Hikma Pharmaceuticals Regulatory News (HIK)

PRESS RELEASE

Hikma delivers a robust performance in a challenging environment, with revenues up 25.6% and adjusted operating profit up 2.0%

Positive outlook for the Group in 2012, with expectation of 20% top line growth

14 March 2012 - Hikma Pharmaceuticals PLC ("Hikma") (LSE: HIK) (NASDAQ Dubai: HIK), the fast growing multinational pharmaceutical group, today reports its preliminary results for the year ended 31 December 2011.

Group financial highlights

1 Before the amortisation of intangible assets (excluding software) and exceptional items (including acquisition and integration related expenses of $16.4 million and an inventory adjustment of $1.8 million)

2 Before the amortisation of intangible assets (excluding software) and exceptional items

·; Continued our track record of doubling revenue every four years, with Group revenue up 25.6% to $918.0 million

·; Increased organic revenues by 7.6% and adjusted1 operating profit by 2.0%, despite the impact of the Arab Spring and the discontinuation of colchicine

·; Net cash flow from operating activities of $126.4 million, including the $21.1 million impact of working capital financing for the Multi-Source Injectables ("MSI") acquisition

·; Strong growth in MENA operating cash flow helped to offset the impact of the discontinuation of colchicine

·; Successfully financed $325 million of acquisitions with new debt facilities

·; Maintained the dividend at 13.0 cents per share

Group strategic highlights

·; Completed the MSI acquisition, doubling the size of our global Injectables business, making us the second largest supplier of generic injectables in the US and adding revenue of $120.3 million in 2011

·; Entered the Moroccan market, acquiring a 94.1%3 stake in Promopharm S.A. ("Promopharm"), significantly expanding our geographic reach in MENA

·; Made significant capital investments to increase our manufacturing capacity and capabilities in Egypt, Tunisia and Algeria. Acquired a local manufacturing presence in Sudan

·; Completed strategic investments in India and China, strengthening our ability to source quality Active Pharmaceutical Ingredients ("API") and enhancing our R&D capabilities

3 Hikma acquired a controlling stake of 63.9% in Promopharm on 3 October 2011. It increased this stake to 84.3% by 31 December 2011 through the purchase of additional shares in the market and to 94.1% by 6 January 2012 through a mandatory tender offer.

Segmental financial highlights

·; Better than expected performance in MENA, with Branded revenue increasing by 12.1% and organic4 revenue up 9.6%. Adjusted operating profit increased by 9.3%

·; Doubled revenue in our global Injectables business to $315.7 million, with a 23.3% increase in organic5 revenue reflecting strong growth across all markets

·; Generics revenue declined by 11.3% to $154.8 million, in line with guidance. Excluding exceptional colchicine sales in 2010, Generics delivered double-digit revenue growth

4 Before the consolidation of the Promopharm business

5 Before the consolidation of the MSI and Promopharm businesses

2012 outlook

·; Strong Group performance expected in 2012, with Group revenue growth of around 20%

Said Darwazah, Chief Executive Officer of Hikma, said:

"In 2011, Hikma continued its track record of doubling revenue every four years, whilst at the same time achieving a number of strategic milestones.

These achievements are all the more impressive for having been delivered in a very challenging economic and geopolitical environment. Our success in 2011 demonstrates the strength of our diversified business model, the robust nature of our MENA operations, the excellent potential of our global Injectables business, our ability to deliver our core strategic objectives, the dedication of our talented employees and our overall commitment to quality and business ethics.

We are expecting a strong performance in 2012, reflecting the investments that we have made across the Group in 2011 and the excellent growth opportunities we see for our business, particularly in the MENA region and in the global injectables market."

-- ENDS --

Enquiries

Hikma Pharmaceuticals PLC

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

FTI Consulting

Ben Atwell /Julia Phillips/Jonathan Birt/Matthew Cole +44 (0)20 7831 3113

About Hikma

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

A meeting for analysts and investors will be held today at 09:30am GMT at FTI Consulting, Holborn Gate, 26, Holborn Gate London WC2A 1PB. A live webcast of the meeting will be available at www.hikma.com. The dial-in details are: London: +44 (0) 208 817 9301; UK: +44 (0) 845 634 0041 and UK Freephone: 0800 634 5205. The Meeting ID is 6944088. In addition, we will be holding a conference call for US investors at 2.00pm GMT on +1 866 966 1187, Meeting ID: 2421402252. A recording of both meeting and call will be available on the Hikma website.

Business and financial review

Overview

Hikma's Group revenue increased by 25.6% to $918.0 million in 2011. Excluding the contribution of the MSI and Promopharm acquisitions, organic sales growth was 7.6%.

Group gross profit increased by 10.6% to $395.3 million, compared to $357.3 million in 2010 and adjusted operating profit increased by $2.8 million or 2.0%, to $145.8 million. Adjusted operating margin decreased from 19.6% in 2010 to 15.9% in 2011. The lower margin in 2011 primarily reflects the exceptional contribution from colchicine in 2010. Profitability was also impacted by an increase in employee wages and benefits across the MENA region, the consolidation of the lower margin MSI business and the effect of foreign exchange movements on sales and raw material costs.

Management focuses on adjusted profit metrics such as adjusted operating profit and adjusted profit attributable to shareholders, which remove the impact of the amortisation of intangible assets (excluding software) and exceptional items such as transaction costs, as this provides a clearer understanding of the Group's underlying financial performance.

Group revenue by business segment

6 Reflects the impact on the Group if the MSI and Promopharm businesses had been owned from the beginning of 2011

Group revenues by region

Branded

2011 highlights:

• Strong second half performance across the MENA region delivered full year revenue growth of 12.1% and organic revenue growth of 9.6%. Adjusted operating profit increased by 9.3%

• Entered the Moroccan market through the acquisition of a 94.1% controlling stake in Promopharm S.A.

• Expanded capacity in Egypt, Tunisia and Algeria and acquired a local manufacturing facility in Sudan, strengthening our presence and capabilities in the MENA region

Branded revenues increased by 12.1% to $441.9 million, compared to $394.2 million in 2010. Organic revenue growth was 9.6% to $432.1 million, with the Promopharm acquisition contributing a further $9.9 million in the three months to 31 December 2011.

In 2011, the rapid and effective response of our management teams and the commitment of our local employees across the MENA region helped to minimise the impact of the Arab Spring disruptions, particularly in Egypt, Tunisia and Libya. Our Egyptian business rebounded strongly in the second half and delivered 12.1% revenue growth for the full year. In Tunisia, sales in 2011 were maintained broadly in line with the prior year, despite the market disruptions and the lost sales of Actos, which was withdrawn during the year. In Libya, where the market was closed for more than half the year, we achieved sales of just over $10 million in 2011 and we expect demand to increase as the market recovers.

Our other key MENA markets performed well in 2011, as we focused on growing our market share through increased sales of our existing portfolio and continued new product launches. We delivered strong growth in Algeria through an increase in local manufacturing, despite lower pricing for locally produced products. In Jordan, we benefitted as anticipated from the restructuring of our distribution channels and we achieved strong growth in the Gulf markets, particularly the UAE.

We have been building our presence in Sudan in recent years, where we are the leading pharmaceutical company, with around 17%7 market share. In the second half of 2011, we acquired the business of Elie Pharmaceuticals in Sudan, including a manufacturing facility and a number of product registrations. This acquisition will reinforce our leading market position and enable us to accelerate the launch of new products. The total consideration was $17.5 million.

7 Advanced Marketing Statistics (AMS) Health, YTD December 2011

For some time, entry into Morocco, the fourth largest MENA pharmaceutical market, has been an important strategic objective. In October 2011, Hikma acquired Promopharm, the ninth largest pharmaceutical company in Morocco with an attractive, well-diversified portfolio of branded generics and in-licensed products. We initially acquired a controlling stake of 63.9% and then increased this stake to 84.3% by 31 December 2011 through the purchase of additional shares in the market. Through a mandatory tender offer that closed on 6 January 2012, we raised our stake in Promopharm to 94.1%. The total consideration paid for the 94.1% stake was $152.4 million, excluding transaction costs.

Promopharm contributed $9.9 million of sales to Hikma's Branded business for the three month period to 31 December 2011 and a further $1.3 million of revenue was consolidated into the Injectables business. We see significant growth opportunities for Promopharm. In the short term, we will focus on growing sales of Promopharm's existing portfolio and R&D pipeline. Over the medium term, we are working to register Hikma's strategic products in Morocco, which we expect to drive sales growth and margin expansion.

Revenue from in-licensed products grew by 9.8% to $174.8 million, despite one of our leading in-licensed products being withdrawn from some key markets. For the year, in-licensed products represented 39.6% of Branded sales, compared to 40.4% in 2010. We continue to develop our portfolio of in-licensed products, demonstrating our position as the partner of choice in the MENA region.

In 2011, the Branded business launched a total of 43 products across all markets, including 6 new compounds and 12 new dosage forms and strengths. The Branded business also received 39 regulatory approvals across the region, including 8 for new compounds.

Gross profit in the Branded business increased by 5.2% to $214.1 million, compared to $203.4 million in 2010. The Branded business gross margin declined to 48.4%, compared to 51.6% in 2010. This reflects increases in salaries and employee benefits due to inflationary pressure across the MENA region, a higher percentage of lower margin products and tender sales and the negative impact of foreign exchange movements on sales and raw material costs. It also results from the increase of local production in Algeria and the lower prices for locally produced products.

Operating profit of the Branded business was $98.5 million, compared to $98.7 million in 2010. Adjusted operating profit was $105.1 million, up 9.3% from $96.2 million in 2010. Adjusted operating margin was 23.8%, compared to 24.4% in the prior year, principally reflecting the decline in gross profit margin.

In a very challenging year, we maintained our position as the largest regional pharmaceutical company and the fifth8 largest pharmaceutical company overall in the MENA region. We increased our market share to 3.9%, compared to 3.7% in the prior year. At the same time, we invested significantly in our MENA facilities, increasing capacity in Egypt, Tunisia and Algeria and strengthening our sales and marketing operations across the region.

8 IMS Health, YTD December 2011. Private retail sales only include Algeria, Jordan, Kuwait, Egypt, Tunisia, Morocco, UAE, Lebanon and Saudi Arabia

We believe Hikma is very well positioned to continue to grow slightly ahead of the overall MENA market. With the benefit from the Moroccan and Sudanese acquisitions we are expecting overall Branded revenue growth of around 20% in 2012. We expect continued inflationary pressure on MENA operating costs in 2012, which we aim to offset through new product launches and sales and marketing efficiencies. We expect gross margin and adjusted operating margin in 2012 to be broadly in line with 2011.

Injectables

2011 highlights:

• Organic Injectables revenue up 23.3%, driven by strong demand across our product portfolio and growth in contract manufacturing

• Excellent improvement in organic Injectables operating margin to 17.5% from 15.1%

• Completion of the MSI acquisition, adding $120.3 million of revenue in the eight months to 31 December 2011

Revenue in our global Injectables business increased by $158.3 million to $315.7 million, compared to $157.4 million in 2010. Organic Injectables revenues grew 23.3% to $194.1 million.

9 Reflects the impact on the Injectables business if the MSI and Promopharm businesses had been owned from the beginning of 2011

US Injectables sales, excluding MSI, reached $41.9 million, up 40.1% from $29.9 million in 2010. This excellent performance reflects the strength of our product portfolio, with success from recently launched products, good demand for our existing products and an increased demand for contract manufacturing.

On 2 May 2011, we completed our acquisition of MSI, establishing Hikma as the second largest supplier, by volume, of generic injectables in the US market. The results of MSI have been consolidated for the eight months to 31 December 2011, adding sales of $120.3 million to our Injectables business for 2011. On a proforma basis, MSI revenue in 2011 was $178.3 million. The MSI business contributed adjusted operating profit of $17.8 million at an adjusted operating margin of 14.8%, before the impact of acquisition and integration related costs of $10.0 million, an inventory adjustment of $1.8 million and intangible amortisation $0.5 million. Overall, MSI contributed net income of $2.7 million in 2011, ahead of our expectations.

Since May, we have been rapidly integrating this business and we have made excellent progress with our restructuring programme. Through headcount reductions and reorganisation of the manufacturing operations, we are delivering significant gains in productivity. We are driving greater value from the existing product portfolio and in 2011 we began the process of re-activating MSI's dormant ANDAs. We have also been executing our plan to build the product pipeline through increased R&D. We have begun to implement our plans to upgrade our Cherry Hill, New Jersey facility, with investment in new state-of-the-art manufacturing equipment with higher capacity, better reliability and of a superior quality standard. We expect completion of this investment by early 2013. As guided at the time of the acquisition, we expect total capex investment in MSI of around $25 million, of which around $4 million was incurred in 2011.

European Injectables sales increased by 24.7% to $78.2 million in 2011, compared to $62.7 million in 2010. On a constant currency basis, sales grew by 18.9%. Sales growth was driven by new contract manufacturing opportunities, increased oncology sales and higher sales of existing and recently launched products. We continued to see strong price erosion during the year, which was more than offset by volume growth.

Injectables sales in the MENA region increased by 16.2% to $75.4 million, compared to $64.9 million in 2010. Excluding, the acquisition of Promopharm, which added Injectables revenue of $1.3 million for the three months to 31 December 2011, the organic MENA Injectables business grew by 14.2%. In 2011, we saw the strongest growth coming from Algeria, Jordan and Sudan, reflecting our strengthened sales and marketing operations, new product launches, growth in oncology sales and greater success in the tender market as we grow in scale.

In October 2011, we inaugurated a new facility at our Injectables manufacturing site in Portugal. The new facility has the capability to fill and finish both sterile liquid and freeze-dried (lyophilised) products. The facility has begun producing lyophilised products for Europe and MENA and liquid products for the US. In February 2012, the US Food and Drug Administration ("FDA") approved the facility for the manufacture of lyophilised products for the US market.

In 2011, the Injectables business launched a total of 43 products across all markets, including 7 new compounds and 14 new dosage forms and strengths. The Injectables business also received a total of 61 regulatory approvals across all regions and markets, including 33 in MENA, 22 in Europe and 6 in the US.

Injectables gross profit grew by 79.7% to $127.6 million, compared to $71.0 million in 2010. Gross margin was 40.4% compared to 45.1% in 2010. Excluding MSI, the gross margin was 43.1% in 2011. The reduction in the underlying margin reflects increased overheads related to the new lyophilisation plant, which was only partially utilised during the year, and higher tender sales in MENA.

Injectables operating profit increased by 91.5% to $45.4 million, compared to $23.7 million in 2010. Injectables operating margin was 14.4%. Adjusted operating profit was $54.9 million and adjusted operating margin was 17.4%. Excluding MSI and Promopharm, operating margin was 17.5%, compared to 15.1% in 2010. This significant margin improvement reflects our strong performance across all markets, good cost control and the benefits of economies of scale.

MSI is now largely integrated into the global Injectables business and we expect the combined business to deliver very strong growth in 2012, building on the excellent performance in 2011. Given that MSI delivered better than expected profitability in 2011, we expect the adjusted operating margin of the overall Injectables business to be in the high teens in 2012, ahead of our previous expectations.

Generics

2011 highlights:

• Generics revenue was $154.8 million, in line with guidance

• Generics delivered double-digit revenue growth, excluding the exceptional colchicine sales in 2010

• Strong volume growth was partially offset by accelerating price erosion

Generics revenue was $154.8 million in 2011, down 11.3% from $174.5 million in 2010. This decline in revenue reflects the exceptional benefit of colchicine in 2010. Excluding colchicine, the Generics business delivered double-digit revenue growth through a significant increase in volumes, which was partially offset by accelerating price erosion.

The Generics segment gross profit decreased by 36.2% to $52.2 million, compared to $81.8 million in the prior year. Gross margin was 33.7%, compared to 46.9% in 2010, due to the contribution of colchicine in 2010, as well as strong price erosion in the second half of 2011 and an adverse change in product mix. Consequently, the Generics segment achieved an operating profit of $17.1 million, compared to $51.1 million in 2010 and Generics operating margin was 11.0%, compared to 29.3%.

During 2011 we made good progress with our tech transfer programme. Products manufactured in our Jordan and Saudi Arabian facilities for sale in the US represented 26.8% of Generics sales in 2011, compared to 21.2%10 in 2010. Over the medium term, we will be focusing on leveraging our MENA production facilities and exploiting synergies in order to be more competitive in the US oral generic market.

10 Sales figure in 2010 excludes colchicine

At our oral solid dosage manufacturing facility in Eatontown, New Jersey, we have had to address observations made by the US FDA during its inspection of the facility in June 2011, which resulted in a warning letter being issued by the FDA in February 2012. We have been taking, and continue to take, the necessary steps to address the issues raised. We are committed to the highest standards of quality and compliance and regard our relationship with the FDA as critical to both our past and future success.

In 2011, the Generics business launched 2 new compounds and 5 new dosage forms and strengths and received 5 new product approvals.

Generics revenue is expected to decline in 2012, reflecting continued price erosion and limited new product launches. Looking further ahead, we expect growth to be driven by continued investment in the development of more differentiated products for this business. R&D investment will increase in 2012, resulting in an operating margin in the high single digits for the full year in 2012, before rebuilding towards more normalised levels.

Other businesses

Other businesses primarily comprise Arab Medical Containers, a manufacturer of pharmaceutical packaging, and International Pharmaceuticals Research Centre, which conducts bio-equivalency studies. These businesses, which supply Group operations and third parties, had aggregate revenues of $5.6 million, compared with aggregate revenue of $4.8 million in 2010.

These other businesses delivered an operating loss of $2.4 million in 2011, compared to an operating loss of $2.9 million in 2010.

Group

Revenue for the Group increased by 25.6% to $918.0 million in 2011, compared to $730.9 million in 2010. Excluding the contribution of the MSI and Promopharm acquisitions, organic revenue grew by $55.7 million, or 7.6%, driven by growth in the Branded and Injectables businesses.

The Group's gross profit was $395.3 million, up 10.6% from $357.3 million in 2010. Gross margin was 43.1%, compared to 48.9% in the prior year, reflecting the loss of the contribution from higher margin colchicine sales in 2010, increased employee wages and benefits across the MENA region, the consolidation of the lower margin MSI business and the effect of negative foreign exchange movements on sales and raw material costs.

Group operating expenses grew by 24.5% to $276.7 million, compared to $222.2 million in 2010. As a percentage of revenue, Group operating expenses were 30.1%, in line with 2010. The following paragraphs address the Group's main operating expenses in turn.

Sales and marketing expenses grew more slowly than Group revenue during the year, increasing by 17.5% to $125.3 million, compared to $106.7 million in 2010, and decreased as a percentage of sales to 13.6% in 2011, compared to 14.6% in 2010. This primarily reflects the strong performance of our global Injectables business, with its relatively lower sales and marketing expenses as a percentage of sales and the benefits of increased scale.

General and administrative expenses increased by 26.9% to $107.5 million, compared to $84.8 million in the prior year. As a percentage of sales, general and administrative expenses were 11.7% in 2011, compared to 11.6% in 2010. Excluding the impact of acquisition and integration costs of $16.4 million in 2011 and $7.7 million in 2010, Group general and administrative expenses were $91.2 million in 2011, or 9.9% of sales, compared to 10.5% in 2010. This reflects good control of costs across the Group in 2011.

In line with our strategy to increase investment in R&D across the Group, R&D grew by 32.2% to $31.2 million. Total investment in R&D represented 3.4% of Group revenue, compared to 3.2% in 2010. We expect to significantly increase our R&D investment to around 4.5% of Group sales in 2012, as we work to develop our global portfolio, particularly for our global Injectables products.

During 2011, we have had success in executing our strategy to build our API and R&D capabilities through strategic investments in India and China. We acquired a minority stake in Unimark Remedies Limited ("Unimark"), a leading manufacturer of API ingredients and API intermediates. We will collaborate with Unimark to develop new strategic APIs and finished products, enabling us to bring more products in more therapeutic areas to market globally. We also acquired a minority stake in Hubei Haosun Pharmaceutical Co Ltd ("Haosun"), a Chinese company that develops and manufactures niche, difficult to make APIs. This investment gives us access to a high quality, long term source of oncology API.

Other net operating expenses increased on a reported basis by $5.4 million to $12.6 million in 2011. However, excluding non-recurring gains of $7.2 million in 2010 arising from the revaluation of the previously held interests in the Tunisian company Ibn Al Baytar and the Algerian company Al Dar Al Arabia, net operating expenses decreased by $1.8 million in 2011 compared to the prior year.

Operating profit for the Group was $118.7 million, compared to $135.1 million in 2010. Group operating margin was 12.9%, compared to 18.5% in 2010. Adjusted Group operating profit was $145.8 million compared to $143.0 million in 2010.

Research & Development11

The Group's product portfolio continues to grow. In 2011 the Group's portfolio expanded to 667 compounds in 1,598 dosage forms and strengths through acquisitions and new product launches. We manufacture and/or sell 207of these compounds under-license.

Across all businesses and markets, a total of 91 products were launched. In addition, the Group received 114 approvals.

11 Products are defined as pharmaceutical compounds sold by the Group. New compounds are defined as pharmaceutical compounds not yet launched by the Group and existing compounds being introduced into a new segment

12 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 154 regulatory filings in 2011 across all regions and markets. As of 31 December 2011, we had a total of 493 pending approvals across all regions and markets.

At 31 December 2011, we had a total of 126 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 increased to $22.9 million, compared to $13.5 million in 2010. The increase reflects higher borrowings in 2011 as a result of the MSI, Promopharm, Elie Pharmaceuticals, Unimark and Haosun acquisitions. Additionally, it reflects higher bank charges related to trade financing in the MENA region. We expect the net finance expense in 2012 to be around $32 million, reflecting the full year cost of new debt facilities, including higher interest loans in local currencies that will help to provide a natural hedge for foreign currency exposure. It also reflects an increase in bank charges as we continue to grow our MENA business.

Profit before tax

Profit before tax for the Group decreased by 22.4% to $93.9 million, compared to $121.0 million in 2010. Adjusted profit before tax was $121.0 million, compared to $128.9 million in 2010.

Tax

The Group incurred a tax expense of $10.4 million in 2011, compared to $21.5 million in 2010. The effective tax rate was 11.1%, compared to 17.7% in 2010. This reflects the reduced profitability in the US in 2011, as well as the benefit of a European Union tax credit arising in Portugal in 2011. Given the changing geographic mix of sales, we expect the Group's effective tax rate to be around 20% in 2012.

Profit for the year

The Group's profit attributable to equity holders of the parent was $80.1 million, compared to $98.8 million in 2010. Adjusted profit attributable to equity holders of the parent decreased by 2.2% to $100.9 million, compared to $103.1 million in 2010.

Earnings per share

Basic earnings per share for the year to 31 December 2011 were 41.3 cents, compared to 51.4 cents in 2010. Adjusted diluted earnings per share were 51.0 cents, compared to 52.4 cents in 2010.

Dividend

The Board has recommended a final dividend of 7.5 cents per share (approximately 4.6 pence per share), which will make a dividend for the full year of 13.0cents per share, maintained in line with 2010. The proposed final dividend will be paid on 24 May 2012 to shareholders on the register on 20 April 2012, subject to approval by shareholders at the Annual General Meeting.

Net cash flow, working capital and net debt

Group cash flow from operations was $126.4 million, including the $21.1 million impact of financing MSI's working capital requirements, compared to $152.5 million in 2010. Excluding MSI, Group net cash flow from operating activities decreased by 3.3% to $147.5 million. Strong growth in operating cash flow in MENA helped to offset the exceptional colchicine benefit in 2010.

Excluding the MSI acquisition, the Group continued to deliver significant improvements in working capital in 2011, reducing its overall working capital cycle by 15 days to 198 days. This reflects our commitment to improve collections, increase the factoring of receivables and optimise our supply chain. Including acquisitions, the Group working capital cycle improved by 20 days to 193 days, reflecting the shorter payment terms in the US.

Capital expenditure increased to $69.0 million, compared to $49.1 million in 2010. In 2011, investment was focused on the expansion of our manufacturing capabilities in the MENA region, which accounted for $47.3 million in expenditure. This underlines our future growth expectations for MENA and our commitment to the region. Further investment included upgrades to the MSI facility and the completion of our new lyophilisation plant in Portugal as well as maintenance capex. We expect capital expenditure in 2012 to be between $85 and $90 million, as we continue to expand our manufacturing capacity in the MENA region and our Injectables capacity in the US.

Group net debt increased from $101.1 million at 31 December 2010 to $421.9 million at 31 December 2011, reflecting the successful negotiation of new debt facilities of $345.0 million. Net debt to EBITDA was 2.6 times, compared to 0.6 times at 31 December 2010. The increase in borrowing was principally to finance $325.0 million of acquisitions completed during the year.

In December 2011, the Group further enhanced its borrowing capacity by signing a new $110 million loan agreement with the International Finance Corporation ("IFC"). The nine-year loan facility will be used to support Hikma's ongoing programme of capital expenditure and expansion in MENA. This facility is currently undrawn.

Balance sheet

During the year, shareholder equity was negatively impacted by unrealised foreign exchanges losses of $15.3 million, reflecting the depreciation of the Euro, the Moroccan Dirham and the Algerian Dinar against the US dollar, resulting from the revaluation of net assets denominated in currencies other than US dollars.

2012 outlook

We expect to deliver Group revenue growth of around 20% in 2012. Overall, we remain confident in Hikma's medium and long term growth prospects and look forward to another strong year in 2012.

Responsibility statement

The responsibility statement below has been prepared in connection with the company's full annual report for the year ended 31 December 2010. Certain parts thereof are not included within this announcement.

We confirm to the best of our knowledge:

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

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

Cautionary statement

This preliminary announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. It 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.

Hikma Pharmaceuticals PLC

Consolidated statement of comprehensive income

for the year ended 31 December 2011

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

Hikma Pharmaceuticals PLC

Consolidated balance sheet

at 31 December 2011

Hikma Pharmaceuticals PLC

Consolidated statement of changes in equity

at 31 December 2011

Hikma Pharmaceuticals PLC

Consolidated cash flow statement

at 31 December 2011

Hikma Pharmaceuticals PLC

1. Basis of preparation

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2011 or 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention any matters by way of emphasis without qualifying their report and did not contain statements under S498 (2) or (3) of the Companies Act 2006. Hikma Pharmaceuticals PLC's consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board. The financial statements have also been prepared in accordance with IFRSs adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation. The financial statements have been prepared under the historical cost convention, except for the revaluation to market of certain financial assets and liabilities. The preliminary announcement is based on the Company's financial statements.

The Group's previously published financial statements were also prepared in accordance with International Financial Reporting Standards. These International Financial Reporting Standards have been subject to amendment and interpretation by the International Accounting Standards Board and the financial statements presented for the years ended 31 December 2010 and 31 December 2011 have been prepared in accordance with those revised standards. Unless stated otherwise these policies are in accordance with the revised standards that have been applied throughout the year and prior years presented in the financial statements.

The presentational and functional currency of Hikma Pharmaceuticals PLC is the US Dollar as the majority of the Company's business is conducted in US Dollars (USD).

2. Going concern

The directors believe that the Group is well diversified due to its geographic spread, product diversity and large customer and supplier base. The Group operates in the relatively defensive generic pharmaceuticals industry which the directors expect to be less affected compared to other industries.

The Group has increased its year end net debt position to $421.9 million (2010: $101.1 million) following significant investment in acquisitions. Operating cash flow in 2011 was $126.4 million (2010: $152.5 million). The Group has $396.4 million (2010: $264.8 million) of undrawn banking facilities. These facilities are well diversified across the operating subsidiaries of the Group and are with a number of financial institutions. 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 and political outlook. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The directors therefore continue to adopt the going concern basis in preparing the financial statements.

3. Segmental reporting

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 segment information.

The Group discloses underlying operating profit as the measure of segment result as this is the measure used in the decision-making and resource allocation process of the chief operating decision maker, who is the Group's Chief Executive Officer.

Information regarding the Group's operating segments is reported below.

The following is an analysis of the Group's revenue and results by reportable segment in 2011:

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

"Others" mainly comprise Arab Medical Containers Ltd, 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, donations, travel expenses and acquisition related expenses.

The following is an analysis of the Group's revenue and results by reportable segment in 2010:

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

"Others" mainly comprise Arab Medical Containers Ltd, 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, donations, travel expenses and acquisition related expenses.

The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods/services:

The top selling markets are USA, Saudi Arabia and Algeria with total sales of USD 317.3 million (2010: USD 204.4 million), USD 121.4 million (2010: USD 118.5 million) and USD 102.5 million (2010: USD 88.8 million), respectively.

Included in revenues arising from the Branded and Injectables segments are revenues of approximately USD 101.9 million (2010: USD 99.4 million) which arose from sales to the Group's largest customer which is located in Saudi Arabia.

The following is an analysis of the total non current assets excluding deferred tax and financial instruments and an analysis of total assets by the geographical area in which the assets are located:

4. Exceptional items and intangible amortisation

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

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

Acquisition and integration related expenses are costs incurred in acquiring the Baxter Healthcare Multi-Source injectables business (MSI), Société de Promotion Pharmaceutique du Maghreb S.A. (Promopharm) S.A, and Elie Pharmaceuticals Businesses, now called ("Savanna"). Acquisition related expenses are included in the unallocated corporate expenses while integration related expenses are included in segment results. Further details are set out in note 15 "Acquisition of subsidiaries".

Acquisition related expenses mainly comprises of third party consulting services, legal and professional fees.

USD 10.1 million (31 December 2010: USD 7.7million) of costs have been classified as investing activities in the cash flow statement relating to the cash outflow in respect of acquisition and integration costs in the period.

The inventory related adjustments reflect the fair value uplift of the inventory acquired as part of the MSI acquisition (refer to note 15).

In the prior year, acquisition related expenses related to transaction costs incurred in acquiring Ibn Al Baytar, Al Dar Al Arabia and MSI, for which the process of completion commenced in the second half of 2010. These were included in the unallocated corporate expenses.

Gains on revaluation of previously held equity interests related to gains arising from the remeasurement to fair value of the previously held equity interests in Ibn Al Baytar and Al Dar Al Arabia. These were included within other operating expenses (net).

5. Tax