Hikma delivers excellent first half results with 16% revenue growth and 44% increase in adjusted EPS

H1 2014 highlights

Group

• Group revenue increased by 16% to $738 million, driven by the very strong performance of our Injectables business in the first half
• Group adjusted operating margin rose to 33.2%, up from 29.6%, reflecting a higher Injectables margin
• Profit attributable to shareholders increased by 132% to $169 million. On an adjusted basis, profit attributable to shareholders rose 44% to $176 million
• Basic EPS increased 130% to 85.4 cents per share
• Net cash flow from operating activities increased by $64 million to $200 million
• Completed the acquisition of assets of Bedford Laboratories ("Bedford") in July 2014 and agreed to acquire substantially all of the assets of the Ben Venue manufacturing site, significantly enhancing the long term strength of our global Injectables business
• Continued to build our global product portfolio through new product introductions across all countries and markets – launched 49 products and received 140 product approvals
• Interim dividend of 7.0 cents per share, in line with the first half of 2013
• Declared a special dividend of 4.0 cents per share, reflecting the exceptionally strong market opportunities captured by our US businesses in the first half of 2014

Branded

• Good performances across most markets, with strong growth in key markets such as Egypt and Saudi Arabia
• Lower than expected sales in Algeria due to restructuring and in Sudan, Iraq and Libya due to escalating political disruptions
• Branded revenue grew by 1% and adjusted operating profit decreased by 9%, with adjusted operating margin of 20.8%, compared with 23.0% in the first half of 2013
• Branded business is now expected to deliver low single digit revenue growth for the full year, resulting in an adjusted operating margin below full year 2013

Injectables

• Global Injectables revenue grew 41%, with an adjusted operating margin of 41.0%
• Excellent performance in the first half, driven by strong underlying growth in the US, enhanced by specific market opportunities
• Continue to expect Injectables revenue growth above 20% for the full year, reflecting the weighting of sales towards the first half, and adjusted operating margin of around 35% for the full year, before the slight dilution from Bedford

Generics

• Continued benefit from specific market opportunities and the re‐introduction of products drove Generics revenue of $128 million, a decrease of only 3%
• Generics adjusted operating profit was $79 million compared with $82 million in the first half of 2013, with an adjusted operating margin of 61.7%
• We now expect full year revenue to be around $200 million, with an adjusted operating margin of above 45%

Said Darwazah, Chief Executive Officer of Hikma, said:

“I am very pleased with our first half results, which reflect strong underlying performances in our businesses and our success in capturing a number of specific market opportunities.

In the MENA region, our focus on new, higher value products is delivering good results in key markets. Whilst this is being offset by weakness in other markets this year, our businesses across the region remain well positioned to drive future growth. Our Injectables business delivered an excellent performance, as we captured a number of attractive market opportunities. I am delighted we have acquired the Bedford assets, which will add products, R&D capabilities and capacity to support future growth for the global Injectables business. Our Generics business is performing extremely well and we are working hard to strengthen the product portfolio and pipeline.

Over the past eighteen months the Group has generated significant cash flows and our strong balance sheet is enabling us to make strategic investments across our businesses. Overall, the Group is benefiting from our diversified business model and I am pleased to be reiterating our Group guidance of around 5% revenue growth for the full year.”

^{Before the amortisation of intangible assets (excluding software) and exceptional items, as set out in note 4 to the condensed set of financial statements Earnings before interest, tax, depreciation and amortisation. EBITDA is stated before impairment charges and share of results from associated companies}