Interim Results

PRESS RELEASE

Hikma delivers exceptionally strong first half results with 20% revenue growth and 156% increase in adjusted EPS

Raising Group guidance to around 20% revenue growth for the full year, with a positive outlook for all businesses

London, 21 August 2013 - Hikma Pharmaceuticals PLC ("Hikma") (LSE: HIK) (NASDAQ Dubai: HIK) (OTC: HKMPY), the fast growing multinational pharmaceutical group, today reports its interim results for the six months ended 30 June 2013.

H1 2013 highlights

Group

· Group revenue increased by 19.9% to $638.3 million. Full year Group guidance raised to around 20% revenue growth

· Group adjusted operating margin rose to 29.6%, up from 15.7%, reflecting significant improvement in Generics and Injectables margins

· Profit attributable to shareholders increased by 82.1% to $73.6 million. On an adjusted basis, profit attributable to shareholders rose 157.2% to $121.2 million

· Net cash flow from operating activities increased by $88.9 million to $136.0 million

· Continued new product introductions across all countries and markets - launched 63 products and received 65 product approvals

· Increase in the interim dividend to 7.0 cents per share, up from 6.0 cents in the first half of 2012, plus a special dividend of 3.0 cents per share that reflects the exceptional performance of the Generics business

Branded

· Branded revenue grew 3.2%, or 8.7% in constant currency. The Branded business remains on track for around 11% full year revenue growth in constant currency

· Branded adjusted operating profit grew by 10.6%, with adjusted operating margin of 22.6%

Injectables

· Global Injectablesrevenue grew 9.5%, with adjusted operating margin of 28.6%, driven by strong performances in the US and Europe

· The Injectables business remains on track to deliver low double-digit revenue growth for the full year

Generics

· Generics revenue increased by 136.6% to $132.0 million and full year Generics revenue guidance raised to $230 million, reflecting exceptionally strong doxycycline sales

· Generics operating profit of $49.4 million, after non-recurring costs of $32.8 million

Said Darwazah, Chief Executive Officer of Hikma, said:

"The Group has made an excellent start to this year and all of our businesses are performing well.

In the MENA region, our strategic focus on higher value products and operational efficiencies is delivering improved profitability. Our global Injectables business continues to deliver good growth in revenue and a significant improvement in profitability. In particular, we are benefitting from strong demand for our products in the US and new product launches.

The Generics business is benefiting from exceptional sales of doxycycline and generated strong profitability in the first half of the year. This is enabling us to more than offset the impact of the ongoing remediation at our Eatontown facility and is providing excellent cash flow for the Group.

Overall, the Group is performing well and I am very pleased to be able to raise our Group guidance to around 20% revenue growth for the full year."

Group financial highlights

Enquiries

Hikma Pharmaceuticals PLC

Susan Ringdal, VP Corporate Strategy and Investor Relations +44 (0)20 7399 2760/ +44 7776 477050

Lucinda Henderson, Investor Relations Manager +44 (0)20 7399 2765/ +44 7818 060211

FTI Consulting

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

About Hikma

Hikma Pharmaceuticals PLC is a fast growing 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 primarily in the Middle East and North Africa ("MENA") region, where it is a market leader, the United States and Europe. In 2012, Hikma achieved revenues of $1,108.7 million and profit attributable to shareholders of $100.3 million.

A presentation for analysts and investors will be held today at 09:30 at FTI Consulting, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB. To join via conference call please dial: +44 (0) 203 139 4830 or 0808 237 0030 (UK toll free) and use participant PIN code: 93232833#. Alternatively you can listen live via our websiteat www.hikma.com. A recording of both the meeting and the call will be available on the Hikma website. Video interviews of Said Darwazah, CEO and Khalid Nabilsi, CFO are available at www.hikma.com. The contents of this website do not form part of this interim management report.

Interim management report

The interim management report set out below summarises the performance of Hikma's three main business segments, Branded, Injectables and Generics, for the six months ended 30 June 2013.

Group revenue by business segment (%)

Group revenue by region (%)

Branded

H1 2013 highlights:

• Branded revenue increased by 3.2%, or 8.7% in constant currency

• Branded adjusted operating profit increased by 10.6%, with adjusted operating margin of 22.6%, up from 21.1%

• 34 products launched and two new in-license agreements signed

Branded revenue increased by 3.2% in the first half of 2013 to $256.8 million, compared with $248.8 million in the first half of 2012. On a constant currency basis, Branded revenue was $270.5 million, up 8.7%. During the period, we continued to focus on prioritising higher value strategic products through enhanced sales and marketing activities across our MENA markets. We also worked on driving operational efficiencies in our local manufacturing facilities.

Our Egyptian business had an excellent first half, with revenue growth of around 14%, despite the significant depreciation of the Egyptian pound against the US dollar, which depreciated by around 11% during the first half of 2013. This reflects our continued emphasis on higher value products and the contribution from new product launches. These factors should also drive performance in the second half and, whilst the situation in Egypt has escalated in recent weeks, we have confidence in our experienced local management team and their strong track record of managing the business through disruptions.

During the period, we completed the acquisition of the Egyptian Company for Pharmaceutical and Chemical Industries ("EPCI") for an aggregate cash consideration of $20.5 million. We have fully integrated EPCI's sales and marketing team and are upgrading their manufacturing facility. We expect EPCI's excellent product portfolio and specialised manufacturing capabilities to drive significant growth in our Egyptian business over the medium term.

In Algeria, we experienced slower than expected sales in the first half due to the timing of orders and lower sales of certain products that had an exceptionally good performance in the first half of 2012. We believe we are well positioned to achieve strong growth in the second half driven by new product launches and increased demand for our product portfolio. We expect to deliver double-digit revenue growth in Algeria for the full year. In anticipation of continued strong demand in Algeria in the coming years, we began the expansion of our general formulation facility in the first half, which will enable us to meet growing demand and strengthen our competitive position in the Algerian market.

In Saudi Arabia, we are implementing our strategy to improve profitability by reducing low margin tender sales and focusing on the promotion of higher margin, more strategic products. Profitability is improving and we are expecting good top line growth in the second half, driven by more targeted sales and marketing efforts and new product launches.

In Sudan, we made a very strong start to the year, benefitting from our local manufacturing facility and new product registrations. We have more than offset the significant impact of the currency devaluation that took place in Sudan in June 2012. In Iraq, we are delivering strong growth following the appointment of an additional distributor in 2012. Our business in Jordan has also performed well, benefitting from a greater focus on higher value products and the sales force restructuring done in 2012.

During the first half of 2013, the Branded business launched a total of 34 products across all markets, including 12 new compounds and 20 new dosage forms and strengths. The Branded business also received 38 regulatory approvals across the region.

Revenue from in-licensed products increased from $89.2 million to $93.9 million in the first half. In-licensed products represented 36.6% of Branded revenue, compared with 35.8% in the first half of 2012. We signed two new licensing agreements for innovative oral products during the first half of 2013, which will support our continued focus on growing our portfolio of higher value products in growing therapeutic areas.

Branded gross profit grew by 8.1% to $129.8 million in the first half of 2013 and gross margin was 50.5%, compared with 48.3% in the first half of 2012. The improvement in gross margin primarily reflects a favourable product mix during the period, with a focus on higher value products and a reduction in low margin tender sales.

Operating profit in the Branded business increased by 8.3% to $51.3 million, compared with $47.4 million in the first half of 2012. Adjusted operating margin was 22.6%, compared with 21.1% in the first half of 2012, after excluding the amortisation of intangibles of $4.8 million and other non-recurring costs of $2.0 million.

Excluding the impact of adverse currency movements, adjusted operating margin was 23.1%. This improvement in margin reflects our success in driving higher margin sales, restructuring our sales and marketing teams and improved operational efficiencies. This has enabled us to absorb continued inflationary pressure in the region and other disruptions to our business related to the Arab Spring.

On a constant currency basis, we continue to expect Branded revenue growth of around 11% for the full year and a slight improvement in adjusted operating margin. On a reported basis, taking into account exchange rate movements since the beginning of 2013, we expect Branded revenue growth to be around 7% this year, with margins in line with 2012.

Injectables

H1 2013 highlights:

· Global Injectables revenue grew by 9.5% to $246.6 million

· Excellent performance in US Injectables, up 21.1%, driven by new launches and price improvements

· Significant improvement in Injectables adjusted operating margin to 28.6%, up from 22.7%

Injectables revenue by region

Revenue in our global Injectables business increased by 9.5% to $246.6 million, compared with $225.2 million in the first half of 2012.

US Injectables revenue grew by $28.8 million, or 21.1%, to $165.4 million. This excellent performance reflects our success in driving new product launches and price improvements. Our ability to maintain supply and our strong quality track record continue to be key competitive advantages.

In the MENA region, Injectables revenue decreased by 22.3% to $40.1 million, compared with $51.6 million in the first half of 2012. This primarily reflects the timing of tenders in Algeria and Saudi Arabia, a strategic reduction in low margin tender sales and a difficult comparator period. We are expecting strong growth in the second half across our MENA markets, driven in part by the shipping of tenders won at the end of the first half. However, a delay in product registrations means that MENA Injectables revenue for the full year will be broadly in line with last year.

Revenue in our European Injectables business grew by 10.6% to $41.1 million. Growth was driven by recent product launches and continuing demand for contract manufacturing. We successfully offset double-digit price erosion with strong volume growth.

Injectables gross profit increased by 26.9% to $124.6 million, compared with $98.2 million in the first half of 2012. Gross margin increased significantly to 50.5%, compared with 43.6% in the first half of 2012. This reflects pricing improvements, new product launches and significant overhead reductions at our Cherry Hill facility.

Operating profit increased by 37.5% to $65.6 million. Adjusted operating profit increased by 37.9% to $70.6 million. Adjusted operating margin increased from 22.7% to 28.6%. This excellent margin expansion reflects the improvement in gross margin and operating efficiencies. It was also achieved despite higher R&D expenditure, which will continue to increase in the second half of the year.

We remain focussed on strengthening our global Injectables product portfolio, with a particular emphasis on more differentiated products. In January, we received a 505(b)2 approval for phenylephrine injection, which we re-launched in February. We are investing in a dedicated R&D line at our Portuguese facility that will help us to accelerate our internal product development. We are also focussed on expanding our portfolio through partnerships and product acquisitions. Our ability to add higher value, more differentiated products to our portfolio will be a key driver of growth for our global Injectables business.

During the first half of 2013, the Injectables business launched a total of 29 products across all markets, including 8 new compounds and 12 new dosage forms and strengths. The Injectables business also received a total of 26 regulatory approvals across all regions and markets, namely 8 in MENA, 15 in Europe and 3 in the US. During the period, we also signed a licensing agreement with Theravance for Vibativ®, an anti-infective product for the MENA region.

We expect our global Injectables business to continue to perform well in 2013 and we reiterate our guidance of low double-digit revenue growth for the full year.

Generics

H1 2013 highlights:

· Generics revenue increased by 136.6% to $132.0 million on strong doxycycline sales

· Operating profit increased to $49.4 million, after $32.8 million of remediation and other one-off costs[4]

Generics revenue was $132.0 million, compared to $55.8 million in the first half of 2012. This is due to exceptionally strong revenue from doxycycline and includes only a limited contribution from the rest of our portfolio. The ongoing remediation work at our Eatontown facility has slowed the re-introduction of products and we are having to rebuild our market position.

Generics gross profit was $99.4 million, compared with $15.2 million in the first half of 2012, and gross margin was 75.3%, compared with 27.3% in the first half of 2012. Operating profit was $49.4 million and operating margin was 37.4%, compared with an operating loss of $3.3 million in the first half of 2012.

Excluding the impact of non-recurring remediation and other one-off costs of $32.8 million, adjusted operating profit was $82.2 million and adjusted operating margin was 62.3% in the first half of 2013, compared with an adjusted operating loss of $3.3 million in the first half of 2012.

Doxycycline revenue has been exceptionally strong, leading us to raise our Generics revenue guidance from around $200 million to around $230 million for 2013. We expect reported operating margin to be above 30% for the full year, after remediation costs of around $30 million and other one-off costs of around $15 million. Visibility for 2014 remains limited at this stage. The remediation of the Eatontown facility remains our priority and we continue to expect to complete the remediation work by the end of the year.

Other businesses

Other businesses, which primarily comprise Arab Medical Containers, a manufacturer of plastic specialised packaging, International Pharmaceuticals Research Centre, which conducts bio-equivalency studies, and the chemicals division of Hikma Pharmaceuticals Limited, contributed revenue of $2.9 million, compared with $2.5 million in the first half of 2012.

These other businesses delivered an operating loss of $2.9 million in the first half of 2013, compared with a loss of $2.0 million in the first half of 2012.

Group

Group revenue increased by 19.9% to $638.3 million in the first half of 2013. Group gross profit increased by 50.9% to $353.3 million, compared with $234.1 million in the first half of 2012. Group gross margin was 55.3%, compared with 44.0% in the first half of 2012, reflecting the significant gross margin improvement of the Generics and global Injectables businesses.

Group operating expenses grew by 31.6% to $209.3 million, compared with $159.0 million in the first half of 2012. Excluding the amortisation of intangible assets (excluding software) of $7.1 million and exceptional items[5] of $38.0 million, adjusted Group operating expenses grew by 9.2% to $164.2 million. The paragraphs below address the Group's main operating expenses in turn.

Sales and marketing expenses were $77.7 million, or 12.2% of revenue, compared with $74.1 million and 13.9% of revenue in the first half of 2012. Strong Generics revenue growth, which did not require incremental sales and marketing costs, offset an increase in wages and employee benefits in the MENA region.

General and administrative expenses increased by $10.9 million, or 19.5%, to $66.8 million in the first half of 2013. The increase in expenses primarily reflects an increase in employee benefits related to the exceptional performance of the US business this year, as well as increased IT costs.

Group R&D expenditure was $19.5 million in the first half of 2013, compared with $17.1 million in the first half of 2012. An increase in spend for the Branded and Injectables businesses has more than offset a reduction in R&D expenditure for the Generics business. Total investment in R&D represented 3.1% of Group revenue, compared with 3.2% in the first half of 2012. We expect increased investment in R&D in the second half of 2013, as we continue to focus on new product development, particularly for the Injectables business.

Other net operating expenses increased by $33.3 million to $45.2 million. Excluding exceptional items, the increase was $2.5 million, primarily reflecting an increase in provisions for slow-moving items.

Operating profit for the Group increased by 91.8% to $144.0 million in the first half of 2013. Group operating margin increased to 22.6%, compared with 14.1% in the first half of 2012. On an adjusted basis, Group operating profit increased by $105.4 million, or 125.8%, to $189.1 million and operating margin increased to 29.6%, up from 15.7% in the first half of 2012.

Research & Development[6] 

The Group's product portfolio continues to grow as a result of our in-house product development efforts. During the first half of 2013, we launched 20 new compounds, expanding the Group portfolio to 685 compounds in 1,626 dosage forms and strengths.[7] We manufacture and/or sell 94 of these compounds under license from the originator.

Across all businesses and markets, a total of 63 products were launched during the first half of 2013. In addition, the Group received 65 approvals.

To ensure the continuous development of our product pipeline, we submitted 111 regulatory filings in the first half of 2013 across all regions and markets. As of 30 June 2013, we had a total of 379 pending approvals across all regions and markets and a total of 205 products under development.

Investments in associates

During 2011, Hikma acquired a minority interest in Unimark Remedies Limited ("Unimark") in India for a cash consideration of $33.6 million. Unimark manufactures active pharmaceutical ingredients ("API") and API intermediates.  Unimark has been impacted by a decline in prices in its API manufacturing business and is in the process of restructuring its corporate debt. During the period, we incurred an impairment charge of $15 million in respect of our investment. We believe that Unimark will be able to successfully manage its current issues and we continue to collaborate with Unimark in the development of a portfolio of products for the US market.

Net finance expense

The Group's net debt position at 30 June 2013 was $357.0 million, down from $406.5 million at 31 December 2012, and $473.0 million at 30 June 2012. Despite the reduction in total debt during the period, net finance expense increased to $17.0 million, compared with $16.7 million in the first half of 2012. The increase relates to the early repayment of long term loans in the first half of 2013. We now expect net finance expense to be around $38 million for the full year.

Profit before tax

Profit before tax for the Group increased by 92.9% to $111.6 million, compared with $57.8 million in the first half of 2012. Adjusted profit before tax increased by 158.1% to $171.7 million.

Tax

The Group incurred a tax expense of $35.1 million, compared with $15.0 million in the first half of 2012. The effective tax rate was 31.5%. Excluding the impact of the non-cash impairment charge in respect of Unimark, the effective tax rate was 27.7% in the first half of 2013, compared with 25.9% in the first half of 2012. The increase in the tax rate is mainly attributable to the increased profitability in higher tax jurisdictions. We now expect the full year effective tax rate to be around 24%, excluding the impact of the impairment charge related to our investment in Unimark.

Profit attributable to equity holders of the parent

The Group's profit attributable to equity holders of the parent increased by 82.1% to $73.6 million in the first half of 2013. Adjusted profit attributable to equity holders of the parent increased by 157.2% to $121.2 million.

Earnings per share

Basic earnings per share increased by 81.2% to 37.4 cents, compared with 20.6 cents in the first half of 2012. Diluted earnings per share increased by 80.9% to 37.0 cents, compared with 20.4 cents in the first half of 2012. Adjusted diluted earnings per share was 60.9 cents, an increase of 155.5% over the first half of 2012.

Dividend

The Board has declared an interim dividend of 7.0 cents per share (approximately 4.5 pence per share), compared to 6.0 cents per share for the first half of 2012. In addition, the Board has declared a special dividend of 3.0 cents (approximately 1.9 pence per share), which reflects the exceptional performance of the Generics business in the first half. The interim dividend and the special dividend will be paid on 7 October 2013 to eligible shareholders on the register at the close of business on 6 September 2013. The ex-dividend date is 4 September 2013 and the final date for currency elections is 13 September 2013.

Net cash flow, working capital and net debt

The Group generated operating cash flow of $136.0 million in the first half of 2013, up $88.9 million from $47.1 million in the first half of 2012. The significant improvement in operating cash flow was achieved through strong growth in profitability while maintaining our focus on working capital management. Working capital days were unchanged at 207 days.

Capital expenditure was $25.6 million, compared with $26.1 million in the first half of 2012. Around $13 million was spent in MENA, principally to maintain our manufacturing facilities across the region and to upgrade our recently acquired facility in Egypt. Around $10 million was spent in the US, primarily at our facility in Cherry Hill.

The Group made an acquisition in Egypt in January 2013, acquiring EPCI for a total consideration of $20.5 million of which $18.5 million was paid and $2.0 million was deferred.

Group net debt decreased from $406.5 million at 31 December 2012 to $357.0 million at 30 June 2013. This reflects the strong performance of the Group in the first half of 2013, which enabled us to make an early repayment of long term loans.

Balance sheet

During the period, shareholder equity was negatively impacted by unrealised foreign exchange losses of $13.4 million, primarily reflecting adverse movements in the Egyptian pound and the Algerian dinar against the US dollar and the revaluation of net assets denominated in these currencies.

Summary and outlook

We delivered a strong performance across our businesses in the first half of 2013, with a 19.9% increase in revenue and a 155.9% increase in adjusted basic earnings per share.

We now expect the Group to deliver full year revenue growth of around 20%.

We are expecting stronger sales in the MENA region in the second half and we continue to expect our Branded business, on a constant currency basis, to deliver revenue growth of around 11% for the full year and a slight improvement in adjusted operating margin. On a reported basis, taking into account exchange rate movements since the beginning of 2013, we expect Branded revenue growth to be around 7% for the full year, with margins in line with 2012.

We expect the strong performance of our global Injectables business will be sustained in the second half of the year and we reiterate our guidance of low double-digit revenue growth.

Doxycycline revenue has been exceptionally strong, leading us to raise our Generics revenue guidance from around $200 million to around $230 million for 2013. We expect reported operating margin to be above 30% for the full year, after remediation and other one-off costs of around $45 million. Visibility for 2014 remains limited at this stage. The remediation of the Eatontown facility remains our priority and we continue to expect to complete the remediation work by the end of the year.

Overall, we are pleased with the performance of the Group in the first half of 2013 and we are confident in the outlook for the remainder of the year, as well as the Group's medium and long term growth prospects.

Going concern statement

As set out in note 2 to the condensed financial statements, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than twelve months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Responsibility statement

The Board confirms that to the best of its 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 including their impact on the financial statements 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 which have had or could have a material financial effect on the financial position of the Group during the period).

Cautionary statement

This interim management report 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.

INDEPENDENT REVIEW REPORT TO HIKMA PHARMACEUTICALS PLC

We have been engaged by Hikma Pharmaceuticals PLC (the 'Company') to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 which comprises the condensed consolidated income statement, 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 16. 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 it 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 Kingdom's Financial Conduct Authority.

As disclosed in note 2, 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 2013 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 Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

 20 August 2013

Hikma Pharmaceuticals PLC

Condensed consolidated income statement

On this page and throughout this interim financial information "H1 2013" refers to the six months ended 30 June 2013, "H1 2012" refers to the six months ended 30 June 2012 and "FY 2012" refers to the year ended 31 December 2012.

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

Hikma Pharmaceuticals PLC

Condensed consolidated statement of other comprehensive income

Hikma Pharmaceuticals PLC

Condensed consolidated balance sheet

Hikma Pharmaceuticals PLC

Condensed consolidated balance sheet

The financial statements of Hikma Pharmaceuticals PLC, registered number 5557934, were approved by the Board of Directors and signed on its behalf by:  

Said Darwazah Mazen Darwazeh

Director Director

20 August 2013

Hikma Pharmaceuticals PLC

Condensed consolidated statement of changes in equity

Hikma Pharmaceuticals PLC

Condensed consolidated cash flow statement

Hikma Pharmaceuticals PLC

Notes to the condensed set of financial statements (unaudited)

1. General information

The financial information for the year ended 31 December 2012 does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012, 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 auditor's report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain any statement under Section 498 (2) or (3) of the Companies Act 2006.

2. Accounting policies

The unaudited condensed set of financial statements for the six months ended 30 June 2013 have been prepared using the same accounting policies and on a basis consistent with the audited financial statements of Hikma Pharmaceuticals PLC (the 'Group') for the year ended 31 December 2012 which are prepared in accordance with IFRSs as adopted by the European Union.

Dynamic market changes can generate uncertainty as to the ultimate net selling price of a pharmaceutical product and therefore revenue cannot always be measured reliably at the point when the product is supplied or made available to external customers. The Company has therefore expanded its revenue recognition policy as shown below; this had no impact on revenue recognised in prior periods.

Revenue recognition

Revenue is recognised in the consolidated income statement when goods or services are supplied or made available to external customers against orders received and when the significant risks and rewards of ownership have passed.

Revenue represents the amounts receivable after the deduction of discounts, value added tax, other sales taxes, allowances given, provisions for chargebacks and accruals for estimated future rebates and returns. The methodology and assumptions used to estimate rebates and returns are monitored and adjusted regularly in light of contractual and historical information.

If the ultimate net selling price cannot be reliably measured, revenue recognition is deferred until a reliable measurement can be made. Deferred revenue is included in other current liabilities in the consolidated balance sheet

Basis of preparation

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

The Group's condensed set of financial statements included in this half- yearly financial report have been prepared in accordance with International Accounting Standards 34 'Interim Financial Reporting' as adopted by the European Union. They were approved by the Board on 20 August 2013.

Taxes on income for interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

Going concern

The Group has $757.9 million of banking facilities of which $265.3 million were undrawn as at 30 June 2013. Of the undrawn facilities, $125.6 million was committed. These facilities are well diversified across the operating subsidiaries of the Group with a number of financial institutions.

About 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 and cash equivalent of $119 million as at 30 June 2013. 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 within the levels of its facilities.

Although the current economic conditions may affect short-term demand for our products, as well as placing pressure on customers and suppliers which may face liquidity issues, the Group's geographic spread, product diversity, 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.

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 set of condensed financial statement.

Changes in accounting policies

Adoption of new and revised standards

The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but, with the exception of the amendment to IFRS 1 and IFRIC 20, may impact the accounting for future transactions and arrangements

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in future periods.

3. Business and geographical segments

For management purposes, the Group is currently organised into three operating divisions - Branded, Injectables and Generics. These divisions represent the Group's reportable segments under IFRS 8 and are the basis on which the Group reports its primary segment information.

Segment information about these businesses is presented below.