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 FORM 6-K
 
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 under
the Securities Exchange Act of 1934


For the month ended June, 2017


ICON plc
(Registrant's name)


333-08704
 (Commission file number)


South County Business Park, Leopardstown, Dublin 18, Ireland
(Address of principal executive offices)


Brendan Brennan, CFO
South County Business Park, Leopardstown, Dublin 18, Ireland.
Brendan.Brennan@iconplc.com
00-353-1-291-2000
 (Name, telephone number, email and/or facsimile number and address of Company contact person)



Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
Yes___X___
No_______
 
Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
 
Yes______
No___X___
 
Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
 
Yes______
No___X___
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes______
No___X___
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82 N/A
 
 




 

EXHIBIT LIST
 
Exhibit
 
Description
 
 
 
 
 
99.1
 
Notice of Annual General Meeting
     
99.2
 
Proxy Card
     
99.3
 
ICON plc Annual Report
 
 
 
 



 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
ICON plc
 
 
 
 
 
 
 
 
 
 
 
/s/ Brendan Brennan
Date:  June 23, 2017
 
Brendan Brennan
Chief Financial Officer
Exhibit 99.1

 
Notice of Annual General Meeting
to be held on 25 July 2017















ICON plc
(the “Company” or “ICON”)


















THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the action to be taken, you should consult with your independent financial adviser who, if you are taking advice in the Republic of Ireland, is authorised or exempted under the European Communities (Markets in Financial Instruments) Regulations (Nos. 1 to 3) 2007 or the Investment Intermediaries Act, 1995.

If you have sold or transferred your entire holding of ordinary shares in ICON, please pass this document, together with the attached proxy form, to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale was effected, for transmission to the purchaser or transferee as soon as possible.


23 June, 2017
To: All ICON Shareholders

NOTICE OF ANNUAL GENERAL MEETING

Dear Shareholder

The Annual General Meeting of ICON plc (the AGM) will be held at 9.00am (Dublin time) on 25 July 2017 at ICON’s global headquarters in South County Business Park, Leopardstown, Dublin 18, Ireland.

The purpose of this letter is to outline the background to and summarise the resolutions to be proposed at the AGM.   Please refer to the form of proxy for the AGM (which is separately enclosed) and the notes on pages 8 to 9 for details on how to vote your shares and return your form of proxy.  Your attention is also drawn to the notice of the AGM on pages 5 to 7 which sets out the matters to be considered at the AGM.

Re-election of Directors (ordinary resolutions 1.1 to 1.4)
In accordance with our Articles of Association (by-laws), one third of the Board who are subject to retirement by rotation shall retire from office and may stand for re-election at the AGM. Professor Dermot Kelleher, Professor Hugh Brady and Ms. Mary Pendergast will stand for re-election. Mr. Ronan Murphy, who was appointed since the 2016 Annual General Meeting, will also offer himself for re-election.  Professor Dermot Kelleher, Professor Hugh Brady, Ms. Mary Pendergast and Mr. Ronan Murphy are all independent non-executive Directors (in accordance with NASDAQ rules).
 
Each of the Directors standing for re-election demonstrates the necessary commitment to the role and provides valuable skills, knowledge and experience and makes important contributions to the working of the Board. Further information on the experience, qualifications and industry knowledge of the Directors is available from the Annual Report and/or Form 20-F at http://investor.iconplc.com/annuals.cfm.
 
ICON’s 2016 Accounts (ordinary resolution 2)
This resolution is to receive and consider ICON’s 2016 accounts which have been audited by KPMG, ICON’s independent auditors.

Remuneration of Auditors (ordinary resolution 3)
This resolution authorises the Directors to fix the remuneration of the auditors.

Authority to issue shares up to 20% of share capital (ordinary resolution 4)
This resolution authorises the Directors to issue shares until the earlier of the next Annual General Meeting of the Company or 24 January 2019 up to an aggregate of 20% of the share capital of the Company without further shareholder approval.  This resolution is required under Irish law as the Company is an Irish incorporated company. The 20% cap on this resolution aligns the resolution with the NASDAQ rules which provide that up to 20% of share capital can be issued without shareholder approval.

Authority to issue shares up to 5% of share capital without offering to existing shareholders, with an additional 5% for funding capital investment or acquisitions (special resolution 5 and special resolution 6)

Resolution 5 authorises the Directors to issue shares for cash, subject to resolution 4, until the earlier of the next Annual General Meeting of the Company or 24 January 2019 up to an aggregate of 5% of the share capital of the Company without having to offer the shares to existing shareholders on a pro rata basis. Resolution 6 authorises the Directors to issue an additional 5% of the share capital for cash, again subject to Resolution 4, on a non pre-emptive basis provided that the proceeds of any such share issuance are to be used only for the purposes of financing (or re-financing, if the authority is to be used within six months after the original transaction) an acquisition or other capital investment.
 
 
2
ICON plc – Notice of Annual General Meeting 2017


A resolution authorising the issuance of shares for cash without such offer round is a requirement of Irish law and there is no such requirement under the NASDAQ rules. As above, this year the authorities under these resolutions expire on the earlier of the next Annual General Meeting of the Company or 24 January 2019.

The caps on resolutions 4, 5 and 6 are different but complementary and they give shareholders significant anti-dilution protection which is far in excess of the protection that the shareholders of numerous NASDAQ companies would have. Every year since the Company was listed (apart from 2014 as resolutions with 5 year authority were passed in 2013), the Directors have put resolutions to authorise the issue of shares and to disapply offer round to the shareholders and each such resolution has been passed.

Authority to buy back shares up to 10% of share capital (special resolution 7)
This resolution authorises the Company to purchase in the market (buy-back) up to 10% of the outstanding shares in the Company.  It is important both for the Company and shareholders that the Company has this flexibility to implement a buy-back (without having to seek further shareholder approval) if the market conditions favour a buy-back.  It should also be noted that the NASDAQ rules do not require shareholder approval to do a share buy-back and this resolution is required as the Company is an Irish incorporated company and Irish law requires shareholders to pass such a resolution to give Directors the authority to put a buy-back in place. The authority under this resolution expires on the earlier of the next Annual General Meeting and 24 January 2019.

Authority to reissue shares held as treasury shares (special resolution 8)
This resolution authorises the price range at which the Company can reissue shares that it holds as treasury shares. Any share buyback activity by the Company will result in ordinary shares either being cancelled or re-issued as treasury shares. We may reissue treasury shares that we acquire through our proposed share buyback activities including in connection with our executive compensation programme, our employee restricted share unit programme and our other compensation programmes.  As a result of using this authority in this way, ICON would avoid the need to issue new shares (and the resulting shareholder dilution) when vesting of equity awards triggers the requirement to issue shares to employees.

Under Irish company law, our shareholders must authorise the price range at which we may reissue any shares held in treasury. In this proposal, that price range is expressed as a minimum and maximum percentage of the prevailing market price (as defined below). Under Irish law, this authorisation expires after eighteen months unless renewed; accordingly, we are renewing the authorisation approved at the 2016 Annual General Meeting and we expect to propose renewal of this authorisation at subsequent annual general meetings.

The authority being sought from shareholders provides that the minimum and maximum prices at which an ordinary share held in treasury may be reissued are 95% and 120%, respectively, of the average closing price per ordinary share of the Company, as reported by NASDAQ, for the thirty (30) trading days immediately preceding the proposed date of re-issuance. Any reissuance of treasury shares will be at price levels that the Board considers in the best interests of our shareholders.

There will also be a review of the affairs of the Company at the AGM.
 
There is no resolution dealing with executive compensation as ICON, being a foreign private issuer, is not obliged to provide a “say on pay” shareholder resolution on executive compensation. Details of ICON’s executive officers compensation for 2016 are available in the Annual Report and Form 20-F for 2016 which are available at http://investor.iconplc.com/annuals.cfm.
 
3
ICON plc – Notice of Annual General Meeting 2017

 
Approval of Resolutions
Resolutions 1.1 to 1.4, 2, 3 and 4 are ordinary resolutions which require approval of a simple majority of the votes cast in person or by proxy and resolutions 5 to 8 are special resolutions which require approval of 75% of the votes cast in person or by proxy.

Recommendation of Directors
Your Board believes that the resolutions to be proposed at the AGM are in the best interests of the Company and its shareholders.  Accordingly, your Directors unanimously recommend that you vote in favour of all resolutions as they intend to do in respect of the shares held by them.  On 21 June 2017, the directors held 861,585 Ordinary Shares representing approximately 1.6% of the issued ordinary share capital of the Company.
 

 


Yours sincerely,
Ciaran Murray
Executive Chairman

4
ICON plc – Notice of Annual General Meeting 2017


 

NOTICE OF ANNUAL GENERAL MEETING

NOTICE is hereby given that the Annual General Meeting of the Company will be held at ICON plc Headquarters, South County Business Park, Leopardstown, Dublin 18, Ireland on 25 July 2017 at 9.00 a.m.

ORDINARY BUSINESS

To consider and, if thought fit, pass the following ordinary resolutions:

1.
To re-elect, by separate resolutions, the following individuals who retire as Directors in accordance with the Articles of Association of the Company and, being eligible, offer themselves for re-election:

1.1
Professor Dermot Kelleher;
1.2
Professor Hugh Brady;
1.3
Ms. Mary Pendergast; and
1.4
Mr. Ronan Murphy.

2.
To receive and consider the accounts for the year ended 31st December 2016 and the reports of the Directors and auditors thereon.

3.
To authorise the Directors to fix the remuneration of the auditors.

SPECIAL BUSINESS

To consider and, if thought fit, pass the following ordinary resolution:

4.
"That the Directors be and are hereby generally and unconditionally authorised, pursuant to Section 1021 of the Companies Act 2014, to exercise all the powers of the Company to allot relevant securities (within the meaning of Section 1021 of the Companies Act 2014) up to an aggregate nominal amount of €648,496.61  representing approximately 20% of the aggregate nominal value of the issued ordinary share capital of the Company as at 21 June 2017 and the authority conferred by this resolution shall expire on the earlier of the date of the next Annual General Meeting of the Company or 24 January 2019, unless previously renewed, varied or revoked; provided that the Company may make an offer or agreement before the expiry of the authority conferred by this resolution, which would or might require any such securities to be allotted after the authority conferred by this resolution has expired and, in that case, the Directors may allot relevant securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired."

To consider and, if thought fit, pass the following special resolutions:

5.
“That, subject to the passing of Resolution 4, the Directors be and are hereby empowered pursuant to Section 1022 and Section 1023(3) of the Companies Act 2014, to allot equity securities (as defined in Section 1023 of the Companies Act 2014) for cash as if the provisions of sub-section (1) of the said Section 1022 did not apply to any such allotment up to an aggregate nominal amount of €162,124.15 representing approximately 5% of the aggregate nominal value of the issued ordinary share capital of the Company as at 21 June 2017 and the authority conferred by this Resolution shall expire on the earlier of the date of the next Annual General Meeting of the Company or 24 January 2019, unless previously renewed, varied or revoked; provided that the Company may make an offer or agreement before the expiry of the authority conferred by this resolution, which would or might require any such securities to be allotted after the authority conferred by this resolution has expired and, in that case, the Directors may allot relevant securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired."
 
5
ICON plc – Notice of Annual General Meeting 2017

6.
"That subject to the passing of Resolution 4, the Directors be and they are hereby authorised in addition to any authority granted under Resolution 5, to allot equity securities (as defined in Section 1023 of the Companies Act 2014) for cash as if the provisions of sub-section (1) of the said Section 1022 did not apply to any such allotment provided that:
 
a)
the proceeds of any such allotment are to be used for the purposes of financing (or re-financing, if the authority is to be used within six months after the original transaction) an acquisition or other capital investment; and
 
b)
the nominal value of all equity securities allotted pursuant to this authority together with the nominal value of all treasury shares (as defined in Section 106 of the Companies Act 2014) re-issued pursuant to Resolution 8 not exceed €162,124.15 representing approximately 5% of the nominal value of the issued share capital as at 21 June 2017.

The authority  conferred by this resolution shall expire on the earlier of the date of the next Annual General Meeting of the Company or 24 January 2019, unless previously renewed, varied or revoked; provided that the Company may make an offer or agreement before the expiry of the authority conferred by this resolution, which would or might require any such securities to be allotted after the authority conferred by this resolution has expired and, in that case, the Directors may allot relevant securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired."

7.
“That the Company and/or any subsidiary (as such expression is defined by Section 7 of the Companies Act 2014) of the Company be and they are hereby generally authorised to make overseas market purchases (as defined by Section 1072(2) of the Companies Act 2014) of shares of any class of the Company on such terms and conditions and in such manner as the Directors or, as the case may be, the Directors of such subsidiary, may from time to time determine in accordance with and subject to the provisions of the Companies Act 2014 and the following restrictions and provisions:

(i)
The maximum aggregate number of shares authorised to be acquired pursuant to this resolution shall not exceed 10% of the aggregate number of shares issued by the Company at close of business on the date of passing of this resolution;

(ii)
The minimum price (exclusive of expenses) which may be paid for any such share shall be an amount equal to the nominal value thereof;
 
(iii)
The maximum price (exclusive of expenses) to be paid for any ordinary share shall be an amount equal to 115% of the NASDAQ Official Close Price (the “NOCP”) (as reported by NASDAQ) of the Company’s ordinary shares on the trading day preceding the day on which the relevant shares are purchased by the Company.

The authority hereby conferred shall expire on the earlier of the date of the next Annual General Meeting of the Company or 24 January 2019 or (if earlier) unless previously varied, revoked or renewed in accordance with the provisions of Section 1074 of the Companies Act 2014. The Company or any subsidiary may before such expiry make a contract for the purchase of shares which would or might be wholly or partly executed after such expiry and may make a purchase of shares pursuant to any such contract as if the authority herby conferred had not expired.”

8.
“That the reissue price range at which any treasury shares held by the Company may be reissued off-market shall be as follows:
 
6
ICON plc – Notice of Annual General Meeting 2017

(a)
the maximum price at which such treasury share may be reissued off-market shall be an amount equal to 120% of the "market price"; and

(b)
the minimum price at which a treasury share may be reissued off-market shall be the nominal value of the share where such a share is required to satisfy an obligation under an employee share plan operated by the Company or, in all other cases, an amount equal to 95% of the "market price"; and

(c)
for the purposes of this resolution, the "market price" shall mean the average closing price per ordinary share of the Company, as reported by NASDAQ, for the thirty (30) trading days immediately preceding the proposed date of re-issuance.

The authority hereby conferred to reissue treasury shares shall expire eighteen months from the date of the passing of this resolution unless previously varied or renewed in accordance with the provisions of Section 1078 of the Companies Act 2014.”

By the Order of the Board.
Diarmaid Cunningham
23 June, 2017
Company Secretary
 
 
Registered Office:
South County Business Park,
Leopardstown,
Dublin 18
 

ICON plc – Notice of Annual General Meeting 2017

NOTES:

1.                   Information and Documentation
Information regarding the Annual General Meeting is available on the Company’s website www.iconplc.com and from www.proxyvote.com. If you require a paper copy of the Form 20-F or Annual Report please contact Investor Relations at 1-888-381-7923 or IR@iconplc.com.

2.
Who is eligible to vote and how?
The record date for the Annual General Meeting is 30 May 2017.

If your shares are registered in your name, you are a shareholder of record. Shareholders of record who are entered in the Register of Members of the Company on 30 May 2017 shall be entitled to attend, speak, ask questions and vote at the Annual General Meeting, or if relevant, any adjournment thereof. Changes in the Register of Members of the Company after that time will be disregarded in determining the right of any person to attend and/or vote at the Annual General Meeting.

For those shareholders whose shares are not held in their name, but rather in an account at a brokerage firm, bank, dealer or other similar organisation, who in turn hold through The Depository Trust Company (“DTC”), then their entitlement to vote is determined as at 30 May 2017.

Depending on whether your shares are registered in your name or whether your shares are held in a "street name" the arrangements are as follows:
 
Shareholder of Record: Shares Registered in Your Name
 
As a shareholder of record, you may vote in person at the Annual General Meeting or vote by proxy. In the case of joint holders, the vote of the senior member who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other shareholder of record and, for this purpose, seniority shall be determined by the order in which the names stand in the Register of Members of the Company in respect of the joint holding. The appointment of a proxy will not preclude a shareholder of record from attending, speaking, asking questions and voting at the Annual General Meeting should the shareholder subsequently wish to do so. A proxy need not be a member of the Company. If you wish to appoint more than one proxy or a person not listed on the form of proxy, please contact Investor Relations at 1-888-381-7923 or IR@iconplc.com.

A Form of Proxy is enclosed with this notice of Annual General Meeting for shareholders of record. To be effective, the Form of Proxy duly completed and executed, together with any authority under which it is executed, or a copy thereof certified, must be deposited at the registered office of the Company, so as to be received on 24 July 2017 or if the Annual General Meeting is adjourned, on the day that falls before the day appointed for the adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the Annual General Meeting or adjourned meeting) the day before the taking of the poll at which it is to be used. Any alteration to the Form of Proxy must be initialled by the person who signs it.

Alternatively, provided it is received by 11.59pm ET on 23 July 2017 or if the Annual General Meeting is adjourned,  by 11.59pm ET on the day that falls 48 hours before the time appointed for the adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the Annual General Meeting or adjourned meeting) by 11.59pm ET on the day that falls 48 hours before the taking of the poll at which it is to be used, the appointment of a proxy may be submitted electronically, subject to the applicable terms and conditions, via the Internet by accessing Broadridge’s website www.proxyvote.com and, when you follow the instructions on the website, the information you need to appoint your proxy electronically is included on the top of your Form of Proxy.

In the case of a corporation, the Form of Proxy must be either executed under seal or signed on its behalf by a duly authorised officer or attorney.
 
8
ICON plc – Notice of Annual General Meeting 2017

Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Agent
 
If, as at 30 May 2017, your shares were not held in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organisation, who in turn hold through The Depository Trust Company (“DTC”), then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organisation, together with instructions as to voting.  You will need to carefully follow the instructions from your broker, bank or other agent or contact your broker, bank or other agent if you have any queries.
 
As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account as per the instructions enclosed by your broker. You are also invited to attend the Annual General Meeting. However, since you are not the shareholder of record, you may not vote your shares in person at the Annual General Meeting unless you contact your broker and obtain a valid proxy card from your broker or other agent.
 
Therefore as a beneficial owner of shares registered in the name of your broker, bank or other agent, who in turn hold through DTC, you should have received a voting instruction card and voting instructions with these proxy materials from that organisation rather than from us. Simply complete and mail the voting instruction card as per the instructions from your broker, bank or other agent to ensure that your vote is counted. 

3.
How many votes do you have?
The total number of issued ordinary shares on the record date, 30 May 2017, was 54,015,288.  On a vote on a show of hands, every shareholder present in person and every proxy has one vote (but no individual shall have more than one vote). On a poll, every shareholder present in person and every proxy shall have one vote for every share carrying rights of which he is the holder or proxy. Ordinary resolutions are required to be passed by a simple majority of shareholders voting in person or by proxy. Special resolutions are required to be passed by a majority of 75 per cent of shareholders voting in person or by proxy.

4.                  Broker Voting
If your shares are held by a broker on your behalf (that is, in “street name”), and you do not instruct the broker as to how to vote these shares, the broker may not exercise discretion to vote for or against any of the proposals. This would be a “broker non-vote” and these shares will not be counted as having been voted on the proposals. Please instruct your bank or broker so your vote can be counted.

5.                  Can I change my vote after submitting my proxy?
Shareholder of Record: Shares Registered in Your Name
Yes. You can revoke your proxy at any time before the final vote at the Annual General Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of three ways: 
 
·
You may submit another properly completed proxy with a later date. Your revised proxy must be received before the commencement of the Annual General Meeting at 9.00am Dublin time on 25 July 2017 or if the Annual General Meeting is adjourned, before the commencement of the adjourned meeting;
 
·
You may send a written notice that you are revoking your proxy to Erina Fox, Assistant Company Secretary, ICON plc at the registered office of the Company (being South County Business Park, Leopardstown, Dublin 18, Ireland) or by email to IR@iconplc.com. Your notice must be received before the commencement of the Annual General Meeting at 9.00am Dublin time on 25 July 2017 or if the Annual General Meeting is adjourned, before the commencement of the adjourned meeting; or
 
·
You may attend the Annual General Meeting and vote in person.

Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Agent
If your shares are held by your broker, bank or other agent, you should follow the instructions provided by them.

6.                  What does it mean if I receive more than one set of materials?
If you receive more than one set of materials, your shares are registered in more than one name or are registered in different accounts. In order to vote all the shares you own, you must sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards you receive.
 
 
9
ICON plc – Notice of Annual General Meeting 2017
Exhibit 99.2
 
 
 


 
 
Exhibit 99.3
 
 
ICON plc and Subsidiaries
 
 
 
Consolidated Financial Statements
 
 
 
Year ended 31 December 2016
 
 
 
 
 
Registered number  145835
 

Directors’ Report and Consolidated Financial Statements
 
Contents
Page
 
 
Directors and Other Information
2
 
 
Directors’ Report
3
 
 
Statement of Directors’ Responsibilities in respect of the Directors’ report and the financial statements
12
 
 
Independent Auditor’s Report to the members of ICON plc
13
 
 
Consolidated Statement of Profit and Loss
15
 
 
Consolidated Statement of Comprehensive Income
16
 
 
Consolidated Statement of Financial Position
17
 
 
Consolidated Statement of Changes in Equity
18
 
 
Consolidated Statement of Cash Flows
20
 
 
Notes to Consolidated Financial Statements
21
 
 
Company Statement of Financial Position
108
 
 
Company Statement of Changes in Equity
109
 
 
Company Statement of Cash Flows
111
 
 
Notes to Company Financial Statements
112
 
 
Reconciliation from IFRS to US Accounting Polices
121
 
 
Appendix A: Risk Factors
125
 
1

Directors’ and Other Information
 
Directors
Ciaran Murray (Irish – Executive Chairman)
Dr. Steve Cutler (Australian – Chief Executive Officer)
Prof. Hugh Brady (Irish – Non-Executive)
Dr. John Climax (Irish – Non-Executive)
Prof. William Hall (Irish – Non-Executive)
Prof. Dermot Kelleher (Irish – Non-Executive) 
Dr. Ronan Lambe (Irish – Non-Executive)
Declan McKeon (Irish – Non-Executive)
Ronan Murphy (Irish – Non-Executive)
Mary Pendergast (American – Non-Executive)
 
 
Company secretary
Diarmaid Cunningham
 
 
Registered office
South County Business Park
Leopardstown
Dublin 18
 
 
Auditor
KPMG
Chartered Accountants
1 Stokes Place
St. Stephen’s Green
Dublin 2
 
 
Solicitors
A & L Goodbody
International Financial Services Centre
North Wall Quay
Dublin 1
 
 
 
Cahill Gordon Reindel LLP
80 Pine Street
NY 10005
USA
 
 
Registrars
Computershare Investor Services (Ireland) Limited
Herron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
 
 
Bankers
Citibank
Canada Square Canary Warf
London E14 5LB
United Kingdom
 
 
 
JP Morgan Chase Bank N.A.
4 New York Plaza
New York
NY 10004
USA
2

Directors’ Report                                                                             
 
The Directors present their report and audited Consolidated and Company financial statements of ICON plc (“the Company” or “ICON”), a public limited company incorporated in the Republic of Ireland, and its subsidiary undertakings (“the Subsidiaries”, with the Company and the Subsidiaries being together “the Group”) for the year ended 31 December 2016.

The Company’s ordinary shares are traded on the NASDAQ market. The Company is considered a foreign private issuer in the US and accordingly it is not subject to the same ongoing regulatory requirements as a US registered company with a primary listing on the NASDAQ market.

These consolidated and Company financial statements (together “the financial statements”) for the year ended 31 December 2016 are prepared in accordance with IFRS as adopted by the EU and meet the reporting requirements pursuant to Irish Company Law.  In addition to the consolidated financial statements contained in this annual report, we also prepare separate consolidated financial statements on Form 20-F pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (‘SEC’) and in accordance with accounting principles generally accepted in the United States (U.S. GAAP).  The Form 20-F (under U.S. GAAP) is a separate document, a copy of which may be obtained from the Company’s website www.iconplc.com. IFRS differs in certain respects from U.S. GAAP, details of which are set out on pages 121 to 124 of this annual report.

Principal activities, business review and future developments

The Group is a contract research organisation (“CRO”), providing outsourced development services on a global basis to the pharmaceutical, biotechnology and medical device industries. The Group specialises in the strategic development, management and analysis of programmes that support all stages of the clinical development process - from compound selection to Phase I-IV clinical studies. The Group’s mission is to accelerate the development of drugs and devices that save lives and improve the quality of life. Our vision is to be the Global CRO partner of choice for the Biopharma industry by delivering best in class information, solutions and performance in clinical and outcomes research.

Headquartered in Dublin, Ireland, the Group began operations in 1990 and has expanded the business predominately through internal growth, together with a number of strategic acquisitions to enhance its capabilities and expertise in certain areas of the clinical development process. Its principal executive office is located at: South County Business Park, Leopardstown, Dublin 18, Republic of Ireland. The contact telephone number of this office is +353 1 291 2000.

The Group believes that it is one of a select number of CROs with the expertise and capability to conduct clinical trials in most major therapeutic areas on a global basis and has the operational flexibility to provide development services on a stand alone basis or as part of an integrated “full service” solution. At 31 December 2016, the Group had approximately 12,500 employees, in 87 locations in 38 countries. During the year ended 31 December 2016, the Group derived approximately 45.8%, 43.4% and 10.8% of its net revenue in the United States, Europe and Rest of World, respectively.

To meet the evolving needs of our clients we continue to enhance our capabilities through both organic service development and targeted acquisitions. During 2016 we established a dedicated global group focused on development services in the growing medical device market. We also continued to enhance our scientific and therapeutic expertise to support our customers in the overall formation of their development strategies for new products.  Some examples of the enhancements made during 2016 include the development of CNS Rating Scale Analytics leveraging our ICONIK platform. This is enabling a data-driven approach to rating surveillance that increases the consistency of both Clinicial and Patient Reported Outcomes in CNS studies. We  have also grown our global network of investigative sites that have the capabilities and expertise to conduct biosimilar trials and we further strengthened our relationships with specialized Oncology sites whilst also extending our internal oncology expertise within our consulting and project management groups.

We also continue to build our positions in emerging markets and have expanded our presence in regions such as Asia-Pacific, in particular in China and Japan, as is evident from recent acquisitions of Niphix, the Japanese subsidiary of Aptiv Solutions and BeijingWits Medical Limited, a leading Chinese CRO. We also added scale and capabilities to our commercialisation and outcomes service offering in the US through the acquisition of Medimedia Pharma Solutions on 27 February 2015.

3

Directors’ Report (continued)
 
Acquisition activity

On 15 September 2016, a subsidiary of the Company, ICON US Holdings Inc. acquired Clinical Research Management, Inc. (“ClinicalRM”) which resulted in initial net cash outflows of $52.4 million (including certain payments made on behalf of ClinicalRM totaling $9.2 million).  Further consideration of up to $12 million is payable if certain performance milestones are met in respect of the periods to December 2017. ClinicalRM is a full-service CRO specialising in preclinical through Phase IV support of clinical research and clinical trial services for biologics, drugs and devices. The organization helps customers progress their products to market faster, with a wide array of research, regulatory and sponsor services within the U.S. and around the globe. ClinicalRM provide full service and functional research solutions to a broad range of US government agencies and commercial customers. Their extensive expertise extends across basic and applied research, infectious diseases, vaccines development and testing and the response to bio-threats. They have worked in collaboration with government and commercial customers to respond to the threat of global viral epidemics.

On 4 December 2015, Inclinix-PMG Holdings, Inc. (“PMG”) was acquired by ICON Clinical Research LLC a subsidiary of the Company, resulting in net cash outflows of $65.4 million. PMG is an integrated network of clinical research sites operating from 12 metropolitan areas throughout the US. PMG conducts clinical trials in all major therapeutic areas with particular experience in cardiology, dermatology, endocrinology, gastroenterology, men's health, neurology, pulmonology, rheumatology, vaccine, and women's health trials. In addition to a proprietary research database of clinical trial participants, PMG also has access to over 2 million active patient lives via electronic health records through their unique partnerships with health care systems and community physician practices.

On 27 February 2015, a subsidiary of the Company; ICON Holdings Unlimited Company (formerly ICON Holdings), acquired 100% of the securities of MMMM/CHC Holding, LLC (“MediMedia Pharma Solutions”) from MediMedia USA, Inc. which resulted in net cash outflows of $116.0 million.  Headquartered in Yardley, Pennsylvania, MediMedia includes MediMedia Managed Markets and Complete Healthcare Communications. MediMedia Managed Markets is a leading provider of strategic payer-validated market access solutions. Complete Healthcare Communications is one of the leading medical and scientific communication agencies working with medical affairs, commercial and brand development teams within life science companies.

Share repurchase programme

On 3 October 2016, the Company commenced a previously announced share buyback programme of up to $400 million. The Company can acquire up to 10% of its outstanding ordinary shares (by way of redemption), in accordance with  Irish law, the United States securities laws and the Company’s constitutional documents through open market share acquisitions.   At 31 December 2016 a total of 1,429,187 ordinary shares were redeemed by the Company under this buyback programme for a total consideration of $110 million. All ordinary shares that were redeemed under the buyback programme were cancelled in accordance with the constitutional documents of the Company and the nominal value of these shares transferred to other undenominated capital as required under Irish Company Law.

On 1 May 2015, the Company commenced a buyback programme of up to $60 million under which the Company could acquire its outstanding ordinary shares (by way of redemption), in accordance with  Irish law, the United States securities laws and the Company’s constitutional documents through open market share acquisitions.   A total of 882,419 ordinary shares were redeemed by the Company under this buyback programme for a total consideration of $57.9 million.   On 31 July 2015, the Company commenced a further buyback programme of up to $400 million under which the Company could acquire its outstanding ordinary shares (by way of redemption), in accordance with  Irish law, the United States securities laws and the Company’s constitutional documents through open market share acquisitions.   A total of 5,316,062 ordinary shares were redeemed by the Company under this buyback programme for a total consideration of $400 million.  The second share buyback programme was completed in December 2015.  During the year ended 31 December 2015, the Company redeemed a total of 6,198,481 ordinary shares under these programmes for total consideration of $457.9 million.
 
4

Directors’ Report (continued)
 
Financing

On 27 July 2015, the Company entered into a 364 day bridge facility for $350 million with two financial institutions.  The facility bore interest at LIBOR plus a margin and included certain guarantees and indemnities in favor of the financial institutions. As of 31 December 2015, the full amount of this facilityhad been repaid.   

On 15 December 2015, the Company issued through its subsidiary ICON Investments Five Unlimited Company (the "Issuer") Senior Notes for aggregate gross proceeds of $350 million through a private placement. The Senior Notes will mature on 15 December 2020. Interest payable is fixed at 3.64% and is payable semi-annually on the Senior Notes on each 15 June and 15 December commencing on 15 June 2016. The Senior Notes are guaranteed by ICON plc, the Senior Notes may be redeemed, at the Issuer's option, at any time prior to maturity, at par plus a make whole premium, together with accrued and unpaid interest, if any, to the redemption date. The terms of the notes are set forth in the Note Purchase and Guarantee Agreement, dated as of 15 December 2015, by and among the Issuer, ICON plc and the purchasers named therein (“Note Purchase and Guarantee Agreement”).

The Issuer used the proceeds from the sale of the Senior Notes to repay the existing $350 million bridge facility. The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

The Company entered into an interest rate hedge in respect of the planned issuance of the Senior Notes in December 2015. The interest rate hedge matured in November 2015 when the interest rate on the Senior Notes was fixed. During the year ended 31 December 2015, cash proceeds of $4.6 million representing the realised gain on the interest rate hedge was received on maturity in November 2015 and recorded within Other Comprehensive Income.

Future developments
In 2017, the Group looks forward to continuing to expand through organic growth, together with strategic acquisitions to enhance its expertise and capabilities in certain areas of the clinical development process and to continue to deliver on the Company’s mission to accelerate the development of drugs and devices that save lives and improve the quality of life.

Results and dividends

The results for the year are as shown on page 15 of these financial statements. The Directors do not propose the payment of a dividend for the year ended 31 December 2016.

The following table sets forth for the periods indicated certain financial data as a percentage of net revenue and the percentage change in these items compared to the prior period, being the key performance indicators used by management. The trends illustrated in the following table may not be indicative of future results.

   
Year ended
   
Year ended
       
   
31 December
2016
   
31 December
2015
       
   
As a percentage of net revenue
   
Percentage change
in period
 
Net revenue
   
100
%
   
100
%
   
5.8
%
                         
Direct costs (excluding exceptional items)
   
57.7
%
   
57.7
%
   
5.8
%
                         
Other operating expenses (excluding exceptional items)
   
23.1
%
   
24.4
%
   
0.2
%
                         
Operating profit (excluding exceptional items)
   
19.2
%
   
17.9
%
   
13.5
%
                         
Exceptional items (before taxation)
   
0.5
%
   
0
%
   
100
%
                         
Operating profit (including exceptional items)
   
18.7
%
   
17.9
%
   
10.6
%
5

Directors’ Report (continued)
 
Results and dividends (continued)

Twelve months ended 31 December 2016 compared to twelve months ended 31 December 2015

Net revenue for the year increased by $91.5 million, or 5.8%, from $1,575.0 million for the year ended 31 December 2015 to $1,666.5 million for the year ended 31 December 2016.  For the year ended 31 December 2016 we derived approximately 45.8%, 43.4% and 10.8% of our net revenue in the United States, Europe and Rest of World, respectively.
 
Direct costs for the year ended 31 December 2016 increased by $52.6 million, or 5.8%, from $909.0 million for the year ended 31 December 2015 to $961.6 million for the year ended 31 December 2016 (excluding exceptional items). Direct costs consist primarily of compensation, associated fringe benefits and share based compensation expense for project-related employees and other direct project driven costs.  The increase in direct costs during the period arose due to an increase in headcount and a corresponding increase in personnel related expenditure of $59.5 million combined with an increase in laboratory costs of $4.8 million. These were offset by a decrease in other direct project related costs of $8.2 million and a decrease in travel related costs of $3.8 million. As a percentage of net revenue, direct costs have remained at 57.7% for the year ended 31 December 2015 and for the year ended 31 December 2016.
 
Other operating expenses for the year ended 31 December 2016 increased by $0.8 million, or 0.2%, from $384.0 million for the year ended 31 December 2015 to $384.8 million for the year ended 31 December 2016 (excluding exceptional items). Other operating costs are primarily comprised of compensation, related fringe benefits, share compensation for non project related employees, recruitment expenses, professional service costs and advertising costs. The movement arose primarily from an increase in personnel related expenditure of $8.3 million, a decrease in facilities and related costs of $2.9 million and a decrease in general and administrative expenses net of foreign exchange movements of $6.5 million.  As a percentage of net revenue, other operating expenses, decreased from 24.4% for the year ended 31 December 2015 to 23.1% for the year ended 31 December 2016 (excluding exceptional items).
 
During the year ended 31 December 2016 a restructuring plan was implemented to improve operating efficiencies resulting in recognition of an exceptional charge of $8.2 million (pre-tax). The restructuring plan includes the cost of resource rationalisations in certain areas of the business to improve utilisation (resulting in a charge of $6.2 million), and office consolidation (resulting in the recognition of an onerous lease obligation of $2.0 million).
 
Operating profit increased by $29.8 million, or 10.6%, from $282.1 million for the year ended 31 December 2015 to $311.9 million for the year ended 31 December 2016 ($320.1 million, or 13.5% excluding exceptional items). As a percentage of net revenue, income from operations increased from 17.9% of net revenues for year ended 31 December 2015 to 18.7% of net revenues for year ended 31 December 2016 (19.2% excluding exceptional items).
 
Financing expense for the period increased from $4.0 million for the year ended 31 December 2015 to $13.0 million for the year ended 31 December 2016.  This increase primarily reflects the drawdown of the Senior Notes of $350 million issued in December 2015 resulting in a full year’s interest expense in 2016.  Financing income for the year increased from $1.3 million for the year ended 31 December 2015 to $1.5 million for the year ended 31 December 2016.

Income tax expense for the period decreased to $32.4 million for the year ended 31 December 2016 from $39.4 million for the year ended 31 December 2015.  The Company’s effective tax rate for the year ended 31 December 2016 was 10.8% (10.8% excluding the effect of exceptional items) compared with 14.1% for the year ended 31 December 2015. The Company’s effective tax rate is principally a function of the distribution of pre-tax profits in the territories in which it operates.

Risks and uncertainties

Under Irish Company Law (Section 327 of the Companies Act 2014 ‘the Companies Act’), the Directors are required to give a description of the principal risks and uncertainties which it faces.  Details of the principal risks and uncertainties facing the Group are set out in Appendix A of this annual report and form an integral part of the Directors’ Report.
6

Directors’ Report (continued)
 
Financial risk management

Group financial risk management is governed by policies and guidelines which are reviewed and approved annually by the Board of Directors.  These policies and guidelines primarily cover foreign exchange risk, credit risk, liquidity risk and interest rate risk.  The principal objective of these policies and guidelines is the minimisation of financial risk at reasonable cost.  The Group’s financial instruments comprise cash and cash equivalents, current asset investments, finance lease obligations and negotiated debt facilities.  The main purpose of these financial instruments is to fund the working capital requirements of the Group, the cost of new acquisitions and continued growth.  The principal financial risks facing the Group include currency rate risk, interest rate risk, credit risk and liquidity risk.  Further details of which are set out in note 26 to the Consolidated financial statements and note 11 to the Company financial statements. The Group does not undertake any trading activity in financial instruments nor does it enter into any leveraged derivative transactions.  The Group treasury function centrally manages the Group’s funding and liquidity requirements.

The Group maintains a strong balance sheet.  The Group maintains both committed and uncommitted credit lines with its relationship banks.  On 15 December 2015, the Group entered into a Note Purchase Agreement in respect of an aggregate gross proceeds of $350 million.  The interest rate on the Senior Notes was fixed at 3.64%.  The Group entered into an interest rate hedge in anticipation of the drawdown of the Senior Notes the proceeds of which were received in November 2015.  This interest rate hedge qualified for hedge accounting under IAS 39.  The gain on the hedge is being amortised in the Income Statement over the term of the Senior Notes, resulting in an offset to the interest payable cost on the notes.  The effective rate on our 5 year Senior Notes is fixed at 3.37%.

Subsequent events

Details of subsequent events are set out in note 31 to the financial statements.

Directors and Secretary

The members of the Board of Directors during the year are included in note 9 to the Consolidated financial statements.

Mr. Ronan Murphy was appointed as a Director of the Company on 18 October 2016.  Mr. Thomas Lynch retired as Chairman of the Board on 31 March 2016 and retired as a Director of the Board on 22 July 2016.

The following table sets forth information concerning the composition of the Company’s Board committees as of 31 December 2016:

Name
Position
Ciaran Murray (1)(5)
Chief Executive Officer, Director and Executive Chairman designate
Dr. Steve Cutler (1)
Chief Operating Officer, Director and Chief Executive Officer designate
Professor Hugh Brady
Director
Dr. John Climax (6)
Director
Professor William Hall (2)(3)(4)(6)
Director
Professor Dermot Kelleher (3)(6)
Director
Dr. Ronan Lambe  (6)
Director
Declan McKeon (2)(3)(4)(5)
Director and Acting Chairman
Ronan Murphy (2)(3)(4)
Director
Mary Pendergast (2)(6)
Director
 
(1)
Executive Officer of the Company.
(2)
Member of Compensation and Organization Committee.
(3)
Member of Audit Committee.
(4)
Member of Nominating and Governance Committee.
(5)
Member of Execution Committee.
(6)
Member of Quality Committee.
7

Directors’ Report (continued)
 
Details required by Companies Act 2014, section 329, of Directors’ interests in the Group’s shares are set out in note 9 to the financial statements.  Mr Tom Lynch resigned as a Director on 22 July 2016.  Mr Ronan Murphy was appointed to the Board on 18 October 2016.  All other Directors served for the entire year.

Directors’ remuneration

Details of the Directors’ remuneration and interests are set out in note 3 and 9 to the Consolidated financial statements.

Directors’ power to purchase and allot company shares

Subject to the provisions of the Companies Act 2014, the Company may purchase any of its own shares.  Every contract for the purchase of shares, or under which the Company may become entitled or obliged to purchase shares in the Company shall be authorised by a special resolution of the Company.  The Company may cancel any shares so purchased or may hold them as treasury shares or re-issue them.

On 3 October 2016, the Company commenced a previously announced share buyback programme of up to $400 million. The  Company can acquire up to 10% of its outstanding ordinary shares (by way of redemption), in accordance with  Irish law, the United States securities laws and the Company’s constitutional documents through open market share acquisitions.  

On 1 May 2015 the Company commenced a buyback programme of up to $60 million under which the Company could acquire its outstanding ordinary shares (by way of redemption), in accordance with  Irish law, the United States securities laws and the Company’s constitutional documents through open market share acquisitions.   On 31 July 2015 the Company commenced a further buyback programme of up to $400 million under which the Company could acquire its outstanding ordinary shares (by way of redemption), in accordance with  Irish law, the United States securities laws and the Company’s constitutional documents through open market share acquisitions.

On 19 September 2014 the Company announced that it had completed a $40 million redemption of the Company’s ordinary shares and that it had entered into a further programme under which the Company can acquire up to an additional $100 million of its outstanding ordinary shares (by way of redemption), in accordance with United States securities laws through open market share acquisitions.

Further details of the above share repurchase programmes can be found in note 24 to the financial statements.

Rights and Obligations attaching to the Company’s shares

The authorised share capital of the Company is €6,000,000 divided into 100,000,000 ordinary shares of €0.06 at 31 December 2016.  Holders of ordinary shares will be entitled to receive such dividends as may be recommended by the Board of Directors of the Company and approved by the shareholders and/or such interim dividends as the Board of Directors of the Company may decide. On liquidation or a winding up of the Company, the par value of the ordinary shares will be repaid out of the assets available for distribution among the holders of the Company's ordinary shares. Holders of ordinary shares have no conversion or redemption rights. On a show of hands, every holder of an ordinary share present in person or proxy at a general meeting of shareholders shall have one vote with no individual having more than one vote.

Change of control

Certain of the Group’s customer contracts allow the customer to terminate the contract in the event of a change in control of the Company.
 
The Group has negotiated a banking facility with a number of financial institutions, details of which are set out in note 23 to the financial statements.  This facility requires repayment in the event that the Company becomes controlled by any person or persons acting in concert by whom it was not controlled at the date the facility was entered into.  

8

Directors’ Report (continued)
 
Furthermore certain Group companies have entered capital grant agreements with the Irish government agency, Enterprise Ireland, whereby the Group covenants that the controlling interest in the Company will not change without Enterprise Ireland’s prior written consent, which will not be unreasonably withheld. 

Additionally, the Company's share option and restricted share unit plans contain change in control provisions which provide for the acceleration of the vesting and exercisability of outstanding options and awards of restricted share units in the event that a change in control occurs with respect to the Company.

Corporate Governance

The   Company is listed on the NASDAQ Global Select Market. The Company complies with the corporate governance listing requirements under the NASDAQ marketplace rules. NASDAQ may provide exemptions from certain NASDAQ corporate governance standards to a foreign private issuer in certain circumstances provided that the foreign private issuer properly notifies NASDAQ and makes the required disclosure except to the extent that such exemptions would be contrary to United States federal securities laws.

The exemptions that the Company relies on, and the practices the Company adheres to, are as follows:

·
The Company is exempt from provisions set forth in NASDAQ Rule 5620(c), which requires each issuer (other than limited partnerships) to provide for a quorum in its by-laws for any meeting of the holders of common stock, which shall in no case be less than 33.33% of the outstanding shares of the issuer’s common voting stock.  The Company’s Articles of Association require that only 3 members be present, in person or by proxy, at a shareholder meeting to constitute a quorum.  This quorum requirement is in accordance with Irish law and generally accepted business practices in Ireland.

·
The Company is exempt from provisions set forth in NASDAQ Rule 5635(c) which requires (other than for certain specified exceptions) shareholder approval prior to the establishment or material amendment of a stock option or purchase plan or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees or consultants.  Irish law does not require shareholder approval with respect to equity compensation arrangements.  Accordingly, the 2013 Employees Restricted Share Unit Plan was adopted by the Board of Directors without shareholder approval.

·
The Company is exempt from provisions set forth in NASDAQ Rule 5605(b)(2), which requires independent Directors to hold regularly scheduled meetings at which only independent Directors are present.  Irish law does not require independent directors to hold regularly scheduled meetings at which only independent Directors are present.  The Company holds regularly scheduled meetings which all of the Directors may attend. 

The Company's practices with regard to these requirements are not prohibited by Irish law.

Audit Committee

The Audit Committee meets a minimum of four times a year. It reviews the quarterly and annual financial statements, the effectiveness of the system of internal control (including the arrangement for the Company’s employees to raise concerns in confidence about financial inappropriateness) and recommends the appointment and removal of the external auditors. It monitors the adequacy of internal accounting practices and addresses all issues raised and recommendations made by the external auditors. The Audit Committee pre-approves all audit and non-audit services provided to the Company by its external auditors on a quarterly basis. The Audit Committee, on a case by case basis, may approve additional services not covered by the quarterly pre-approval, as the need for such services arises. The Audit Committee reviews all services which are provided by the external auditor to review the independence and objectivity of the external auditor, taking into consideration relevant professional and regulatory requirements. The Chief Financial Officer, the Head of Internal Audit, the General Counsel and the external auditors normally attend all meetings of the Audit Committee and have direct access to the Committee Chairman at all times. The Audit Committee currently comprises of the following four independent Directors: Declan McKeon (Chairman), Professor Dermot Kelleher, Professor William Hall, and Ronan Murphy.  Thomas Lynch served as a member of the Committee during 2016 until his retirement from the Board on 22 July 2016. Ronan Murphy joined the Committee on 18 October 2016.
9

Directors’ Report (continued)
 
Significant shareholdings

The Company has been notified of the following shareholdings in excess of 3% of the issued share capital of the Company as at 31 December 2016:

Name
 
%
   
Number of Shares
 
             
Neuberger Berman LLC
   
6.43
     
3,506,496
 
Wellington Management Company LLP
   
6.42
     
3,502,108
 
WCM Investment Management
   
6.31
     
3,439,710
 
EARNEST Partners LLC
   
6.10
     
3,328,111
 
All Directors and Officers as a group (1)
   
4.69
     
2,559,954
 
AllianceBernstein LP
   
4.45
     
2,428,154
 
Acadian Asset Management LLC
   
4.19
     
2,282,150
 
Wasatch Advisors Inc
   
3.31
     
1,805,776
 
Boston Partners
   
3.02
     
1,644,720
 
 
(1)
Includes 888,015 ordinary shares issuable upon the exercise of stock options granted by the Company, 80,560 restricted stock units (“RSUs”) awarded by the Company to directors, officers and other key employees and 540,670 performance share units (“PSUs”) awarded by the Company to Directors, officers and other key employees. Of the issued PSUs, performance conditions will determine how many of them vest and, if performance targets are exceeded, additional PSUs will be issued and vest in accordance with the terms of the relevant PSU award.

Subsidiary undertakings

The information required by the Companies Act in relation to subsidiary undertakings is presented in note 32 to the financial statements.

Political donations

The Group made no disclosable political donations in the period.

Going concern

The Directors have a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future.  For this reason, the Group continues to adopt the going concern basis in preparing the financial statements.

Accounting records

The Directors are responsible for ensuring that adequate accounting records as outlined in Section 281-285 of the Companies Act, are kept by the Company.  The Directors are also responsible for the preparation of the Annual Report.  The Directors have appointed professionally qualified accounting personnel with appropriate expertise and have provided adequate resources to the finance function in order to ensure that those requirements are met.  The accounting records of the Company are maintained at the Group’s principal executive offices at its registerd office at Leopardstown, Dublin 18.

Statement of relevant audit information

The Directors believe that they have taken all steps necessary to make themselves aware of any releveant audit information and have established that the Company's statutory auditors are aware of that information. In so far as they are aware, there is no relevant audit information of which the Company's statutory auditors are unaware.

10

Directors’ Report (continued)
 
Directors’ compliance statement

The Directors, in accordance with Section 225(2) of the Companies Act 2014, acknowledge that they are responsible for securing the Company’s compliance with its relevant obligations as defined within the Companies Act, 2014 (hereinafter called the relevant obligations).

The Directors confirm that:

·
a compliance policy statement has been drawn up setting out the Company’s policies with regard to such compliance;
·
appropriate arrangements and structures that, in their opinion, are designed to secure material compliance with the Company’s relevant obligations, have been put in place; and
·
a review has been conducted, during the financial year, of the arrangements and structures that have been put in place to secure the Company’s compliance with the relevant obligations.

Auditor

In accordance with Section 383(2) of the Companies Act 2014, KPMG, Chartered Accountants, will continue in office.
 
On behalf of the Board

Ciaran Murray
Declan McKeon
25 April, 2017
Executive Chairman
Director
 

11

Statement of Directors’ Responsibilities in respect of the Directors’ report and the financial statements

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and applicable law.

Under Company law the Directors must not approve the Group and Company financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and Company and of the Group’s profit or loss for that year. In preparing each of the Group and Company financial statements, the Directors are required to:

·
select suitable accounting policies and then apply them consistently;
·
make judgements and estimates that are reasonable and prudent;
·
state whether they have been prepared in accordance with IFRS as adopted by the EU; and
·
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that the financial statements of the Group are prepared in accordance with applicable IFRS, as adopted by the EU and comply with the provisions of the Companies Act 2014. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities. The Directors are also responsible for preparing a Directors’ Report that complies with the requirements of the Companies Act 2014.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

On behalf of the Board

Ciaran Murray
Declan McKeon
 
Executive Chairman
Director
 
12

Independent Auditor’s Report to the members of ICON plc
                                                                                    
We have audited the Group and Company financial statements (“financial statements”) of ICON plc for the year ended 31 December 2016 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Cash Flows, the Consolidated and Company Statements of Changes in Equity and the related notes.  The financial reporting framework that has been applied in their preparation is Irish law and International Financial Reporting Standards (IFRS) as adopted by the European Union, and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2014. Our audit was conducted in accordance with International Standards on Auditing (ISAs) (UK & Ireland).  

Opinions and conclusions arising from our audit
 
1 Our opinion on the financial statements is unmodified
 
In our opinion:
 
·
the Group financial statements give a true and fair view of the  assets, liabilities and financial position of the Group as at 31 December 2016 and of its profit for the year then ended;
 
·
the Company statement of financial position gives a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2016;
 
·
the Group financial statements have been properly prepared  in accordance with IFRS as adopted by the European Union;
 
·
the Company financial statements have been properly prepared in accordance with IFRS as adopted  by the European Union, as applied in accordance with the provisions of the Companies Act 2014; and
 
·
the Group financial statements and Company financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014. 
 
2 Our conclusions on other matters on which we are required to report by the Companies Act 2014 are set out below
 
We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
 
In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the financial statements are in agreement with the accounting records.
 
In our opinion the information given in the Directors’ Report is consistent with the financial statements. 

3 We have nothing to report in respect of matters on which we are required to report by exception
 
ISAs (UK & Ireland) require that we report to you if, based on the knowledge we acquired during our audit, we have identified information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading.
 
In addition, the Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions required by sections 305 to 312 of the Act are not made.
 
Basis of our report, responsibilities and restrictions on use

As explained more fully in the Statement of Directors’ Responsibilities set out on page 12, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014.  Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish law and International Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Financial Reporting Council’s Ethical Standards for Auditors.
13

Independent Auditor’s Report to the members of ICON plc
 
An audit undertaken in accordance with ISAs (UK & Ireland) involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.  This includes an assessment of: whether the accounting policies are appropriate to the Group and Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.
 
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
 
Whilst an audit conducted in accordance with ISAs (UK & Ireland) is designed to provide reasonable assurance of identifying material misstatements or omissions it is not guaranteed to do so. Rather the auditor plans the audit to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements does not exceed materiality for the financial statements as a whole. This testing requires us to conduct significant audit work on a broad range of assets, liabilities, income and expense as well as devoting significant time of the most experienced members of the audit team, in particular the engagement partner responsible for the audit, to subjective areas of the accounting and reporting.
 
Our report is made solely to the Company’s members, as a body, in accordance with section 391 of the Companies Act 2014.  Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s 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 and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
 


________________

Emer McGrath
For and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
25 April 2017
1 Stokes Place
St. Stephen’s Green
Dublin 2
Ireland

14

Consolidated Statement of Profit and Loss
for the year ended 31 December 2016

                                           
         
31 December
   
31 December
   
31 December
   
31 December
   
31 December
   
31 December
 
   
Note
   
2016
   
2016
   
2016
   
2015
   
2015
   
2015
 
         
Excluding
   
(Note 8)
   
Including
   
Excluding
         
Including
 
Continuing
Operations
       
Exceptional
items
   
Exceptional
items
   
Exceptional
items
   
Exceptional
items
   
Exceptional
items
   
Exceptional
items
 
       
 
$’000
   
 
$’000
   
 
$’000
   
 
$’000
   
 
$’000
   
 
$’000
 
                                                       
                                                       
Gross revenue
         
2,364,956
     
-
     
2,364,956
     
2,161,618
     
-
     
2,161,618
 
Reimbursable
expenses
         
(698,469
)
   
-
     
(698,469
)
   
(586,640
)
   
-
     
(586,640
)
Net revenue
   
2
     
1,666,487
     
-
     
1,666,487
     
1,574,978
     
-
     
1,574,978
 
                                                         
                                                         
Direct costs
           
(961,641
)
   
(2,273
)
   
(963,914
)
   
(908,907
)
   
-
     
(908,907
)
Other operating
expenses
           
(384,774
)
   
(5,886
)
   
(390,660
)
   
(383,951
)
   
-
     
(383,951
)
Operating profit
           
320,072
     
(8,159
)
   
311,913
     
282,120
     
-
     
282,120
 
                                                         
Financing
income
   
4
     
1,484
     
-
     
1,484
     
1,306
     
-
     
1,306
 
Financing
expense
   
5
     
(13,006
)
   
-
     
(13,006
)
   
(3,992
)
   
-
     
(3,992
)
                                                         
Profit before
taxation
   
3
     
308,550
     
-
     
300,391
     
279,434
     
-
     
279,434
 
Income tax
expense
   
6
     
(33,451
)
   
1,020
     
(32,431
)
   
(39,410
)
   
-
     
(39,410
)
                                                         
Profit for the
financial year
           
275,099
     
(7,139
)
   
267,960
     
240,024
     
-
     
240,024
 
                                                         
Attributable to:
                                                       
                                                         
Owners of the
Company
   
25
     
275,099
     
(7,139
)
   
267,960
     
240,024
     
-
     
240,024
 
                                                         
                                                         
Earnings per
ordinary share
                                                       
Basic
   
7
     
-
     
-
     
4.85
     
-
     
-
     
4.09
 
                                                         
Diluted
   
7
     
-
     
-
     
4.74
     
-
     
-
     
3.95
 

On behalf of the Board
 
 
 
Ciaran Murray
Declan McKeon
 
Executive Chairman
Director
 

15

Consolidated Statement of Comprehensive Income
for the year ended 31 December 2016

         
31 December
   
31 December
 
   
Note
   
2016
   
2015
 
         
 
$’000
   
 
$’000
 
                       
                       
Other Comprehensive Income                      
                       
Items that will not be reclassified to profit or loss:                       
                       
Re-measurement of post-employment benefit obligations
   
10
     
(2,675
)
   
2,236
 
                         
Total items that will not be reclassified to profit or loss
           
(2,675
)
   
2,236
 
                         
Items that are or may be reclassified subsequently to profit or loss net of tax:
                       
                         
Currency translation differences
   
25
     
(12,839
)
   
(35,105
)
                         
Currency impact on long-term intercompany funding
   
25
     
(8,824
)
   
7,342
 
                         
Tax on currency impact on long-term funding
   
25
     
396
     
(3,574
)
                         
Unrealised capital gain/(loss) on investments
   
25
     
11
     
(54
)
                         
Amortisation of interest rate hedge
   
25
     
(923
)
   
-
 
                         
Gain on interest rate hedge
   
25
     
-
     
4,617
 
                         
                         
Total items that are or may be reclassified to profit or loss
           
(22,179
)
   
(26,774
)
                         
Other comprehensive loss for the year, net of tax
           
(24,854
)
   
(24,538
)
                         
Profit for the financial year
           
267,960
     
240,024
 
                         
Total comprehensive income for the financial year
           
243,106
     
215,486
 
                         
Attributable to:
                       
Equity holders of the Company
           
243,106
     
215,486
 
                         
Total comprehensive income for the financial year
           
243,106
     
215,486
 

On behalf of the Board
 
 
 
Ciaran Murray
Declan McKeon
 
Executive Chairman
Director
 
16

Consolidated Statement of Financial Position
as at 31 December 2016
 
         
31 December
   
31 December
 
   
Note
   
2016
   
2015
 
ASSETS
       
$
’000
   
$
’000
 
Non-current assets
                     
Property, plant and equipment
   
12
     
93,482
     
98,389
 
Intangible assets – goodwill and other
   
13
     
742,192
     
720,399
 
Other non-current assets
   
17
     
20,054
     
17,049
 
Deferred tax assets
   
6
     
37,985
     
46,768
 
Total non-current assets
           
893,713
     
882,605
 
                         
Current assets
                       
Inventories
   
15
     
2,419
     
1,820
 
Accounts receivable
   
16
     
416,229
     
409,165
 
Unbilled revenue
           
192,687
     
173,649
 
Other current assets
   
17
     
58,562
     
59,780
 
Current taxes receivable
           
33,939
     
34,323
 
Current asset investments
   
18
     
68,046
     
85,990
 
Cash and cash equivalents
   
19
     
192,541
     
103,911
 
Total current assets
           
964,423
     
868,638
 
 
Total assets
           
1,858,136
     
1,751,243
 
                         
EQUITY
                       
Share capital
   
24
     
4,692
     
4,719
 
Share premium
           
252,977
     
242,864
 
Share based payment reserve
   
25
     
141,890
     
108,397
 
Other undenominated capital
   
25
     
809
     
715
 
Other reserves
   
25
     
10,348
     
11,340
 
Foreign currency translation reserve
   
25
     
(83,809
)
   
(62,542
)
Current asset investment - fair value reserve
   
25
     
(23
)
   
(34
)
Retained earnings
   
25
     
650,583
     
491,671
 
Total equity attributable to the owners of the company
           
977,467
     
797,130
 
                         
LIABILITIES
                       
Non-current liabilities
                       
Non-current bank credit lines and loan facilities
   
23
     
348,511
     
348,304
 
Non-current other liabilities
   
20
     
18,639
     
13,183
 
Non-current provisions
   
21
     
7,083
     
1,518
 
Deferred tax liabilities
   
6
     
4,631
     
4,643
 
Total non-current liabilities
           
378,864
     
367,648
 
                         
Current liabilities
                       
Accounts payable
           
8,696
     
7,023
 
Payments on account
           
272,757
     
318,697
 
Accrued and other liabilities
   
20
     
188,295
     
229,764
 
Provisions
   
21
     
1,349
     
598
 
Current tax payable
           
30,708
     
30,383
 
Total current liabilities
           
501,805
     
586,465
 
                         
Total liabilities
           
880,669
     
954,113
 
                         
Total equity and liabilities
           
1,858,136
     
1,751,243
 

On behalf of the Board
 
 
 
Ciaran Murray
Declan McKeon
 
Executive Chairman
Director
 
17

Consolidated Statement of Changes in Equity
for the year ended 31 December 2016
 
   
Number
of shares
 
Share
Capital
 
Share
Premium
 
Other
Undenominated
 
Share Based
Payment
 
Other
Reserves
 
Currency
Reserve
 
Current Asset Investment
Fair value
 
Retained
Earnings
 
Total
 
 
   
 
 
 
 
 
 
Capital
 
 Reserve
 
 
 
 
 
Reserve
 
 
 
 
 
       
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
                                                               
Balance at 1 January 2016
   
54,958,912
   
4,719
   
242,864
   
715
   
108,397
   
11,340
   
(62,542
)
 
(34
)
 
491,671
   
797,130
 
Total comprehensive income for the year:
                                                             
Profit for the year
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
267,960
   
267,960
 
Other Comprehensive Income:
                                                             
                                                               
Foreign currency translation
   
-
   
-
   
-
   
-
   
-
   
-
   
(12,839
)
 
-
   
-
   
(12,839
)
                                                               
Currency impact on long-term funding
   
-
   
-
   
-
   
-
   
-
   
-
   
(8,824
)
 
-
   
-
   
(8,824
)
                                                               
Tax on currency impact of long term funding
   
-
   
-
   
-
   
-
   
-
   
-
   
396
   
-
   
-
   
396
 
                                                               
Unrealised fair value movements on investments
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
11
   
-
   
11
 
                                                               
Employee benefits
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(2,675
)
 
(2,675
)
                                                               
Amortisation of interest rate hedge
   
-
   
-
   
-
   
-
   
-
   
(923
)
 
-
   
-
   
-
   
(923
)
                                                               
Total other comprehensive income
   
-
   
-
   
-
   
-
   
-
   
(923
)
 
(21,267
)
 
11
   
(2,675
)
 
(24,854
)
                                                               
Total comprehensive income for the year
   
-
   
-
   
-
   
-
   
-
   
(923
)
 
(21,267
)
 
11
   
265,285
   
243,106
 
Transactions with owners, recorded directly in equity
                                                             
                                                               
Share-based payment
   
-
   
-
   
-
   
-
   
40,310
   
-
   
-
   
-
   
-
   
40,310
 
                                                               
Exercise of share options
   
393,240
   
26
   
10,113
   
-
   
-
   
-
   
-
   
-
   
-
   
10,139
 
                                                               
Transfer of exercised and expired  share–based awards  
   
-
   
-
   
-
   
-
   
(3,850
)
 
-
   
-
   
-
   
3,850
   
-
 
                                                               
Issue of Restricted Share Units
   
607,878
   
41
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
41
 
                                                               
Share issue costs
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(17
)
 
(17
)
                                                               
Repurchase of ordinary shares
   
(1,429,187
)
 
(94
)
 
-
   
94
   
-
   
-
   
-
   
-
   
(110,000
)
 
(110,000
)
                                                               
Share repurchase costs
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(275
)
 
(275
)
                                                               
Tax benefit excess on exercise of options
   
-
   
-
   
-
   
-
   
6,403
   
-
   
-
   
-
   
-
   
6,403
 
                                                               
Deferred tax movement on unexercised options
   
-
   
-
   
-
   
-
   
(9,370
)
 
-
   
-
   
-
   
-
   
(9,370
)
                                                               
Non-distributable reserves
   
-
   
-
   
-
   
-
   
-
   
(69
)
 
-
   
-
   
69
   
-
 
                                                               
Total contributions by and distributions to owners
   
(428,069
)
 
(27
)
 
10,113
   
94
   
33,493
   
(69
)
 
-
   
-
   
(106,373
)
 
(62,769
)
                                                               
Total transactions with owners
   
(428,069
)
 
(27
)
 
10,113
   
94
   
33,493
   
(69
)
 
-
   
-
   
(106,373
)
 
(62,769
)
                                                               
Balance at 31 December 2016
   
54,530,843
   
4,692
   
252,977
   
809
   
141,890
   
10,348
   
(83,809
)
 
(23
)
 
650,583
   
977,467
 
18

Consolidated Statement of Changes in Equity
for the year ended 31 December 2015
 
   
Number
of shares
 
Share
Capital
 
Share
Premium
 
Other
Undenominated
 
Share Based
Payment
 
Other
Reserves
 
Currency
Reserve
 
Current Asset Investment
Fair value
 
Retained
Earnings
 
Total
 
 
   
 
 
 
 
 
 
Capital
 
Reserve
 
 
 
 
 
Reserve
 
 
 
 
 
       
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
 
$’000
 
                                                               
Balance at 1 January 2015
   
60,106,780
   
5,059
   
221,943
   
305
   
70,178
   
6,741
   
(31,205
)
 
20
   
700,154
   
973,195
 
Total comprehensive income for the year:
                                                             
Profit for the year
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
240,024
   
240,024
 
Other Comprehensive Income:
                                                             
                                                               
Foreign currency translation
   
-
   
-
   
-
   
-
   
-
   
-
   
(35,105
)
 
-
   
-
   
(35,105
)
                                                               
Currency impact on long-term funding
   
-
   
-
   
-
   
-
   
-
   
-
   
7,342
   
-
   
-
   
7,342
 
                                                               
Tax on currency impact of long term funding
   
-
   
-
   
-
   
-
   
-
   
-
   
(3,574
)
 
-
   
-
   
(3,574
)
                                                               
Unrealised fair value movements on investments
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(54
)
 
-
   
(54
)
                                                               
Employee benefits
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
2,236
   
2,236
 
                                                               
Gain on interest rate hedge
   
-
   
-
   
-
   
-
   
-
   
4,617
   
-
   
-
   
-
   
4,617
 
                                                               
Total other comprehensive income
   
-
   
-
   
-
   
-
   
-
   
4,617
   
(31,337
)
 
(54
)
 
2,236
   
(24,538
)
                                                               
Total comprehensive income for the year
   
-
   
-
   
-
   
-
   
-
   
4,617
   
(31,337
)
 
(54
)
 
242,260
   
215,486
 
Transactions with owners, recorded directly in equity
                                                             
                                                               
Share-based payment
   
-
   
-
   
-
   
-
   
33,187
   
-
   
-
   
-
   
-
   
33,187
 
                                                               
Exercise of share options
   
773,753
   
52
   
20,929
   
-
   
-
   
-
   
-
   
-
   
-
   
20,981
 
                                                               
Transfer of exercised and expired  share–based awards  
   
-
   
-
   
-
   
-
   
(8,020
)
 
-
   
-
   
-
   
8,020
   
-
 
                                                               
Issue of Restricted Share Units
   
276,860
   
18
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
18
 
                                                               
Share issue costs
   
-
   
-
   
(8
)
 
-
   
-
   
-
   
-
   
-
   
-
   
(8
)
                                                               
Repurchase of ordinary shares
   
(6,198,481
)
 
(410
)
 
-
   
410
   
-
   
-
   
-
   
-
   
(457,892
)
 
(457,892
)
                                                               
Share repurchase costs
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(889
)
 
(889
)
                                                               
Tax benefit excess on exercise of options
   
-
   
-
   
-
   
-
   
1,905
   
-
   
-
   
-
   
-
   
1,905
 
                                                               
Deferred tax movement on unexercised options
   
-
   
-
   
-
   
-
   
11,147
   
-
   
-
   
-
   
-
   
11,147
 
                                                               
Non-distributable reserves
   
-
   
-
   
-
   
-
   
-
   
(18
)
 
-
   
-
   
18
   
-
 
                                                               
Total contributions by and distributions to owners
   
(5,147,868
)
 
(340
)
 
20,921
   
410
   
38,219
   
(18
)
 
-
   
-
   
(450,743
)
 
(391,551
)
                                                               
Total transactions with owners
   
(5,147,868