profit before taxes for the Group increased by 28.5% to $50.5 million, compared to $39.3 million in the first half of 2008. 

Tax

The Group incurred a tax expense of $6.5 million in the first half of 2009. The effective tax rate was 12.9%, a decrease of 2.3 percentage points on the comparable period of 2008. The decline in the effective tax rate is attributed the continued shift in the Group's overall geographic sales mix. 

Profit for the period

The Group's profit attributable to equity holders of the parent increased by 31.4% to $43.2 million for the six months to 30 June 2009.

Earnings per share 

Diluted earnings per share for the six months to 30 June 2009 were 22.3 cents, up 31.2% from 17.0 cents in the first half of 2008. 

Dividend

The Board has declared an interim dividend of 4.5 cents per share (approximately 2.75 pence per share) to be paid on 16 October 2009 to eligible shareholders on the register at the close of business on 18 September 2009. The ex-dividend date is 16 September 2009.

Operating cash flow and investment

The Group achieved an overall improvement in its working capital indicators. Receivable days improved from 126 days as at 30 June 2008 to 115 days as at 30 June 2009. Inventory days improved from 194 days to 179 days and payable days remained steady at 65 days. These improvements are a reflection of our continued focus on improving collections, especially in the MENA region, increased factoring of receivables and a leaner supply chain.

Working capital improvements coupled with improved profitability led to a significant increase in operating cash flow to reach $36.2 million during the first half, compared to $5.4 million during the first half of 2008.

Capital expenditures also declined to $14.3 million from $30.0 million due to lower capital expenditure needs following three years of substantial expansion projects.

As a result, net debt decreased from $197.6 million at 30 June 2008 and $170.9 million as at 31 December 2008 to $164.4 million as at 30 June 2009 keeping the Group in a very strong financing position.

Principal risks and uncertainties

The Group's business faces risks and uncertainties which could have a significant effect on its financial condition, results of operations or performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The directors do not consider that the principal risks and uncertainties have changed materially since the publication of the Annual Report & Accounts for the year ended 31 December 2008, which can be found on pages 51 to 57 of the Annual Report & Accounts, which is available at www.hikma.com, and which are summarised below.

Operational risks

Regulatory

Hikma is subject to extensive regulation on the approval, manufacture and distribution of its products in all its markets. There is no single worldwide harmonised set of regulations relating to the development, manufacture and sale of pharmaceutical products, and these laws and regulations may be subject to unexpected change. This can create significant compliance costs, and can also increase the time it takes to realize the full penetration of products into all markets. 

Economic and political dynamics

The Group operates in emerging markets. The failure of control, a change in the economic conditions or political environment or sustained civil unrest in any particular market or country could adversely affect the financial condition of the Group.

Risk of interruption of production

Product manufacture is subject to continual regulatory control, inspection and approval. Regulatory changes or compliance failure could result in interruptions to production. The Group's manufacturing facilities could also be disrupted for reasons beyond the Group's control such as fire, work force actions or other issues.

Regulated and other suppliers

The Group benefits from close commercial relationships with a number of key customers and suppliers. Damage to or loss of any of these relationships could have a direct and detrimental effect on the Group's results. In addition a compliance failure by any of our regulated suppliers could lead to delays in production or increased costs or liabilities.

R&D and commercialisation of new products

Group results may be impacted significantly by the timeliness of its research and development and product commercialisation activities. Additional costs may be incurred, and sales opportunities lost, if there is a significant delay in any of these steps.

Competitor risk

The Group operates in highly competitive markets with significant product innovations. We are subject to the threat of our competitors entering our markets, launching new products in existing markets and to pricing pressures on our existing products.

Seasonality

The Group's business, in particular the Branded Pharmaceuticals business, is seasonal, and generally experiences higher net sales and net profit in the first half of each financial year, as compared to the second half of its financial year. Accordingly, the Group's outstanding borrowings historically have been higher during the first half of the financial year in order to finance the working capital requirements of the Group.

Financial risks

Foreign exchange risk

The Group uses the US Dollar as its reporting currency and is therefore exposed to foreign exchange movements, primarily in the European, Algerian, Sudanese and Egyptian currencies, that could materially affect the Group's financial results.

Interest rate risk 

The Group manages its exposures to interest rate risks by changing the proportion of fixed rate debt and variable rate debt in its total debt portfolio. To manage this mix the Group may enter into interest rate swap agreements, in which it exchanges the periodic payments based on notional amounts and agreed upon fixed and variable interest rates. 

Credit Risk 

In most cases, the Group grants its buyers credit terms for settlement of sales invoices. Credit risk is managed through the Group Credit policy and the use of various financial instruments such as letters of credit, factoring and credit insurance arrangements. The Group has concentration of risk arising from significant balances with key customers in the MENA region and the US.

Liquidity Risk

The Group has constant financing requirements, both for short-term working capital needs and for long term strategic plans. The principal terms of the Group's committed debt facilities and the directors' view on the sufficiency of those facilities are described in note 2 to the condensed financial statements.

Outlook

Our expectations for the second half are positive and we re-iterate our guidance of delivering full year sales growth of approximately 10% on current exchange rates, or 15% in constant currency, with a 1% to 2% improvement in gross margin.

Responsibility statement

We confirm that to the best of our knowledge:   (a) the condensed set of financial statements has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’;   (b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and   (c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board       Said Darwazah Bassam Kanaan Chief Executive Officer Chief Financial Officer   26 August 2009

 

Cautionary statement

This Interim Management Report ("IMR") has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

Forward looking statements

Certain statements in this announcement are forward-looking statements - using words such as "intends", "believes", anticipates" and "expects". Where included, these have been made by the Directors in good faith based on the information available to them up to the time of their approval of this announcement. By their nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements, and should be treated with caution. These risks, uncertainties or assumptions could adversely affect the outcome and financial effects of the plans and events described in this announcement. Forward-looking statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which speak as only of the date of the approval of this announcement.

Except as required by law, the Company is under no obligation to update or keep current the forward-looking statements contained in this announcement or to correct any inaccuracies which may become apparent in such forward-looking statements.

INDEPENDENT REVIEW REPORT TO HIKMA PHARMACEUTICALS PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 13. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdoms' Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Registered Auditors

London, United Kingdom

26 August 2009

Notes: A review does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes may have occurred to the financial information since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance in this area.

Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.

Hikma Pharmaceuticals PLC

Condensed consolidated statement of comprehensive income

		H1 2009	H1 2008	FY 2008
	Notes	$000's (Unaudited)	$000's (Unaudited)	$000's (Audited)
Continuing operations
Revenue	3	321,495	299,912	580,656
Cost of sales	3	(170,312)	(164,884)	(324,174)
Gross profit	3	151,183	135,028	256,482
Sales and marketing costs		(47,303)	(47,149)	(90,560)
General and administrative expenses		(31,674)	(28,018)	(56,853)
Research and development costs		(7,956)	(10,816)	(22,172)
Other operating expenses (net)		(7,036)	(1,936)	(6,215)
Total operating expenses		(93,969)	(87,919)	(175,800)
Adjusted operating profit		60,930	56,686	94,326
Exceptional items	12	-	(6,005)	(6,429)
Intangible amortisation*	12	(3,716)	(3,572)	(7,215)
Operating profit		57,214	47,109	80,682
Finance income		226	430	817
Finance expense		(6,923)	(8,601)	(17,545)
Other (expense) / income		(64)	321	80
Profit before tax		50,453	39,259	64,034
Tax	4	(6,493)	(5,942)	(6,915)
Profit for the period		43,960	33,317	57,119
Other comprehensive income
Cumulative effect of change in fair value of available for sale investments		18	-	(216)
Cumulative effect of change in fair value of financial derivatives		26	160	(78)
Exchange difference on translation of foreign operations		(3,552)	9,955	(15,454)
Total comprehensive income for the period		40,452	43,432	41,371
Profit attributable to:
Attributable to:
Minority interest		730	405	(6)
Equity holders of the parent		43,230	32,912	57,125
		43,960	33,317	57,119
Total comprehensive income attributable to:
Attributable to:
Minority interest		390	405	(6)
Equity holders of the parent		40,062	43,027	41,377
		40,452	43,432	41,371
Earnings per share (cents)
Basic	6	22.8	17.6	30.4
Diluted	6	22.3	17.0	29.6

On this page and throughout these interim financial information "H1 2009" refers to the six months ended 30 June 2009, "H1 2008" refers to the six months ended 30 June 2008 and "FY 2008" refers to the year ended 31 December 2008. 

* Intangible amortisation comprises the amortisation on intangible assets other than software.

Hikma Pharmaceuticals PLC

Condensed consolidated balance sheet

		30 June	30 June	31 December
		2009	2008	2008
	Notes	$000's (Unaudited)	$000's (Unaudited)*	$000's (Audited)
Non-current assets
Intangible assets		254,746	267,824	258,228
Property, plant and equipment		273,922	266,658	271,650
Interest in joint venture		5,453	4,996	5,453
Deferred tax assets		18,438	14,060	13,305
Available for sale investments		557	842	540
Financial and other non-current assets		2,030	1,916	2,077
		555,146	556,296	551,253
Current assets
Inventories	7	166,635	167,970	154,756
Trade and other receivables	8	229,231	228,513	195,843
Collateralised cash		1,025	720	819
Cash and cash equivalents		50,526	21,767	62,727
Other current assets		1,165	4,447	1,061
		448,582	423,417	415,206
Total assets		1,003,728	979,713	966,459
Current liabilities
Bank overdrafts and loans		101,550	119,360	117,300
Obligations under finance leases		708	882	1,221
Trade and other payables	9	104,094	93,124	82,003
Income tax provision		12,824	12,459	12,016
Other provisions		5,452	5,066	5,392
Other current liabilities		7,082	16,373	10,502
		231,710	247,264	228,434
Net current assets		216,872	176,153	186,772
Non-current liabilities
Long-term financial debts		108,340	93,944	110,414
Deferred income		588	810	695
Obligations under finance leases		5,358	5,911	5,496
Deferred tax liabilities		12,353	11,574	12,425
		126,639	112,239	129,030
Total liabilities		358,349	359,503	357,464
Net assets		645,379	620,210	608,995
Equity
Share capital		34,010	33,751	33,857
Share premium		270,900	269,503	269,973
Own shares		(2,203)	-	(1,124)
Other reserves		336,496	310,723	300,503
Equity attributable to equity holders of the parent		639,203	613,977	603,209
Minority interest		6,176	6,233	5,786
Total equity		645,379	620,210	608,995

\* These numbers are revised - see note 1

Hikma Pharmaceuticals PLC

Condensed consolidated statement of changes in equity

	Merger reserve	Revaluation reserves	Translation reserves	Retained earnings
	$000's	$000's	$000's	$000's
Balance at 1 January 2008 (Audited)	33,920	4,627	19,792	215,853
Total comprehensive income for the period	-	(90)	9,955	33,162
Issue of equity shares	-	-	-	-
Acquisition of own shares	-	-	-	-
Cost of equity settled employee share scheme	-	-	-	1,307
Deferred tax arising on share-based payments	-	-	-	(261)
Dividends on ordinary shares	-	-	-	(7,542)
Dividends paid to minority shareholders	-	-	-	-
Balance at 30 June 2008 (Unaudited)	33,920	4,537	29,747	242,519
Balance at 1 January 2008 (Audited)	33,920	4,627	19,792	215,853
Total comprehensive income for the year	-	(180)	(15,454)	57,011
Issue of equity shares	-	-	-	-
Acquisition of own shares	-	-	-	-
Cost of equity settled employee share scheme	-	-	-	3,384
Deferred tax arising on share-based payments	-	-	-	(4,299)
Dividends on ordinary shares	-	-	-	(14,151)
Dividends paid to minority shareholders	-	-	-	-
Balance at 31 December 2008 (Audited)	33,920	4,447	4,338	257,798
Total comprehensive income for the period	-	(91)	(3,212)	43,365
Issue of equity shares	-	-	-	-
Acquisition of own shares	-	-	-	-
Cost of equity settled employee share scheme	-	-	-	2,170
Current and deferred tax arising on share-based payments	-	-	-	1,335
Dividends on ordinary shares	-	-	-	(7,574)
Balance at 30 June 2009 (Unaudited)	33,920	4,356	1,126	297,094

Hikma Pharmaceuticals PLC

Condensed consolidated statement of changes in equity

	Total Other reserves	Share capital	Share premium	Own shares	Total equity attributable to equity shareholders of the parent	Minority interest	Total equity
	$000's	$000's	$000's	$000's	$000's	$000's	$000's
Balance at 1 January 2008 (Audited)	274,192	30,229	114,059	-	418,480	6,177	24,657
Total comprehensive income for the period	43,027	-	-	-	43,027	405	43,432
Issue of equity shares	-	3,522	155,444	-	158,966	-	158,966
Acquisition of own shares	-	-	-	-	-	-	-
Cost of equity settled employee share scheme	1,307	-	-	-	1,307	-	1,307
Deferred tax arising on share-based payments	(261)	-	-	-	(261)	-	(261)
Dividends on ordinary shares	(7,542)	-	-	-	(7,542)	-	(7,542)
Dividends paid to minority shareholders	-	-	-	-	-	(349)	(349)
Balance at 30 June 2008 (Unaudited)	310,723	33,751	269,503	-	613,977	6,233	620,210
Balance at 1 January 2008 (Audited)	274,192	30,229	114,059	-	418,480	6,177	424,657
Total comprehensive income for the year	41,377	-	-	-	41,377	(6)	41,371
Issue of equity shares	-	3,628	155,914	-	159,542	-	159,542
Acquisition of own shares	-	-	-	(1,124)	(1,124)	-	(1,124)
Cost of equity settled employee share scheme	3,384	-	-	-	3,384	-	3,384
Deferred tax arising on share-based payments	(4,299)	-	-	-	(4,299)	-	(4,299)
Dividends on ordinary shares	(14,151)	-	-	-	(14,151)	-	(14,151)
Dividends paid to minority shareholders	-	-	-	-	-	(385)	(385)
Balance at 31 December 2008 (Audited)	300,503	33,857	269,973	(1,124)	603,209	5,786	608,995
Total comprehensive income for the period	40,062	-	-	-	40,062	390	40,452
Issue of equity shares	-	153	927	-	1,080	-	1,080
Acquisition of own shares	-	-	-	(1,079)	(1,079)	-	(1,079)
Cost of equity settled employee share scheme	2,170	-	-	-	2,170	-	2,170
Current and deferred tax arising on share-based payments	1,335	-	-	-	1,335	-	1,335
Dividends on ordinary shares	(7,574)	-	-	-	(7,574)	-	(7,574)
Balance at 30 June 2009 (Unaudited)	336,496	34,010	270,900	(2,203)	639,203	6,176	645,379

Hikma Pharmaceuticals PLC

Condensed consolidated cash flow statement

		H1  2009	H1  2008	FY  2008
	Note	$000's (Unaudited)	$000's (Unaudited)	$000's (Audited)
Net cash from operating activities	10	36,246	5,442	74,969
Investing activities
Purchases of property, plant and equipment		(14,325)	(30,041)	(56,205)
Proceeds from disposal of property, plant and equipment		246	130	1,003
Purchase of intangible assets		(2,067)	(2,882)	(9,313)
Proceeds from disposal of intangible assets		738	-	1,257
Investment in joint venture		-	-	(910)
Investment in financial and other non current assets		46	(1,079)	(787)
Proceeds from available for sale investments (net)		1	166	252
Subsequent payments relating to prior year acquisitions		-	(1,934)	(2,234)
Finance income		226	430	817
Net cash used in investing activities		(15,135)	(35,210)	(66,120)
Financing activities
(Increase)/decrease in collateralised cash		(206)	4,908	4,809
Increase in long-term financial debts		30,768	41,904	101,685
Repayment of long-term financial debts		(15,842)	(5,622)	(48,933)
Decrease in short-term borrowings		(32,750)	(161,223)	(159,237)
Decrease in obligations under finance leases		(650)	(360)	(436)
Dividends paid		(7,574)	(7,557)	(14,151)
Dividends paid to minority shareholders		-	(351)	(385)
Purchase of own shares		(1,079)	-	(1,124)
Interest paid		(6,992)	(8,632)	(17,097)
Proceeds from issue of new shares		1,080	161,450	162,026
Costs of issue of new shares		-	(2,484)	(2,484)
Net cash (used in)/from financing activities		(33,245)	22,033	24,673
Net (decrease)/increase in cash and cash equivalents		(12,134)	(7,735)	33,522
Cash and cash equivalents at beginning of period		62,727	28,905	28,905
Foreign exchange translation movement		(67)	597	300
Cash and cash equivalents at end of period		50,526	21,767	62,727

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements

1. General information

The financial information for the year ended 31 December 2008 does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2008, which were prepared under International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board, have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified did not drawn attention to any matters by way of emphasis and did not contain any statement under Section 237 (2) or (3) of the Companies Act 1985.

2. Accounting policies

The unaudited condensed set of financial statements for the six months ended 30 June 2009 have been prepared using the same accounting policies and on a basis consistent with the audited results for the year ended 31 December 2008, other than as noted below. The financial information has been prepared under the historical cost convention, except for the revaluation to market of certain financial assets and liabilities. 

Basis of preparation

The currency used in the preparation of the accompanying consolidated financial statements is the US Dollar as the majority of the Group's business is conducted in US Dollars ($).

Comparative figures for 30 June 2008 have been adjusted for revisions to the provisional acquisition balance sheet of the companies acquired by the Group in 2007. Further details are provided in note 11. 

The Group's condensed consolidated financial statements included in this half yearly financial report are prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. They were approved by the Board on 26 August 2009.

Going concern 

Although the current economic conditions may affect short-term demand for our products, as well as place pressure on customers and suppliers which may face liquidity issues, the Group's geographic spread, product diversity and large customer and supplier base substantially mitigate these risks. 

In addition, the Group operates in the relatively defensive generic pharmaceuticals industry which we expect to be less affected compared to other industries that are subject to greater cyclical changes.

The Group has $410 million of banking facilities of which $194 million were undrawn as at 30 June 2009. These facilities are well diversified across the operating subsidiaries of the Group with a number of financial institutions.

Over 50% of the Group's short term and undrawn long term facilities are of a committed nature.

We continue to expect the short term facilities to be renewed upon maturity. In addition the Group maintained cash balances of $51.6 million as at 30 June 2009. The Group's forecasts, taking into account reasonable possible changes in trading performance, facility renewal sensitivities and maturities of long-term debt, show that the Group should be able to operate well within the levels of its facilities and their related covenants.

After making enquiries, the Directors believe that the Group is adequately placed to manage its business and financing risks successfully despite the current uncertain economic outlook. Accordingly, they continue to adopt the going concern basis in preparing the half yearly condensed financial statement.

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

2. Accounting policies continued

Changes in accounting policy 

In the current financial year, the Group has adopted International Financial Reporting Standard 8 "Operating Segments" and IAS 1 "Presentation of Financial Statements" (revised 2007).

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 "Segment Reporting") required the Group to identify sets of segments (Business and Geographical), using a risks rewards approach, with the Group's system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. The segmental information required by IAS 34 which is included in note 3 below is presented in accordance with IFRS 8.

IAS 1(revised) requires the presentation of a statement of changes in equity as a primary statement, separate from the income statement and statement of comprehensive income. As a result a condensed consolidated statement of changes in equity has been included in the primary statements, showing changes in each component of equity for each period presented.

Exceptional items are defined as those that are material in nature or amount and are non-recurring. Exceptional items are disclosed separately in the condensed consolidated income statement to assist in the understanding of the financial performance of the Group.

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

3. Business and geographical segments

For management purposes, the Group is currently organised into three operating divisions - Branded , Injectables and Generics. These divisions are the basis on which the Group reports its primary segment information. The segments identified under IFRS 8 are unchanged from those previously disclosed under IAS 14.

Segment information about these businesses is presented below. 

Six months ended	Branded	Injectables	Generic	Others	Group
30 June 2009 (unaudited)	$000's	$000's	$000's	$000's	$000's
Revenue	190,179	67,689	61,775	1,852	321,495
Cost of sales	(89,324)	(38,453)	(40,894)	(1,641)	(170,312)
Gross profit	100,855	29,236	20,881	211	151,183
Result
Adjusted segment result	55,233	10,381	9,209	(1,934)	72,889
Intangible amortisation*	(2,210)	(1,440)	(66)	-	(3,716)
Segment result	53,023	8,941	9,143	(1,934)	69,173
Unallocated corporate expenses					(11,959)
Operating profit					57,214
Finance income					226
Finance expense					(6,923)
Other income					(64)
Profit before tax					50,453
Tax					(6,493)
Profit for the period					43,960
Attributable to:
Minority interest					730
Equity holders of the parent					43,230
					43,960

*Intangible amortisation comprises the amortisation on intangible assets other than software.

"Others" mainly comprises Arab Medical Containers LTD and International Pharmaceutical Research Center LTD and the chemicals division of Hikma Pharmaceuticals LTD Jordan.

Unallocated corporate expenses are primarily made up of employee costs, office costs and professional fees.

	Branded	Injectables	Generic	Corporate and others	Group
Other information 30 June 2009 (unaudited)	$000's	$000's	$000's	$000's	$000's
Additions to property, plant and equipment (cost)	9,679	4,332	1,629	215	15,855
Additions (disposals) to intangible assets	1,426	733	656	(721)	2,094
Total property, plant and equipment and intangible assets (net book value)	336,528	151,262	31,955	8,923	528,668
Depreciation and amortisation	9,776	3,766	2,515	643	16,700
Balance sheet
Total assets
Segment assets	664,165	201,581	117,213	20,769	1,003,728
Total liabilities
Segment liabilities	221,012	87,052	31,599	18,686	358,349

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

3. Business and geographical segments (continued)

Six months ended	Branded	Injectables	Generic	Corporate and others	Group
30 June 2008 (unaudited)	$000's	$000's	$000's	$000's	$000's
Revenue	174,039	80,597	43,133	2,143	299,912
Cost of sales	(80,040)	(46,768)	(36,300)	(1,776)	(164,884)
Gross profit	93,999	33,829	6,833	367	135,028
Result
Adjusted segment result	53,737	14,820	(1,173)	(2,326)	65,058
Exceptional items	(1,205)	-	(4,800)	-	(6,005)
Intangible amortisation*	(2,144)	(1,362)	(66)	-	(3,572)
Segment result	50,388	13,458	(6,039)	(2,326)	55,481
Unallocated corporate expenses					(8,372)
Operating profit					47,109
Finance income					430
Finance expense					(8,601)
Other income					321
Profit before tax					39,259
Tax					(5,942)
Profit for the period					33,317
Attributable to:
Minority interest					405
Equity holders of the parent					32,912
					33,317

*Intangible amortisation comprises the amortisation on intangible assets other than software.

"Others" mainly comprises Arab Medical Containers LTD and International Pharmaceutical Research Center LTD and the chemicals division of Hikma Pharmaceuticals LTD Jordan.

Unallocated corporate expenses are primarily made up of employee costs, office costs, professional fees and donations.

	Branded	Injectables	Generic	Corporate and Other	Group
Other information 30 June 2008 (unaudited)	$000's	$000's	$000's	$000's	$000's
Additions to property, plant and equipment (cost)	17,306	5,200	5,830	856	29,192
Additions to intangible assets	1,084	1,599	-	199	2,882
Total property, plant and equipment and intangible assets (net book value)	331,354	162,124	31,924	9,080	534,482
Depreciation and amortisation	9,466	4,697	2,220	760	17,143
Balance sheet
Total assets
Segment assets	633,038	226,937	96,557	23,181	979,713
Total liabilities
Segment liabilities	191,854	113,693	41,727	12,229	359,503

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

3. Business and geographical segments (continued)

	Branded	Injectables	Generic	Corporate and others	Group
31 December 2008 (audited)	$000's	$000's	$000's	$000's	$000's
Revenue	320,837	149,320	105,696	4,803	580,656
Cost of sales	(148,023)	(85,942)	(86,385)	(3,824)	(324,174)
Gross profit	172,814	63,378	19,311	979	256,482
Result
Adjusted segment result	93,591	24,688	(839)	(3,738)	113,702
Exceptional items	(1,629)	-	(4,800)	-	(6,429)
Intangible amortisation*	(4,478)	(2,587)	(150)	-	(7,215)
Segment result	87,484	22,101	(5,789)	(3,738)	100,058
Unallocated corporate expenses					(19,376)
Operating profit					80,682
Finance income					817
Finance expense					(17,545)
Other income					80
Profit before tax					64,034
Tax					(6,915)
Profit for the year					57,119
Attributable to:
Minority interest					(6)
Equity holders of the parent					57,125
					57,119

*Intangible amortisation comprises the amortisation on intangible assets other than software.

"Others" mainly comprises Arab Medical Containers LTD and International Pharmaceutical Research Center LTD and the chemicals division of Hikma Pharmaceuticals LTD Jordan.

Unallocated corporate expenses are primarily made up of employee costs, office costs, professional fees and donations.

	Branded	Injectables	Generic	Corporate and Other	Group
Other information 31 December 2008 (audited)	$000's	$000's	$000's	$000's	$000's
Additions to property, plant and equipment (cost)	34,226	12,981	8,037	1,427	56,671
Additions to intangible assets	3,801	4,781	463	1,601	10,646
Total property, plant and equipment and intangible assets (net book value)	336,839	150,282	32,185	10,572	529,878
Depreciation and amortisation	18,666	8,540	4,613	1,303	33,122
Balance sheet
Total assets
Segment assets	642,397	196,894	95,456	31,712	966,459
Total liabilities
Segment liabilities	196,924	82,804	28,191	49,545	357,464

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

4. Tax 

	H1 2009	H1 2008	FY 2008
	$000's	$000's	$000's
	(Unaudited)	(Unaudited)	(Audited)
Current tax:
UK current tax	570	9,120	10,830
Double tax relief	(570)	(9,120)	(10,830)
Foreign tax	10,728	6,005	9,268
Prior year adjustments	103	-	76
Deferred tax	(4,338)	(63)	(2,429)
	6,493	5,942	6,915

5. Dividends

	H1 2009	H1 2008	FY 2008
	$000's	$000's	$000's
	(Unaudited)	(Unaudited)	(Audited)
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2008 of 4.0 cents (2007: 4.0 cents) per share	7,574	7,542	7,542
Interim dividend for the year ended 31 December 2008 of 3.5 cents per share	-	-	6,609
	7,574	7,542	14,151

'The proposed interim dividend for the period ended 30 June 2009 is 4.5 cents (30 June 2008: 3.5 cents) per share.

6. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

	H1 2009	H1 2008	FY 2008
	$000's	$000's	$000's
	(Unaudited)	(Unaudited)	(Audited)
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent	43,230	32,912	57,125
	Number	Number	Number
Number of shares	'000	'000	'000
Weighted average number of Ordinary Shares for the purposes of basic earnings per share	189,254	186,646	187,876
Effect of dilutive potential Ordinary Shares :
Share options and LTIP	4,377	6,638	5,295
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share	193,631	193,284	193,171
	H1 2009	H1 2008	FY 2008
	Earnings per share	Earnings per share	Earnings per share
	Cents	Cents	Cents
Basic	22.8	17.6	30.4
Diluted	22.3	17.0	29.6

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

7. Inventories

	H1 2009	H1 2008	FY 2008
	$000's	$000's	$000's
	(Unaudited)	(Unaudited)*	(Audited)
Finished goods	46,048	50,602	45,585
Work-in-progress	23,476	26,668	23,609
Raw and packing materials	87,042	75,119	71,733
Goods in transit	10,069	15,581	13,829
	166,635	167,970	154,756

Goods in transit include inventory held at third parties whilst in transit between Group companies.

\* These numbers are revised - see note 11

8. Trade and other receivables

	30 June	30 June	31 December
	2009	2008	2008
	$000's (Unaudited)	$000's (Unaudited)*	$000's (Audited)
Trade receivables	202,512	206,427	173,958
Prepayments	20,024	16,860	14,345
Value added tax recoverable	4,407	4,551	5,306
Interest receivable	157	245	108
Employee advances	2,131	430	2,126
	229,231	228,513	195,843

\* These numbers are revised - see note 11

9. Trade and other payables

	30 June	30 June	31 December
	2009	2008	2008
	$000's (Unaudited)	$000's (Unaudited)	$000's (Audited)
Trade payables	60,333	58,781	42,632
Accrued expenses	30,310	23,320	29,823
Employees' provident fund *	3,532	3,698	2,753
VAT and sales tax payables	3,625	1,124	1,408
Dividends payable **	2,411	2,728	2,495
Social security withholdings	775	1,045	745
Income tax withholdings	1,442	1,030	1,037
Other payables	1,666	1,398	1,110
	104,094	93,124	82,003

* The employees' provident fund liability represents outstanding contributions to Hikma Pharmaceuticals Limited - Jordan retirement benefit plan, on which the fund receives 5% interest.

** Dividends payable includes $2,224,000 (30 Jun 2008: $2,514,000 and 31 Dec 2008: $2,303,000) due to the previous shareholders of APM. 

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

10. Net cash from operating activities

	H1  2009	H1  2008	FY  2008
	$000's (Unaudited)	$000's (Unaudited)	$000's (Audited)
Profit before tax	50,453	39,259	64,034
Adjustments for:
Depreciation, amortisation and impairment of:
Property, plant and equipment	12,428	13,050	25,067
Intangible assets	4,272	4,093	8,055
Losses/(gains) on disposal of property, plant and equipment	161	(4)	(6)
Gains on disposal of intangible assets	(425)	-	(832.00)
Movement on provisions	386	591	917
Movement on deferred income	(107)	530	416
Cost of equity settled employee share scheme	2,170	1,307	3,384
Finance income	(226)	(430)	(817)
Interest and bank charges	6,923	8,601	17,545
Cash flow before working capital	76,036	66,997	117,763
Change in trade and other receivables	(34,137)	(40,087)	(10,903)
Change in other current assets	(104)	(1,822)	1,564
Change in inventories	(12,804)	(27,706)	(19,327)
Change in trade and other payables	20,654	12,061	(693)
Change in other current liabilities	(3,730)	19	(5,751)
Cash generated by operations	45,915	9,462	82,653
Income tax paid	(9,669)	(4,020)	(7,684)
Net cash generated from operating activities	36,246	5,442	74,969

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

11. Revision of acquisition balance sheets 

Comparative figures for 30 June 2008 have been adjusted for revisions to the provisional acquisition balance sheet of the companies acquired by the Group in 2007, being APM and Alkan.

There were no further revisions to those taken in 31 December 2008.

The following table illustrates those revisions:

	30 June 2008  (as previously reported) $000's	Final Fair value adjustments USD '000	30 June 2008  (Restated) $000's
Non-current assets
Intangible assets	263,534	4,290	267,824
Property, plant and equipment	263,903	2,755	266,658
Interest in joint venture	4,996	-	4,996
Deferred tax assets	14,060	-	14,060
Available for sale investments	842	-	842
Financial and other non-current assets	1,916	-	1,916
	549,251	7,045	556,296
Current assets
Inventories	174,853	(6,883)	167,970
Trade and other receivables	229,219	(706)	228,513
Collateralised cash	720	-	720
Cash and cash equivalents	21,767	-	21,767
Other current assets	4,447	-	4,447
	431,006	(7,589)	423,417
Total assets	980,257	(544)	979,713
Current liabilities
Bank overdrafts and loans	119,360	-	119,360
Obligations under finance leases	882	-	882
Trade and other payables	93,124	-	93,124
Income tax provision	12,459	-	12,459
Other provisions	5,066	-	5,066
Other current liabilities	16,353	20	16,373
	247,244	20	247,264
Net current assets	183,762	(7,609)	176,153
Non-current liabilities
Long-term financial debts	93,944	-	93,944
Deferred income	810	-	810
Obligations under finance leases	5,911	-	5,911
Deferred tax liabilities	12,138	(564)	11,574
	112,803	(564)	112,239
Total liabilities	360,047	(544)	359,503
Net assets	620,210	-	620,210

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

12. Exceptional items and intangible amortisation

Exceptional items are disclosed separately in the condensed consolidated income statement to assist in the understanding of the Group's underlying performance.

	H1 2009	H1 2008	FY 2008
	$000's	$000's	$000's
Revision to estimates for chargebacks, returns and rebates	-	(4,800)	(4,800)
Acquisition integration costs	-	(1,205)	(1,629)
Exceptional items	-	(6,005)	(6,429)
Intangible amortisation	(3,716)	(3,572)	(7,215)
Exceptional items and intangible amortisation	(3,716)	(9,577)	(13,644)
Tax effect	580	2,222	3,408
Impact on profit for the period	(3,136)	(7,355)	(10,236)

*Intangible amortisation comprises the amortisation of intangible assets other than software.

Revision to estimates for chargebacks, returns, and rebates represents a one-off charge taken against revenue during H1 2008.

Acquisition integration costs represent expenses incurred in integrating APM and Hikma Pharma SAE (Egypt) into the Group. These are included within sales and marketing and general and administrative expenses.

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements - continued

13. Related party balances

Intra-group transactions have been eliminated on consolidation and are not disclosed in this note. 

During the period, the Group 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 30.1% at 30 June 2009 (30 June 2008: 30.7%, 31 December 2008: 30.2%)

Other than dividends (as paid to all shareholders), there were no transactions between the Group and Darhold Limited in the year. 

Capital Bank - Jordan: was a related party of the Group because two board members of the Bank were also board members of Hikma Pharmaceuticals PLC during 2008. As at 31 December 2008, those two Board members were no longer board members of Capital Bank. During 2008 total cash balances at Capital Bank - Jordan as of 30 June 2008 was USD 259,000 (31 December 2008: USD 217,000). Loans and overdrafts granted by Capital Bank to the Group at 30 June 2008 amounted to USD 272,000 (31 December 2008: USD 207,000) with interest rates ranging between 8.75% and LIBOR + 1 to 1.25%. Total interest expense incurred in H1 2008 against Group facilities was USD 21,000 (FY 2008: USD 86,000).

Jordan International Insurance Co: is a related party of the Group because one board member of the company is also a board member of Hikma Pharmaceuticals PLC. Total insurance premiums paid by the Group to Jordan International Insurance Co during the period were USD 516,000 (H1 2008: USD 349,000 and FY 2008: USD 1,351,000). The Group's insurance expense for Jordan International Insurance Co contracts in the period was USD 641,000 (H1 2008: USD 820,000 and FY 2008: USD 1,490,000). The amounts due to Jordan International Insurance Co at 30 June 2009 were USD 99,000 (30 June 2008: USD 185,000 and 31 December 2008: USD 93,000).

Tunisian Companies: amounts due from the two Tunisian companies in which the Group has invested net of provisions include USD 627,000 (30 June 2008: USD 270,000 and 31 December 2008: USD 474,000) and USD 784,000 (30 June 2008: USD 444,000 and 31 December 2008: USD 793,000) due from Societe Hikma Medicef Limited - Tunisia and Societe D'Industries Pharmaceutiques Ibn Al Baytar S.A. - Tunisia, respectively. The provision for doubtful debts related to balances above was USD 303,000 (30 June 2008: USD 154,000 and 31 December 2008: USD 303,000).

Labatec Pharma SA: is a related party of the Group because it is owned the by Mr. Samih Darwazah. During H1 2009 the Group total sales to Labatec Pharma amounted to USD 19,000 (FY 2008: USD 30,000) and the Group total purchases from Labatec amounted to USD186,000. At 30 June 2009 the amount owed to Labatec Pharma by the Group as at 30 June 2009 was USD 78,000 (31 December 2008: Nil).

Mr. Yousef Abd Ali: Mr. Yousef Abd Ali is a related party of the Group because he holds 33% of Hikma Lebanon. The amount owed to Mr. Yousef by the Group as at 30 June 2009 was USD 161,000 (30 June 2008: USD 161,000 and 31 December 2008: USD 161,000).

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ENDIR PUUQARUPBGBQ