Annual Report 2022
ICON plc and Subsidiaries
Clinical Research.
Evolved.
With a singular focus on clinical research and
commercialisation, ICON offers highly focused,
integrated services and solutions that strategically
and proactively solve today’s challenges.
Registered number 145835
ICON plc and Subsidiaries
Consolidated Financial Statements
Year ended 31 December 2022
Registered number 145835
[This page intentionally left blank]
Directors’ Report and Consolidated Financial Statements
Contents
Directors’ and Other Information
Directors’ Report
Statement of Directors’ Responsibilities in respect of the Directors’ report and the financial statements
Independent Auditor’s Report to the members of ICON plc
Consolidated Statement of Profit and Loss
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Statement of Cash Flows
Notes to Company Financial Statements
Reconciliation from IFRS to US Accounting Polices
Appendix A: Risk Factors
Page
2
3
28
29
36
37
38
39
41
42
136
137
139
140
149
154
1
Directors’ and Other Information
Directors
Company secretary
Registered office
Auditor
Solicitors
Registrars
Bankers
Ciaran Murray (Irish – Chair)
Dr. Steve Cutler (Australian – Chief Executive Officer)
Rónán Murphy (Irish – Non-Executive)
Dr. John Climax (Irish – Non-Executive)
Joan Garahy (Irish – Non-Executive)
Eugene McCague (Irish – Non-Executive)
Julie O'Neill (Irish – Non-Executive)
Dr. Linda Grais (American - Non-Executive)
Diarmaid Cunningham
South County Business Park
Leopardstown
Dublin 18
KPMG
1 Stokes Place
St. Stephen’s Green
Dublin 2
A & L Goodbody
International Financial Services Centre
North Wall Quay
Dublin 1
Cahill Gordon & Reindel LLP
32 Old Slip
New York
NY 10005
USA
Computershare Investor Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
Citibank
Canada Square
Canary Wharf
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”, “ICON”, "we", "our" or "us"), 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 2022.
The Company’s ordinary shares are traded on the NASDAQ market. The Company is considered a foreign private issuer in
the U.S. and accordingly it is not subject to the same ongoing regulatory requirements as a U.S. 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 2022 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 149 to 153 of this annual report.
Principal activities, business review and future developments
ICON is a clinical research organisation (“CRO”), founded in Dublin, Ireland in 1990. Over thirty years we have grown
significantly to become a leading global provider of outsourced development and services to pharmaceutical, biotechnology,
medical device and government and public health organisations. Our mission is to improve the lives of patients by
accelerating the development of our customers’ drugs and devices through innovative solutions.
We are a public limited company in Ireland and operate under the Irish Companies Acts. Our 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 2912000. Our website is www.iconplc.com.
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. Our service offering includes clinical
development, functional outsourcing and laboratory services. Our clinical development services include all phases of
development (Phases I-IV), peri and post approval, data solutions and site and patient access services. Our laboratory
services include a range of high value testing services, including bionanalytical, biomarker, vaccine, good manufacturing
practice ("GMP") and central laboratory services. We also offer full-service and functional service partnerships to our
customers.
Since ICON was founded, the Company has expanded through organic growth, together with a number of strategic
acquisitions to enhance its expertise and capabilities in certain areas of the clinical development process and to broaden the
service portfolio and add scale to existing services. On 1 July 2021, the Company completed the Acquisition of PRA Health
Sciences, Inc. ("PRA") ("the Acquisition") by means of a merger whereby Indigo Merger Sub, Inc., a Delaware corporation
and subsidiary of ICON, merged with and into PRA, the parent of the PRA Health Sciences Group ("the Merger"). Upon
completion of the Acquisition, PRA and its subsidiaries became wholly owned subsidiaries within the ICON Group. The
financial statements presented herein reflect the results of the combined Company since the Merger completion on 1 July
2021. The results of PRA in the period prior to 1 July 2021 are not reflected other than clearly stated & required by GAAP in
these financial statements.
The acquisition of PRA has transformed the scale and capabilities of the Company. The combined Company leverages its
enhanced operations to transform clinical trials and accelerate biopharma customers’ commercial success through the
development of much needed medicines and medical devices. The new ICON has a renewed focus on leveraging data,
applying technology and accessing diverse patient populations to speed up drug development.
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 2022, the Group had approximately 41,100 employees, in 111 locations in 53 countries, creating one of the
world's most advanced healthcare intelligence and clinical research organisations. During the year ended 31 December
2022, the Group derived approximately 46.1%, 46.6% and 7.3% of its revenue in the United States, Europe and Rest of
World, respectively.
3
Directors’ Report (continued)
We have achieved strong growth since our foundation in 1990, as a global provider of outsourced development and
commercialization services to pharmaceutical, biotechnology, medical device and government and public health
organisations. We focus our innovation on those factors that are critical to our clients - reducing time to market, reducing
cost and increasing quality. Our global team has extensive experience in a broad range of therapeutic areas. ICON has
been recognized as one of the world's leading CROs through a number of high-profile industry awards (see
www.iconplc.com/awards).
As our market has evolved, biopharmaceutical companies are tackling productivity challenges, increasing budget
constraints and greater demands to demonstrate product value; all of which are placing increased pressure on their
revenues and levels of profitability. However, these trends have generally been positive for CROs, as continued outsourcing
has been adopted by these companies as they seek to create greater efficiencies in their development processes, convert
previously fixed costs to variable, and accelerate time to market for new treatments.
Regulatory and reimbursement pressures will increase the emphasis on late stage (post marketing) research, while
increasing requirements to demonstrate the economic value of new treatments. As a result, outcomes and comparative
effectiveness research will most likely be required in order to secure on-going product reimbursement. Furthermore, we
believe advances in molecular biology and genetics will drive further growth in innovation in the long term which in turn
should create further growth opportunities for both biopharma companies and their outsource development partners.
We expect that continued outsourcing will be a core strategy of clients in the near term as they respond to the increased
pressures on their revenues and profitability. Larger clients were the first to form strategic partnerships with global CROs in
an effort to reduce the number of outsource partners with whom they engage and to reduce inefficiencies in their current
drug development models. More recently we have seen the increasing adoption of this partner model with mid-tier
pharmaceutical and biotechnology firms as they also seek to drive development efficiencies. As outsourcing penetration
increases, we believe clients may seek a greater level of integration of service offerings from CROs, although some will
continue to purchase services on a stand-alone basis. Creating greater connectivity and “seamlessness” between our
services and the sharing of “real-time” clinical, operational and “real world” data with clients will therefore become
increasingly important for CROs. ICON will seek to benefit from this continued outsourcing by clients to grow our business
by increasing market share with our existing client base and adding new clients within the Phase I-IV outsourced
development services market; the aim being to ensure we will be considered for all major Phase I-IV projects.
Delivery of our mission and strategy is focused on our four strategic pillars, being (i) Patient Access & Engagement (ii)
Career Development & Employer of choice (iii) Enduring Customer Partnerships and (iv) Healthcare Intelligence & Applied
Innovation.
Our strategy is focused on the following areas:
4
Directors’ Report (continued)
Patient Access & Engagement
ICON has a focused patient, site and data strategy, which is helping us to improve site identification, study placement and
patient recruitment and retention.
Accellacare is ICON's global clinical research network offering customers a wide range of stand-alone and integrated
solutions at the site or in patients' homes as part of decentralized trials. Our patient centric approach accelerates study start-
up and increases patient recruitment and retention for pharmaceutical, biotechnology and medical device industries.
The Accellacare Site Network encompasses more than 76 sites across 6 countries covering the United States and Europe.
Accellacare offers a quality focused clinical research infrastructure delivering value and benefits to sponsors. Accellacare
supports customers with faster start-up. The time from site selected to site initiation visit is on average 30% faster when
compared to other sites. Also, Accellacare achieves an average of 40% more patients per site when compared to other
sites.
Accellacare In-Home Services takes study visits directly to patients where they live, work, study or play in all phases and
therapeutic areas of clinical trials. By bringing trial visits directly to patients, we ease the burden of participating in clinical
research to increase patient recruitment, retention and diversity. Accellacare In-Home Services has experience in more than
400 clinical trials, tailoring our services to fit each study's specific requirements across more than 55 countries. This
cohesive approach is leading to higher patient recruitment and retention rates. Accellacare is also achieving faster study
start-up for its customers through efficiencies gained in central process management including budget and contracting,
which can otherwise be a source of delay. This combined with a finely tuned feasibility approach allows the network to
identify and recruit more patients to studies, in a wide range of therapeutic areas, in a shorter time frame. Accellacare is an
important part of the integrated patient, site and data strategy, helping us to improve patient recruitment and retention.
Through Accellacare we are committed to delivering on the promise of patient centricity in clinical research. It is also
providing investigators with innovative treatments for their patients with a quality-focused clinical research infrastructure
supported by experienced professionals globally.
In 2021, Accellacare entered new partnerships with six research sites across four countries, expanding its global footprint
and capabilities. Agreements with Asclepes Research and Olympian Clinical Research in the U.S., Curiositas ad Sanum and
Intermed in Germany, Quironsalud in Spain, and KO-MED in Poland. Through these new partnerships, Accellacare is also
enhancing its capability in the central nervous system (CNS) and immune-inflammation therapeutic areas.
In 2022 the continued expansion of the Accellacare Site Network increases access and engagement with investigative sites
and its patients, with the goal of faster recruitment and reducing the overall time and cost associated with drug development
for customers. Accellacare now has access to more than 9 million patients.
Finding and engaging suitable patients to conduct clinical trials is one of the biggest issues facing the drug development
industry today. Less than 1% of the U.S. population participates in clinical trials and the performance of investigative sites
that do take part in research is uneven, hard to predict and many trials do not meet the initial recruitment goals. The current
market challenge in patient enrollment creates an opportunity for ICON to differentiate its service offering and we are
working to reduce patient recruitment times through enhanced site and investigator selection based on key performance
metrics and through use of our proprietary FIRECREST technology which is used to train and support sites during the
development process. Our Accellacare and Oncacare site network alliances enhances our ability to enroll patients onto the
clinical studies we perform. We have also developed strategic alliances with investigator site groups and healthcare systems
in all major global research markets. In partnership with others, we are pioneering patient recruitment solutions that leverage
cognitive computing to transform clinical trial matching and allow a data-driven approach to deliver the right patients for
trials. One Search is our intuitive, integrated workflow and interrogation tool that enables access to multiple data sources
and provides the visualization and tools necessary for optimum site identification based on ICON and industry data of
capability, experience and performance. Scoring on enrollment performance, speed of start-up and quality supports better
site selection.
5
Directors’ Report (continued)
Career Development & Employer of choice
People have long been central to our mission to improve the lives of patients by accelerating the development of our
customers’ drugs and devices through innovative solutions. We encourage our people to bring flexibility, innovation, and
determination to every situation. By doing so, our people can build exciting and rewarding careers, and deliver results to
bring life-changing medicines to market and to maintain our success as an industry leader.
Our leadership and talent programs contribute to the enhanced retention of our employees, better project deliverables for
our customers and the enhanced financial performance of the business.
We aim to be an industry leader: a Company where talented people come to do important work, a place where our
employees can shape the future of healthcare, grow their careers, and reach their full potential. We have long held a deep
commitment to cultivating strong people practices. This includes competitive total rewards packages along with a focus on
continuous learning. We nurture a culture of development and aim to boost engagement by supporting our people’s growth,
both personally and professionally. We are dedicated to finding opportunities for our employees to grow and develop.
Our success depends on the knowledge, capabilities, and quality of our people. To improve their skills, we are committed to
providing continuous learning. This commitment is underpinned by clearly defined competencies, which offer employees a
clear path along which to develop skills and advance their careers.
To support employees at every stage of their career journeys, training and development programs are aimed at advancing
scientific, technical, and business knowledge. Programs include tailored CRA academies and a range of project
management curricula, therapeutic-focused programs, and people leader development programs.
Enduring Customer Partnerships
We continue to focus on expanding and deepening our partnerships with existing customers, while also developing new
customer relationships.
Strategic client relationships will increasingly manifest themselves in many different forms. Many of these relationships will
require innovative forms of collaboration across ICON service areas and departments and will therefore require increased
flexibility to offer services on both a standalone functional basis and as part of a fully integrated service solution. To support
this objective, we continue to evolve our collaboration and delivery models, invest in technology that will enable closer data
integration across our service areas and enhance our project and program management capabilities.
To meet the evolving needs of both our existing and new clients we continue to enhance our capabilities through both
organic service development and targeted acquisitions.
During the year, we continued to enhance our scientific and therapeutic expertise to support our customers in specific areas
including oncology, orphan and rare diseases, CNS, dermatology, infectious disease and women's health.
ICON has extensive experience in vaccine clinical development for commercial businesses, governments and NGOs,
having participated in over 160 vaccine studies in the past five years. This experience enabled us to play a significant role in
the search for vaccines and treatments for COVID-19. ICON is currently or has conducted a total of over 130 COVID-19
related trials.
Of particular note was our work in partnering with Pfizer and BioNTech on their investigational COVID-19 vaccine program -
the first to announce positive efficacy results from a Phase 3, late-stage study of a COVID-19 vaccine and to receive
Emergency Use Authorization in individuals 16 years of age or older from the U.S. Food and Drug Administration.
ICON mobilized a large global team of therapeutic and operational specialists to partner on the implementation of Pfizer‘s
and BioNTech’s strategic plan and framework for the monitoring of the trial, which included a high level of remote clinical
monitoring and source data verification in addition to on-site monitoring, safeguarding data quality and integrity in the
evolving pandemic environment. The team combined the benefits of full service and functional service provider clinical
operating models to increase efficiency and ensure rapid study start-up.
ICON worked with 153 sites in the US, Europe, South Africa and Latin America to ensure the recruitment of more than
44,000 trial participants over a four-month period in late 2020. ICON provided site training, document management and
operational support for patient Informed Consent Form review, coordinated eConsent in most countries, and assisted with
clinical supply management services. Achieving the unprecedented trial timelines, while maintaining high standards of
quality, undertaken in response to the pandemic required collaboration and strong communication between the ICON and
companies’ project teams.
6
Directors’ Report (continued)
We continue to target growth in under-penetrated CRO market segments. Penetration within medical device companies has
lagged that of bio-pharma firms but is beginning to accelerate. EU regulatory reform enacted in 2017 has been a further
catalyst to growth in this segment as it included stricter requirements to perform clinical evaluations and post-sale
surveillance. In early 2020, ICON acquired MedPass which has further enhanced our value offering in this area.
We also invested significantly in our site and patient network (Accellacare), and consider our expertise and offering in this
area as one of our strategic pillars effective from 2021.
Healthcare Intelligence & Applied Innovation
Innovation at ICON is focused on the factors that are critical to our clients. We develop integrated technologies to
significantly enhance the efficiency and productivity of clients’ drug and device development programs, providing true
transparency across all areas of a study.
ICON is focused on applying innovation that can help our customers improve their development outcomes. We are focusing
this innovation in three critical areas: improving clinical trial design and execution; faster and more predictable patient
recruitment; and evolving clinical trials to be more patient centric which includes data collection and analysis directly from
patient’s digital devices. Our approach to developing solutions to these challenges incorporates partnering with best-in-class
technology providers but is also supported by a suite of differentiated ICON proprietary technologies.
We have continued to invest in building our capabilities in the gathering, analysis and application of real world patient data
within both the clinical trial and post-trial observational study environments. Alongside expanding internal capabilities, we
continue to develop innovative partnerships with providers of real world data including TriNetX. During 2018, we signed an
agreement with Intel to deploy the Intel® Pharma Analytics Platform for use in clinical trials. The Intel platform is an artificial
intelligence solution that enables remote monitoring and continuous capture of clinical data from study subjects using
sensors and wearable devices and can apply machine learning techniques to objectively measure symptoms and quantify
the impact of new therapies.
ICON’s proprietary One Search tool helps identify optimum trial sites the first time. It synthesizes multiple data sources,
applying AI machine learning and rich data visualization for optimum site identification, resulting in improved study start-up
and site cycle times, significant reductions in the percentage of low performing sites and increasing the percentage of
studies meeting planned First Patient In (FPI).
FIRECREST is ICON’s proprietary comprehensive site performance management system. It is a web-based solution which
enables accurate study information, including protocol information, training manuals and case report forms, to be rolled out
quickly and simultaneously to investigative sites. It allows site behavior to be tracked to ensure training is understood,
procedures are being followed and that timelines and study parameters are met. It can significantly reduce the number of
data queries originated from investigator sites. FIRECREST is now integrated into the ICON Safety Reporting Solution and
provides a Site Question Management Tool.
ICON has also developed a patient engagement platform to support improved patient experience and enrollment in clinical
trials. The web-based patient engagement platform, provides patients with study specific information and connectivity with
the nearest investigative site. The solution supplements patient recruitment outreach by sites and increases visibility of
potential study participants for sponsors and sites. An easy to navigate, user friendly interface guides the patient to new and
ongoing studies in their particular indication and a pre-qualification questionnaire helps to determine if the study is a right fit
for them. If the patient decides to register interest, they are given the option to select their nearest investigative site. This
establishes connection with the site and the patient can then choose to contact the site or ask to be contacted for pre-
screening.
We positively impact patients’ lives by understanding their journeys and how they can benefit from drugs currently in
development and on the market. We do this by developing a holistic, global data environment across pharmaceutical and
biotech companies (development to commercial) that gives insights into patients, and how best to serve them. Alongside the
application of these technology solutions we are also focused on innovation through the redesign and where appropriate the
automation of current clinical trial processes.
Operational Excellence, Quality and Delivery
Quality is the foundation of our success. The quality of our work is vital to our mission of bringing better medications to
patients around the world. We are committed to maintaining, supporting, checking and improving our quality systems to
meet or exceed the quality standards demanded by our clients, patients and regulatory authorities. We focus our innovation
on the factors that are critical to our clients – reducing time to market, reducing cost and increasing quality – and our global
team of experts has extensive experience in a broad range of therapeutic areas.
7
Directors’ Report (continued)
Quality project execution underpins all that we do and we have an ongoing focus on developing our people and processes
to continue to enhance our service delivery. We also deploy supporting technologies which we believe will enable faster and
deeper insights into the quality of trial data.
We are focused on operational excellence across our support functions, and we operate a global business support
infrastructure across functions including finance, information technology, facilities, human resources and legal. This enables
us to enhance the service levels across these support areas whilst driving down the costs of the service provision.
Principal activities of the Company and Group
The principal activity of the Company is to act as a holding Company. The Company also operates branch offices: ICON
Italy in Milan, ICON Poland in Warsaw, ICON Latvia in Riga and ICON Lithuania in Vilnius. These branches provide contract
research services to the pharmaceutical industry.
Acquisition activity
On 1 July 2021, the Company completed the Acquisition of PRA by means of a merger whereby Indigo Merger Sub, Inc., a
Delaware corporation and subsidiary of ICON, merged with and into PRA Health Sciences, Inc., the parent of the PRA
Health Sciences Group ("the Acquisition" and "the Merger"). Upon completion of the Acquisition, PRA became a wholly
owned subsidiary within the ICON Group. ICON’s acquisition of PRA has brought together two high-quality, innovative,
growing organisations with similar cultures and values to create one of the world’s leading healthcare intelligence and
clinical contract research organisations. The total value of the Merger consideration is $12.1 billion and has resulted in the
recognition of goodwill of $8.1 billion, intangible assets of $5.0 billion and an associated deferred tax liability of $1.1 billion.
With approximately 41,100 employees across the globe, the new ICON has established relationships with a majority of the
world’s top pharmaceutical and biotech companies. We believe the Company now has the expertise, technology, and data
assets to lead the industry into a new paradigm for bringing clinical research to more patients and enabling expanded
capabilities for customers. We believe the Merger will deliver a transformational effect on ICON through:
Scale: With a deeper clinical, commercialization and consulting services portfolio, a broader geographic footprint,
depth in therapeutic expertise, and data-driven healthcare technology, the Company can deliver enhanced globally
scaled expertise & solutions for all customers and patients.
Focus: The Company has a singular focus on clinical research and commercialization, leveraging transformational
technology and innovation to execute clinical trials from Phase 1 to post-approval studies with the highest quality,
expertise and speed.
Speed to market: Our extensive services portfolio, digital and data technology capabilities, and enhanced access
to more diverse patient populations, have been combined with flexible delivery approaches and partnership models
– all with the aim of reducing development time and costs.
8
Directors’ Report (continued)
Flexible partnership models: ICON has partnerships with a majority of world’s top biopharma and biotech
companies worldwide. ICON is a global leader in Functional Service Provision and a top global provider of full
service clinical research.
Differentiated DCT platform, healthcare
intelligence & technology: ICON can deliver differentiated
decentralized and hybrid trial solutions through a suite of capabilities, including mobile health, commercial
connected health platforms, real world data and information solutions, a global site network, home health services
and wearables expertise.
Access to patients: ICON offers customers enhanced access to a larger global pool of more diverse patients
through its global site network (Accellacare), specialized oncology network (Oncacare), a pediatric site network, in-
home clinical services and a network of six Phase I clinical research units across the United States and Europe.
Future developments
Please see note 31 Subsequent events for details of events in the period from year-end to the approval of the financial
statements.
The Group looks forward to continuing to expand through organic growth in 2023 and beyond, 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 financial year and state of affairs of the Group are set out in the Consolidated Statement of Profit and
Loss, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows on pages 36 to 41
respectively. The Directors do not propose the payment of a dividend for the year ended 31 December 2022.
The Group commenced a multi-year restructuring programme in 2021 as part of the integration of PRA into the Group. This
programme is expected to last four years and deliver $150 million in synergies on completion. The programme focuses on
alignment of people and processes and involves a review of the Group's global office footprint.
The following table sets forth for the periods indicated certain financial data as a percentage of 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.
Revenue
Year ended 31
December
2022
Year ended 31
December
2021
Percentage
change
in period
As a percentage of revenue
100 %
100 %
41.3 %
Direct costs (excluding exceptional items)
71.4 %
72.5 %
39.1 %
Other operating expenses (excluding exceptional items)
17.3 %
16.5 %
48.2 %
Operating profit (excluding exceptional items)
11.3 %
11.0 %
45.7 %
Transaction and integration related expenses
Restructuring expenses
0.5 %
0.4 %
3.1 %
(77.0) %
0.7 %
0.1 %
Operating profit (including exceptional items)
10.4 %
7.3 %
101.4 %
9
Directors’ Report (continued)
Twelve months ended 31 December 2022 compared to twelve months ended 31 December 2021
Revenue
(dollars in thousands)
Revenue
Year Ended
31 December
Change
2022
2021
$
%
$
7,733,386 $
5,472,826 $
2,260,560
41.3%
Revenue for the year ended 31 December 2022 increased by $2,260.6 million, or 41.3%, to $7,733.4 million from $5,472.8
million for the year ended 31 December 2021. For the year ended 31 December 2022 we derived approximately 46.1%,
46.6% and 7.3% of our revenue in the United States, Europe and Rest of World, respectively. The increase in revenues in
the year ended 31 December 2022 is due to the Merger and the impact the continued recovery from the COVID-19 global
pandemic has had on operations including: our ability to ensure laboratory samples are collected and analysed on time, our
ability to perform on-site monitoring of clinical trials, the ability of patients or service providers to travel, and our ability to
travel. The Company has earned revenue from clinical trials associated with COVID-19, most notably with the Pfizer
BioNTech COVID-19 vaccine programme.
Revenues from our top five customers amounted to $2,187.4 million in the year ended 31 December 2022 compared to
$1,730.6 million in the year ended 31 December 2021 or 28.3% and 31.6% respectively. The largest of these customers
related to a strategic partnership with a large global pharmaceutical company.
Revenue in Ireland increased by $618.7 million in the year ended 31 December 2022, to $1,984.6 million, compared to
$1,365.9 million for the year ended 31 December 2021. Revenue in Ireland during the year ended 31 December 2022
increased by 45.3% compared to an overall increase in Group revenue of 41.3%. Revenue in Ireland is principally a function
of our global contracting model (see note 2 - Segmental information). Entities acquired as part of the Merger are currently
being integrated into the global contracting model and this process remains ongoing at 31 December 2022.
Revenue in the Rest of Europe increased by $442.8 million or 37.7%, to $1,618.4 million, compared to $1,175.5 million for
the year ended 31 December 2021. Revenue in the U.S. increased by $993.6 million or 38.6%, to $3,566.6 million,
compared to $2,573.0 million for the year ended 31 December 2021. Revenue in our Rest of World (‘Other’) region
increased by $205.5 million or 57.3%, to $563.9 million compared to $358.4 million for the year ended 31 December 2021.
Revenue has increased across all regions principally reflecting the Merger completion and continued recovery from the
COVID-19 global pandemic.
Direct costs
(dollars in thousands)
Direct costs
% of revenue
Year Ended
31 December
2022
2021
Change
$
5,521,522
$
3,970,025
$
1,551,497
71.4%
72.5%
39.1%
Direct costs for the year ended 31 December 2022 increased by $1,551.5 million or 39.1%, to $5,521.5 million from
$3,970.0 million for the year ended 31 December 2021. Direct costs consist primarily of investigator and other reimbursable
costs, compensation, associated fringe benefits and routine share-based compensation expense for project-related
employees and other direct project driven costs. The increase in direct costs during the year arose due to an increase in
headcount and a corresponding increase in personnel related expenditure of $919.1 million, as a result of the Merger,
combined with an increase in other direct project related costs of $182.3 million, an increase in laboratory costs of $10.0
million, an increase in third-party investigator and other reimbursable costs of $434.5 million and an increase in travel
related costs of $5.6 million. As a percentage of gross revenue, direct costs have decreased to 71.4% compared to 72.5%
for the year ended 31 December 2021.
10
Directors’ Report (continued)
Other Operating Expenses
Year Ended
31 December
(dollars in thousands)
2022
2021
Change
Other operating expenses (excluding exceptional items)
% of revenue (excluding exceptional items)
Other operating expenses (including exceptional items)
$
$
1,334,235 $
900,455 $
433,780
17.3%
16.5%
48.2%
1,405,073 $
1,102,174 $
302,899
% of revenue (including exceptional items)
18.2%
20.1%
27.5%
Other operating expenses for the year ended 31 December 2022 increased by $433.8 million, or 48.2%, to $1,334.2 million
compared to $900.5 million for the year ended 31 December 2021 (excluding exceptional items). Other operating costs are
primarily comprised of compensation, related fringe benefits and routine share compensation expense for non project
related employees, recruitment expenditures, professional service costs, advertising costs and all costs related to facilities
and information systems. As a percentage of revenue, other operating expenses increased to 17.3% of revenue, compared
to 16.5% of revenue for the year ended 31 December 2021 (excluding exceptional items). During the year, general
overhead costs increased by $49.5 million, facilities related costs increased by $38.2 million, depreciation and amortisation
increased by $252.4 million, personnel related costs increased by $103.5 million and there was an increase of $3.3 million in
marketing fees. These increases were partly offset by a decrease of $11.8 million due to foreign exchange movements and
other immaterial decreases.
Exceptional items - Restructuring, transaction and integration-related expenses associated with the Merger
Year Ended
31 December
(dollars in thousands)
2022
2021
Change
Transaction and integration related (including stock acceleration
charges)
% of revenue
Restructuring
% of revenue
$
$
39,695
$
170,614
$
130,919
0.5 %
3 %
31,143
$
31,105
$
0.4%
0.7%
(77) %
38
0.1 %
During the year ended 31 December 2022, the Company incurred $70.8 million for restructuring, transaction and integration-
related expenses associated with the Merger. The charge includes transaction and integration costs of $39.7 million
associated with advisory costs, retention agreements with employees, accelerated share compensation charges and
ongoing integration activities.
The Company has also undertaken a restructuring programme following the announcement of the Merger to review its
global office footprint, optimise its locations to best fit the requirements of the Company and reorganise its workforce to drive
future growth. This programme has resulted in a charge of $31.1 million in the year ended 31 December 2022. In the year
ended 31 December 2021, a restructuring charge of $31.1 million was recognised under a restructuring plan adopted
following a review of operations. The restructuring plan reflected resource rationalisation across the business to improve
resource utilisation.
We expect to incur additional expenses associated with the Merger; however, the timing and the amount of these expenses
depends on various factors such as, but not limited to, the execution of integration activities and the aggregate amount of
synergies we achieve from these activities.
11
Directors’ Report (continued)
Operating profit
(dollars in thousands)
Operating profit (excluding exceptional items)
% of revenue (excluding exceptional items)
Operating profit (including exceptional items)
% of revenue (including exceptional items)
Year Ended
31 December
2022
2021
Change
$
$
877,629
$
602,346
$
275,283
11.3%
11.0%
45.7%
806,791
$
400,627
$
406,164
10.4%
7.3%
101.4%
Operating profit increased by $275.3 million, or 45.7%, to $877.6 million ($806.8 million including exceptional items) for the
year ended 31 December 2022 from $602.3 million for the year ended 31 December 2021 ($400.6 million including
exceptional items) . As a percentage of revenue, operating profit increased to 11.3% (10.4% including exceptional items) of
revenues for the year ended 31 December 2022 compared to 11.0% of revenues for the year ended 31 December 2021
(7.3% including exceptional items).
Financing income and expense
(dollars in thousands)
Financing income
Financing expense (excluding exceptional items)
Financing expense (including exceptional items)
Year Ended
31 December
2022
2,345 $
2021
Change
$
%
574 $
1,771
308.5%
(234,201) $
(111,145) $
123,056
(234,201) $
(186,536) $
47,665
110.7%
25.6%
$
$
$
Financing expense for the period increased to $234.2 million ($234.2 million including exceptional items) for the year ended
31 December 2022 from $186.5 million for the year ended 31 December 2021 due to the draw down of debt facilities
associated with the Merger and costs related to the extinguishment of previous debt facilities (see note 23 - Bank credit lines
and loan facilities). No amounts were outstanding under the revolving loan facility at 31 December 2022 or the year ended
31 December 2021 with the exception of $4.5 million letters of credit given to landlords to guarantee lease arrangements.
Financing income for the year increased to $2.3 million for the year ended 31 December 2022 from $0.6 million for the year
ended 31 December 2021. This reflects increased returns on cash and cash equivalents.
Income tax expense
(dollars in thousands)
Income tax expense (excluding exceptional items) $
Income tax expense (including exceptional items)
$
Effective income tax rate
Year Ended
31 December
2022
2021
79,679
65,514
$
$
51,061
40,219
$
$
11.5%
18.7%
Change
$
28,618
25,295
%
56.0%
62.9%
Income tax expense for the period increased to $65.5 million (including exceptional items) for the year ended 31 December
2022 from $40.2 million for the year ended 31 December 2021. The Group’s effective tax rate for the year ended
31 December 2022 was 11.5% (12.4% excluding the effect of exceptional items) compared with 18.7% (10.4% excluding the
effect of exceptional items) for the year ended 31 December 2021. The Group’s effective tax rate remains principally a
function of the distribution of pre-tax profits in the territories in which it operates and the tax treatment of costs related to the
Merger.
Risks and uncertainties
Under Irish Company Law (Section 327 the Companies Act), the Directors are required to give a description of the principal
risks and uncertainties which it faced at 31 December 2022. 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.
12
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 to ensure the minimisation of financial risk at reasonable
cost. The Group’s financial instruments comprise cash and cash equivalents, current asset investments, 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 ensure continued growth. The Group also occasionally uses derivative financial
instruments to reduce exposure to fluctuations in foreign exchange rates. The principal financial risk facing the Group is
foreign exchange risk and interest rate risk. Other financial risks include credit risk and liquidity risk. Further details 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.
Financing
In conjunction with the completion of the Merger, on 1 July 2021, ICON entered into a credit agreement providing for a
senior secured term loan facility of $5,515.0 million and a senior secured revolving loan facility in an initial aggregate
principal amount of $300.0 million (the "Senior Secured Credit Facilities"). The proceeds of the senior secured term loan
facility were used to repay the outstanding amount of (i) PRA’s existing credit facilities and (ii) the Company's private
placement notes outstanding and fund, in part, the Merger. The senior secured term loan facility will mature in July 2028 and
the revolving loan facility will mature in July 2026. The credit agreement governing the Senior Secured Credit Facilities
provides that borrowings denominated in U.S. Dollars will bear interest based on the London Interbank Offered Rate
("LIBOR") or other base rate (as elected by the borrower), plus an applicable margin. On November 29, 2022, the Company
agreed with its lenders to the adoption of the Secured Overnight Financing Rate ("SOFR") as the benchmark rate within the
Senior Secured Credit Facilities, thus LIBOR is no longer the benchmark rate available to the Company under the terms of
the Senior Secured Credit Facilities.
The Company repaid $800.0 million and $513.8 million of the senior secured term loan facility for the years ended
December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, no amounts were outstanding under the
senior secured revolving loan facility with the exception of $4.5 million letters of credit given to landlords to guarantee lease
arrangements.
In addition to the Senior Secured Credit Facilities, on 1 July 2021, the Company, issued $500.0 million in aggregate principal
amount of 2.875% senior secured notes in a private offering. The senior secured notes will mature on 15 July 2026.
The Company has contractual liabilities for lease arrangements of $189.7 million which will be predominantly settled over
the next five year period through cash payments.
Subsequent events
Details of subsequent events are set out in note 31 to the Consolidated Financial Statements.
13
Directors’ Report (continued)
Directors and Secretary
The members of the Board of Directors during the year are included in note 9 to the Consolidated Financial Statements.
The following table sets forth information concerning the composition of the Company’s Board committees as of
31 December 2022:
Name
Ciaran Murray
Dr. Steve Cutler (1)(5)
Rónán Murphy (2)(3)(5)
Dr. John Climax
Joan Garahy (2)(4)
Eugene McCague (3)(4)
Julie O'Neill (3)(4)
Dr. Linda Grais (2)
Position
Chair and Director
Chief Executive Officer and Director
Lead Independent Director
Director
Director
Director
Director
Director
(1) Executive Officer of the Company.
(2) Member of Compensation and Organisation Committee.
(3) Member of Audit Committee.
(4) Member of Nominating, Sustainability and Governance Committee.
(5) Member of Execution Committee.
Details required by Companies Act, section 329, of Directors’ interests in the Group’s shares are set out in note 9 to the
Consolidated Financial Statements.
Directors’ remuneration
Details of the Directors’ remuneration and interests are set out in notes 3 and 9 to the Consolidated Financial Statements.
Directors’ power to purchase and allot company shares
Subject to the provisions of the Companies Act, 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.
A resolution was passed at the Company’s Annual General Meeting (“AGM”) on 22 July 2016, which authorised the
Directors to purchase (buyback) up to 10% of the outstanding shares in the Company. This authorisation was renewed at
the Company's AGM on each of 25 July 2017, 24 July 2018, 23 July 2019, 21 July 2020, 20 July 2021 and 26 July 2022. On
3 October 2016, the Company commenced a share buyback programme of up to $400 million. The share buyback
programme was completed during the year ended 31 December 2018 with a total of 4,026,576 ordinary shares redeemed
for a total consideration of $372.1 million. On 8 January 2019, the Company commenced a further share buyback
programme of up to 1,000,000 ordinary shares which was completed during the year ended 31 December 2019. These
shares were redeemed by the Company for a total consideration of $141.6 million. On 22 October 2019, the Company
commenced a further share buyback programme. At 31 December 2019, 35,100 ordinary shares were redeemed by the
Company under this programme for a total consideration of $5.3 million. During the year ended 31 December 2020,
1,235,218 ordinary shares were redeemed by the Company under this buyback programme for a total consideration of
$175.0 million. On 18 February 2022, the Company commenced a share buyback programme which was fully complete at
31 March 2022. Under the buyback programme, 420,530 ordinary shares were redeemed by the Company for total
consideration of $100.0 million.
All ordinary shares that are redeemed under the buyback programme will be cancelled in accordance with the constitutional
documents of the Company and the nominal value of these shares transferred to an undenominated capital fund as required
under Irish Company law.
14
Directors’ Report (continued)
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 2022. 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, all assets available for distribution will
be paid out to 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
A certain number 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 Senior Secured Credit Facilities, details of which are set out in note 23 to the Consolidated Financial Statements,
provides that, upon the occurrence of a change of control, the obligations thereunder may be accelerated.
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 Constitution requires 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 2019 Consultants
and Directors Restricted Share Unit Plan, the 2013 Employees Restricted Share Unit Plan and the
amendments to the Employee Share Option Plan 2008 and Consultants Share Option Plan 2008 were
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 and the
Lead Independent Director may call meetings of the independent Directors and non-employee Directors of the
Board, as appropriate, in accordance with the Lead Independent Director Charter.
The Company's practices with regard to these requirements are not prohibited by Irish law.
15
Directors’ Report (continued)
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 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
Chief Administrative Officer and General Counsel and the external auditors normally attend all meetings of the Audit
Committee and have direct access to the Committee Chairperson at all times. The Audit Committee is currently comprised
of three independent Directors: Rónán Murphy (Chairperson), Eugene McCague and Julie O'Neill. On April 26, 2022, Hugh
Brady stepped down as a member of the Committee and Julie O'Neill joined the Committee.
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 2022:
Name
%
Number of Shares
Massachusetts Financial Services Company
WCM Investment Management
Lazard Asset Management, L.L.C.
Boston Partners
Wellington Management Company LLP
All Directors and Officers as a group (1)
9.93
7.20
3.91
3.80
3.40
1.37
8,119,214
5,885,414
3,193,897
3,106,482
2,782,561
1,116,311
(1)
Includes 401,416 ordinary shares issuable upon the exercise of stock options granted by the Company, 31,940
restricted stock units (“RSUs”) awarded by the Company to Directors, officers and other key employees and 88,074
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, the figure included is
the maximum amount of PSUs that may be issued.
Subsidiary undertakings
The information required by the Companies Act in relation to subsidiary undertakings is presented in note 32 Subsidiary
undertakings to the Consolidated Financial Statements.
Political donations
The Group made no disclosable political donations in the period.
Going concern
The time period that the Directors have considered in evaluating the appropriateness of the going concern basis in
preparing the 2022 Consolidated Financial Statements is a period of at least twelve months from the date of approval of
these financial statements (the "period of assessment").
The Group has considerable financial resources and a large number of customers across different geographic areas.
Having assessed the relevant business risks (see Appendix A) the Directors believe that the Group is well placed to manage
these risks successfully and they have a reasonable expectation that ICON plc, and the Group as a whole, has adequate
financial and other resources to continue in operational existence for the period of assessment with no material
uncertainties. For this reason, the Group continues to adopt the going concern basis in preparing the consolidated financial
statements.
16
Directors’ Report (continued)
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 registered office at South County Business
Park, Leopardstown, Dublin 18.
Statement of relevant audit information
The Directors believe that they have taken all steps necessary to make themselves aware of any relevant 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.
Disclosure of non-financial information
The European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups)
Regulations 2017 require disclosure of certain non-financial information by certain large undertakings and groups.
We have sought to address the requirements of the legislation in the sections following.
Business Model
Our mission is to improve the lives of patients by accelerating the development of our customers’ drugs and devices through
innovative solutions. We are passionate about providing innovative solutions for customers, we are better together working
as one team, we value diversity and care about the success of our people, and we care about doing the right thing. We are
advancing clinical research while offering customers broader and deeper experience, scale, and focus, complemented by
continuity of delivery and speed to market. Our business model is described in the preceding sections. Consistent with our
values, we seek to not only operate in compliance with applicable laws but also to positively influence our global workforce,
the communities that we operate in, the environment and society as a whole. Doing so makes us a stronger, more resilient
organisation by every measure.
Our business model is described in the "Principal activities, business review and future developments" section of the
Directors’ Report.
Our core values underpin our mission and drive a culture and mind-set of ownership at ICON. "Own It at ICON", as set out
below, is a statement of values that has remained at the very heart of ICON’s culture, encouraging our people to seize the
opportunity and bring flexibility, innovation, and determination to every situation. We believe our culture of ownership
personifies who we are as a Company — it also helps us apply our expertise, collaborate to get things done, and succeed at
our mission.
17
Directors’ Report (continued)
Our values underpin how we work together to deliver on our mission to improve the lives of patients by accelerating the
development of our customers’ drugs and devices through innovative solutions. These values and our Code of Ethical
Conduct, which underpins these values, form the core of what we do, and how we do it. It applies to all of our officers,
directors, employees, consultants and agents globally. All employees and temporary workers are mandated to complete
global ethics training.
At ICON, we care about conducting business sustainably. We care about our people, patients, and the communities in which
we live. We care about doing the right thing and we are committed to working to the highest ethical standards and
demonstrating our commitment to honesty, transparency, and quality. As a testament to our commitment, we launched our
“ICON Cares” program at the start of 2023 which incorporates all our Environment, Social and Governance (ESG), Diversity,
Inclusion and Belonging (DIB), and CSR initiatives into one program. ICON’s Environment, Social, and Governance
Committee ("ESG Committee") brings together all these initiatives and efforts under one umbrella to ensure consistency,
enhance monitoring, reveal areas for development and facilitate reporting to the Board. The ESG Committee is chaired by
the Chief Administrative Officer and General Counsel (CAO), who is responsible for reporting to the ICON executive
leadership team, the Nominating, Sustainability and Governance Committee and the Board on ESG matters. In February
2022, the Board delegated oversight responsibilities of the Company's strategies, activities, and risks in respect to ESG
matters to the Nominating and Governance Committee, which was renamed the “Nominating, Sustainability and
Governance Committee” in April 2022. Accordingly, the CAO reports on ESG matters to the Nominating, Sustainability and
Governance Committee and reports to the Board on an annual basis whilst also providing periodic ESG updates to the
executive leadership team.
The ESG Committee is focused on developing our strategy and initiatives relating to the environment, social matters, health
and safety, community engagement, corporate governance, sustainability, and other public policy matters relevant to the
Company. The ESG Committee is a cross-functional management committee of the Company including representation from
facilities, health and safety, corporate communications, finance, legal, investor relations, procurement, commercial,
marketing, and human resources departments. The Committee assists and supports executive management and the
Nominating, Sustainability and Governance Committee of the Company in:
•
•
•
determining and setting the strategy relating to ESG matters;
developing, implementing and monitoring initiatives and policies based on that strategy; and
communicating these strategies, initiatives, and their results.
18
Directors’ Report (continued)
We are committed to building and developing our ESG strategies and reporting. In 2020 we launched our ESG page on the
ICON website and have an internal ESG page on our MyICON intranet portal to engage with our employees and provide
information and updates relating to ESG matters and our commitment to sustainability. In 2021, as a testament to our
commitment to managing ICON responsibly and sustainably, we became a participant in the United Nations Global Compact
(UNGC), a set of Ten Principles covering the areas of human rights, labor, environment, and anti-corruption. In our 2021
ESG report, released in 2022, we reported under the newest Global Reporting Initiative (GRI) standards and the Task Force
on Climate-Related Financial Disclosures (TCFD). Our report summarises our current policies, priorities, and commitments
in respect to ESG matters. During 2022, ICON received a silver medal from EcoVadis in recognition of our environment,
social and governance efforts throughout ICON. The ESG page on our website is available at https://www.iconplc.com/
about/esg/.
The global landscape in respect to regulatory and legislative requirements relating to ESG reporting and disclosure
requirements is rapidly evolving, and we are monitoring potential requirements so that we are positioned to adhere to any
additional requirements in due course, particularly with respect to the requirements of the draft European Sustainability
Reporting Standards (ESRSs) which are expected to be effective from 1 January 2024.
Building a sustainable future – our commitment to the United Nations Sustainable Development Goals
As a global Company, we maintain an ethical and sustainable presence in hundreds of locations worldwide. At its core,
ICON’s mission is to improve health and lives. We are also committed to contributing to the 2030 United Nations
Sustainable Development Goals (SDGs) and are proud that our work contributes to their advancement.
Our research, our work with customers and patients and our on-the-ground efforts to meet the diverse needs across our
communities align with the SDGs. These efforts, however, focus on a subset of themes where we have the greatest
opportunity to effect change and further details are set out in our ESG Report.
Environmental matters
ICON is committed to delivering excellence in care to our communities. To improve our overall sustainability, this
commitment means tracking and improving our environmental performance across all business activities. We achieve this
by pursuing sustainability strategies that recognize the impact of our operations as a CRO on the environment, addressing
greenhouse gas (GHG) emissions, energy use, waste generation and procurement-related activities. Our employees,
directors, officers, contractors, and temporary workers are expected to support our sustainability objectives.
Our Global Environmental Management Policy and Environmental Management Plan is our program for managing
environmental sustainability initiatives. The implementation of the program is led by our facilities team, reporting to our Chief
Administrative Officer and General Counsel (CAO). The CAO is responsible for reporting on the program to the ICON
executive leadership team and Nominating, Sustainability and Governance Committee and the Board.
ICON set environmental goals around the use of renewable energy and carbon emissions in 2019 and we are working
towards achieving these goals which are as follows:
•
•
•
100% renewable electricity by 2025
20% reduction in kilowatt hours (kWh) of electricity by 2030
Net zero carbon emissions on Scope 1 & 2 by 2030
We have programs in place to manage and minimize climate impacts of business activities. To continue to improve
processes and reduce our environmental impact, we track, calculate, and report our GHG footprint. We apply the GHG
Protocol Corporate Standard, which is the global corporate accounting and reporting standard for calculating carbon
emissions. Carbon Trust provides annual verification of our emissions data.
In line with carbon reduction targets, ICON’s combined Scope 1 and 2 GHG emissions, relative to revenue and the number
of employees, have fallen year on year since 2018. Since 2018, following our reduction efforts, the pandemic-related closure
of many of our facilities and a reduction in business travel, GHG emissions across our operations declined significantly.
Since 2021, as more normal operations resumed, we have seen a decrease in combined Scope 1 and 2 emissions with an
overall increase in our total GHG emissions due to an increase in business travel (Scope 3). As the pandemic recovery
continues, and we have resumed more normal operations, we are evaluating additional opportunities to continue to reduce
our carbon emissions across our organisation to develop and improve our environment program.
CDP (formerly the Carbon Disclosure Project) provides a globally recognized system that enables companies to measure
and manage their environmental impacts. ICON continues to be committed to improving its current scoring of a C.
19
Directors’ Report (continued)
We are focused on reducing energy use across our global operations. For example, reducing energy use and shifting to
renewable energy are components of our specific environment goals. Waste reduction is embedded into our environment
policies and practices and is one of the objectives of ICON’s Environmental Management Policy. We will seek new
opportunities to reduce waste by increasing recycling volumes, reducing consumption of primary materials, and decreasing
use of disposable products in our offices and facilities.
The majority of our sites are leased, and we work closely with our landlords and leasing agents to implement measures to
ensure we operate in an environmentally sustainable manner. The Acquisition of PRA expanded our global real estate
footprint and our real estate group worked with other business leaders to understand the sustainability implications and
opportunities of this new footprint and find ways to continue to advance our collective sustainability goals. During 2022, we
continued to integrate offices and reduce our footprint which resulted in downsizing or closing 31 locations to align with new
working styles and business needs. When selecting new locations for offices and planning building modifications, experts
from our real estate team factor in environmental considerations. In addition, we have implemented a series of measures
globally to reduce the local footprint of our offices, such as installing energy-efficient LED lighting, using motion detectors to
reduce energy use, purchasing recycled office supplies, and reducing paper consumption by promoting paperless office
processes, or where printing is necessary, enabling double-sided output.
Our office design has efficiency in mind, utilizing space to provide the maximum number of desks and functional provisions
while still providing comfortable, safe spaces for our employees. Our strategies include:
•
•
•
•
Perimeter glazing of meeting rooms, offices, and other spaces which allow in natural light.
Recycling areas built into business centers and kitchen/ canteens which reduce waste sent to landfills.
Planted green spaces which contribute to internal air quality, temperature, and humidity.
Building materials and vendors which we select for low environmental impact.
We also require our suppliers to abide by our Global Supplier Code of Conduct which includes a commitment to comply with
applicable environment laws and regulations, our expectations around waste management and sustainable use of
resources.
Social and Employee matters
Community Engagement
We are committed to making a positive impact on the communities in which we work and live and we have aligned our
community efforts to a broader vision for social impact, including by aligning priorities with our organisational goals of
diversity, inclusion, and belonging.
Our community engagement activities are focused on two core areas:
•
•
Supporting education and building closer ties between industry and academia.
Improving the welfare of people in the communities in which we live.
Supporting education and building closer ties between industry and academia
A core area of community support includes building ties between industry and academia to inspire the next generation of
leaders in business and science. Our existing partnerships continue with the following organisations:
▪
▪
•
The ICON-McKeon Research Fellowship in Motor Neuron Disease ('MND') in honor of Mr. Declan McKeon,
former Board member, acting Chairman, Lead Independent Director and Chair of the ICON Audit committee. The
ICON-McKeon Research Fellow in MND carries out research in the areas of machine-learning and artificial
intelligence to derive insights from multimodal clinical, imaging neuro-electric signaling, in the context of the
neurodegenerative disease of ALS.
Partnership with Trinity Centre for People with Intellectual Disabilities ('TCPID') - TCPID situated within the
School of Education, Trinity College Dublin, aims to promote the inclusion of people with intellectual disabilities in
education and society. The Centre provides people who have intellectual disabilities with the opportunity to
participate in a higher education program designed to enhance their capacity to fully participate in society as
independent adults. The 2-year education program includes work placements and internships to enable students to
experience and participate in the work environment. In 2022, ICON facilitated a 12-month internship in our
Laboratory and Facilities departments for one of the TCPID graduates and our aim is to continue to offer work
placements and internships as part of this partnership in 2023.
Partnership with Junior Achievement to inspire schoolchildren. Junior Achievement encourages young people
to remain in education and teaches them the skills they need to succeed in a changing world. ICON volunteers
take time out of their working day to deliver Junior Achievement programs, teaching primary and secondary-level
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Directors’ Report (continued)
students valuable business, STEM and entrepreneurship skills that will serve them throughout their professional
lives. ICON expanded its partnership with Junior Achievement to include an additional three locations in the United
States and the United Kingdom in 2022.
In 2022, we further expanded our industry-academia partnerships through the creation of a new ICON scholarship program
to provide increased opportunities for underrepresented groups to study STEM (Science, Technology, Engineering &
Mathematics) courses and to build a more diverse graduate pool of talented and ambitious STEM professionals who can
help to ensure the future success of the life sciences industry. Through the program, ICON is partnering with three
universities in Ireland – Dublin City University (DCU), Trinity College Dublin (TCD) and the University of Limerick (UL) – as
well as with the Thurgood Marshall College Fund (TMCF) in the US, to fund 33 scholarships for students of STEM courses.
TMCF is a not-for-profit organisation that supports nearly 300,000 students attending its 47 member-schools that include
publicly-supported Historically Black Colleges and Universities (HBCUs).
Improving the welfare of people in the communities in which we live
Through volunteering, donations and other charitable initiatives, our employees across the world are making a positive
difference to their communities. We support causes that are important to our employees and have several programs that
support the welfare of people in our local communities. In 2022, 540 employees across the world participated in Run in the
Dark, an annual event organized by the Mark Pollock Foundation to bring people together and fundraise to help find a cure
for paralysis. ICON was the largest global corporate team to participate in the event and helped to raise $10,000 for the
cause. A team of 90 ICON cyclists from 19 countries also participated in our annual ICON cycle challenge, which raised
funds for the International Committee for the Red Cross.
Since 2012, ICON’s annual employee-nominated charity donation program has supported over 90 charities, donating
$10,000 to each organisation. The selected organisations focus on a range of critical issues, from relieving poverty and
homelessness to improving child welfare through education and enhancing the lives of people living with a variety of
diseases. The organisations were chosen to align with our ESG goals. In addition, to support ongoing humanitarian efforts in
Ukraine, we also made a donation to the Children of Heroes charity fund in Ukraine to support children who have been
severely impacted by the war in that region.
Talent and People
Our people are core to our ability to deliver our services and drive better patient outcomes. Through diversity, inclusion and
belonging, industry-leading talent management practices, a sincere attention to our employees’ needs, well-being and health
and safety, we continue to power the potential of together.
At the core of our strategy is our people
People have long been central to our mission to improve the lives of patients by accelerating the development of our
customers’ drugs and devices through innovative solutions. We encourage our people to bring flexibility, innovation, and
determination to every situation. By doing so, our people can build exciting and rewarding careers, and deliver results to
bring life-changing medicines to market and to maintain our success as an industry leader.
Learning and development of our staff is a key focus for us
Our leadership and talent programs contribute to the enhanced retention of our employees, better project deliverables for
our customers and the enhanced financial performance of the business.
We aim to be an industry leader where talented people come to do important work and where our employees can shape the
future of healthcare, grow their careers, and reach their full potential. We have long held a deep commitment to cultivating
strong people practices. This includes competitive total rewards packages along with a focus on continuous learning. We
nurture a culture of development and aim to boost engagement by supporting our people’s growth, both personally and
professionally. We are dedicated to finding opportunities for our employees to grow and develop.
Our success depends on the knowledge, capabilities, and quality of our people. To improve their skills, we are committed to
providing continuous learning. This commitment is underpinned by clearly defined competencies, which offer employees a
clear path along which to develop skills and advance their careers.
To support employees at every stage of their career journeys, training and development programs are aimed at advancing
scientific, technical, and business knowledge. Programs include tailored CRA academies and a range of project
management curricula, therapeutic-focused programs, and people leader development programs. During 2022, this also
included diversity, inclusion and belonging training for everyone on our talent acquisition team and many of our People
Leaders.
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Directors’ Report (continued)
Our People Leader development program focuses on providing our People Leaders with the relevant skills to effectively
manage themselves, their team and their business, including psychometrics to raise their awareness of their behavioral
preferences and the preference of others. ICON also invested in Harvard Manage Mentor, an online learning platform
providing People Leaders with access to learning available at any time with topics ranging from change management,
diversity & inclusion, retaining employees and developing employees.
We provide our people with a personalized and flexible learning experience, delivered through a combination of in-person
and technology-driven programs that suit their learning styles and can flex to suit their schedules. Through our industry
leading CareerHub, ICON employees are encouraged to broaden their scientific, technical, leadership, and business
knowledge. By tapping into development programs and partnerships with leading academic institutions, team members can
use the hub to develop competencies that advance their careers. We also collaborate with UCD Smurfit School Executive
Development to deliver customized leadership development programs for global employees.
As an organisation we are keen to hear directly from our employees
To attract and retain the best talent, we must listen and respond to employees’ needs. This begins with a focus on diversity,
inclusion and belonging, and extends to every aspect of our work, from recruitment and onboarding, to training,
engagement, enablement, and reward. We pursue best-in-class approaches to building employee engagement and these
include, among others:
•
•
•
•
•
Comprehensive global employee surveys, which measure how people feel about their work and whether they feel
they have the tools to do their jobs well. Feedback from these studies informs detailed action plans at the group,
function, and team level.
Pulse check surveys, which are smaller-scale studies designed to measure employee sentiment on specific topics
and initiatives.
Fostering an environment of diversity, inclusion and belonging where everyone is valued.
Stay interviews to help managers understand why staff stay and to uncover what might put them at risk of
departing.
Skip-level meetings to develop trust and rapport between senior leaders and employees.
Our listening strategy supports our efforts to reduce employee turnover, which we monitor closely through analytics.
Qualitative information is collected through formal exit interviews and, where we believe they’ll make an impact, we
intervene via retention plans and related efforts.
Employee well-being
ICON’s commitment to improving health and enriching lives extends beyond the work we do with our customers. Employees
across the globe have direct access to locally relevant information and resources to support every facet of their well-being,
including physical, social, psychological, and environmental.
Our global Employee Assistance Program (EAP) ensures that all employees, and their families, have access to a range of
different, confidential resources and experts to help them better manage their working life and personal life. The EAP also
delivers a web-based and mobile app platform with access to toolkits providing advice and resources in local languages.
Health and safety
At ICON, the health and safety of our employees, customers and clinical trial patients are our most important priorities. We
take guidance from global and regional health authorities and governments to protect the safety and welfare of employees,
as well as abide by government directives. Our global health and safety management system ensures we deliver on all local
and national requirements. Our priority objectives are the safety of our staff, clinical trial patients, protecting the
environment, maintaining business continuity, and ensuring all sensitive health and safety data is protected.
We are committed to providing a safe working environment for our people. We achieve this goal by working in ways that
protect the safety, health, and welfare of all our employees, clinical trial patients, and visitors. Risk assessment is the basis
of the safety management system, and we work to identify, mitigate, and monitor existing and emerging health or
environment risks that may be associated with our business activities. We work to identify, mitigate, and monitor existing and
emerging health or environment risks that may be associated with our business activities.
22
Directors’ Report (continued)
Fostering diversity, inclusion and belonging
We believe in a workplace culture that embraces diverse perspectives and empowers our team members to grow, whether
at work, at home or in their communities. The diversity of our teams is critical to our success. As a global operation, we
deliberately structure teams to be diverse to support the delivery of our customers’ clinical development programs across
multiple geographies and communities.
Diversity, inclusion, and belonging (DIB) are fundamental to our culture and values. Diversity makes us more innovative and
more creative, which helps us better serve our patients, our customers, and our communities. We recognize the critical
importance of diversity in clinical trials ensuring all types of patients who will eventually receive therapies are represented on
clinical trials, as well as offering clinical trials as a care option for those who may not otherwise have access to medical
treatment.
We are committed to being a workplace where all employees are included and feel a sense of belonging. To achieve this,
we acknowledge and celebrate our differences in gender, ethnicity, culture, and abilities. As a values-driven organisation,
respect for diverse points is foundational to how we interact with each other, as well as with customers, patients, and
suppliers.
ICON’s approach to DIB is a key focus area. To reflect this, inclusion is one of our core values and our DIB strategy is now
organized into four key ambitions:
ICON’s DIB practices and programs are viewed through the lens of our four DIB ambitions. Each ambition has sponsors
from our executive leadership team to support and drive the agenda and provide leadership.
We believe in a workplace culture that embraces diverse perspectives and empowers our team members to grow — at
work, at home and in their communities. The key areas of focus for our diversity, inclusion, and belonging agenda include
talent management, country-level inclusion policies, rewards, training, and communications.
We established a Diversity, Inclusion & Belonging Steering Committee in 2019 which brings together individuals from across
ICON to develop and execute work streams under each of the four ambitions, with a central team overseeing the
overarching efforts. ICON has Diversity, Inclusion & Belonging advocates from across our global employee population to
better understand local needs, build local presence and awareness, and to give a voice to every corner of the company
across the world. These individuals play a key role in supporting the Diversity, Inclusion & Belonging Steering Committee
and in aligning activities across the organisation.
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Directors’ Report (continued)
The DIB community groups we have at ICON are:
DAWN: The Disability Awareness Network is a community group striving to develop and foster a
mindset towards creating an inclusive workplace and working environment where
everyone is treated equally with respect and dignity, irrespective of any visible or hidden
disabilities.
EmbRACE: Supporting all race and ethnic backgrounds in creating an inclusive workplace culture.
NOW@ICON: Networking organisation for Women at ICON is committed to inspiring and connecting
current and potential leaders through an inclusive environment of targeted initiatives and
supportive mentorship.
Pride@ICON: Supporting LGBTQ+ colleagues and allies, ensuring that no matter where employees
are in the world, our offices are a safe space where they are welcomed, respected, and
valued.
SPACE: Supporting Parents and Carers Everywhere to create a workplace where stepping out of
careers due to personal commitments for a period is wholly accepted and not career
limiting, and where stepping back into their career is an organic and positive process.
As a testament to our commitment to diversity, ICON are aiming for gender parity at the VP level and above by 2025. As at
31 December 2022, women represent 42% of the positions at the VP level and above.
ICON is focused on building an inclusive culture where employees feel supported by a fair system supporting pay equity.
We have a long track record of developing talent and filling vacancies through internal hires. Using best-in-class analysis,
we conduct regular reviews of salary ranges to ensure fair pay, irrespective of gender, race, or ethnicity whilst considering
legitimate business factors that explain differences such as performance, tenure, and experience.
We continuously monitor and seek to maintain pay equity for our employees. We have structured our pay principles so that
individual differences not related to tenure, experience or performance criteria are not a factor in how we deliver rewards.
ICON has made significant investments in organisational design structures, tools and education that uphold and support our
pay principles.
We are committed to ensuring fair employment practices. For every jurisdiction in which we operate, we act in compliance
with relevant laws relating to labour rights and labour relations as well as market competitive benefits. We believe in fair and
equal treatment for all our people, without regard to gender, race, ethnicity, sexual orientation, marital status, physical or
mental disability, age, pregnancy, veteran status, nationality, religion, or any other legally protected status. We do not
tolerate our employees being subjected to physical, sexual, racial, psychological, verbal, or any other form of harassment.
We encourage our employees to report any issues of harassment or discrimination. We prohibit retaliation against any
employee who rejects, protests, or complains about unlawful discrimination or harassment.
For further details on risks relating to employee matters refer to Appendix A: Risk Factors.
24
Directors’ Report (continued)
Human rights
ICON is committed to human rights and in 2021, ICON became a participant in the UN Global Compact (UNGC), signalling
our commitment to uphold the UNGC’s 10 Principles, including those related to human rights across our global operations.
Our business model and our policies, including our Global Code of Ethical Conduct and Global Supplier Code of Conduct,
are intended to fully comply with applicable human rights legislation in the countries where we operate. Our zero-tolerance
policy on forced labour, slavery, and human trafficking is defined clearly in these policies, which are available to employees,
suppliers, customers, and the public.
We are opposed to forced labour, slavery, and human trafficking. We will not knowingly support or conduct business with
any organisation involved in such activities. We do not employ anyone below the minimum employment age in the
jurisdictions in which we operate.
Our Global Supplier Code of Conduct incorporates the Pharmaceutical Supply Chain Initiative (PSCI) principles for
responsible supply chain management, including for labour. Before doing business with ICON, suppliers must certify that
they will comply with the ICON Global Supplier Code of Conduct or their own materially equivalent internal code, which
includes human rights protections. We perform pre-engagement due diligence on our suppliers, including in relation to
labour issues, which we support through periodic re-screening. We hold our suppliers accountable for meeting their
contractual obligations. Contract non-compliance can result in termination of the business relationship with the supplier and
exclusion from future business.
Ethics and Compliance
ICON’s commitment to ethics and integrity is embedded in our company values. We act with integrity and integrate ethical
principles into our business practices and culture. ICON’s Global Code of Ethical Conduct (the Code) establishes our core
principles and standards for honest, fair, and ethical behaviour. This Code addresses the core values expected of our
people in our internal interactions with each other as well as in external dealings with patients, customers, healthcare
professionals, regulators, investors, vendors and other third parties.
Our Ethics and Compliance program builds on the principles established in the Code to define and drive business conduct
consistent with company values and the laws, rules and regulations that apply to our business. The Ethics & Compliance
Team (E&C) provides day-to-day independent oversight for the program. The team is independent of the business and
reports to the Chief Administrative Officer and General Counsel (CAO). The CAO reports on the program to ICON’s
executive leadership team, the Nominating, Sustainability and Governance Committee and the Board. The program
supports all functional areas globally and is dedicated to the implementation of standardized global policies, procedures,
training, guidance, communications, monitoring, investigations, issue management, assessing compliance-related risk and
mitigations, and reporting to ensure the overall compliance program is effectively functioning.
ICON has incorporated a third-party system, Ethics Line, for employees and third parties to confidentially report ethics and
compliance questions, as well as concerns, and to track reports through follow-up and resolution. These tools also provide
visibility into our risks while highlighting opportunities to address them. ICON’s compliance and ethics program will continue
to grow and evolve in response to changes in our business and in the global business climate.
All employees are required to complete mandatory training in key areas which support our values and our ways of working.
The training incorporates the key principles of our policies and codes and includes interactive scenarios where applicable.
At ICON, we promote a Speak Up culture that encourages compliance, openness, and accountability without retaliation. The
Speak Up Policy aims to support our culture and values and seeks to encourage the prompt reporting or surfacing of
concerns or violations. Reported ethics concerns and other ethics and compliance-related data are reported via the CAO to
the Board as appropriate.
For further details on risks relating to ethics and compliance refer to Appendix A: Risk Factors.
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Directors’ Report (continued)
Anti-bribery and Corruption
ICON is guided by the foundational principle that we do not tolerate bribery or any other form of corruption or fraud. Our anti-
bribery and anti-corruption (ABAC) program is a key element of our Ethics and Compliance Program. ICON and all ICON
directors, employees, consultants, agents and all third parties acting on ICON's behalf must act in compliance with
international laws and regulations relating to bribery, corruption, and illicit payments, including the US Foreign Corrupt
Practices Act and the UK Bribery Act 2010.
ICON maintains the ISO 37001:2016 certification for our Anti-Bribery Management System, which establishes the
framework for the controls that prevent, detect and mitigate the risk of bribery. Our program is designed to ensure our
compliance with anti-corruption laws, including due diligence, training, policies, procedures, and internal controls.
Bribery and corruption remain a business risk as we conduct our business across the globe and enter partnerships and
collaborations. There is no certainty that all employees and third-party business partners (including our vendors, suppliers,
agents, contractors, and other partners) will comply with anti-bribery laws. When working with third parties, we are
committed to working with only those who embrace high standards of ethical behavior consistent with our own. Bribery and
corruption risks are a focus of our third-party diligence and management process. We hold our suppliers accountable for
meeting their contractual obligations with ICON, including commitments that are made with regard to our Global Supplier
Code of Conduct and regulatory compliance. Contract non-compliance can result in termination of the business relationship
with the supplier and exclusion from future business with ICON.
ICON's internal audit teams conduct ABAC Program audits. Internal Audit focuses on testing for compliance and design
effectiveness of the overall ABAC Program. Internal Audit incorporates an assessment of ABAC measures in all audits, as
appropriate. In this approach, bribery and corruption risks are incorporated into the risk assessment and scoping process of
each audit.
For further details on risks relating to anti-corruption refer to Appendix A.
Information Security and Privacy
Data privacy and information security are fundamental to our business and key to retaining customers, building investors’
trust, protecting patients, and complying with global and regional regulations. We recognize and respect that our customers,
employees, patients, and all those who do business with us expect that we will protect their personal information in
accordance with our legal obligations and policy commitments.
Our cybersecurity strategy and program protect our systems and data from an evolving threat landscape. The cybersecurity
program, overseen by the Chief Information Officer (CIO), has the support of executive leadership and the Board, and we
have invested heavily in cybersecurity technologies to protect our environment. Our processes and range of information
security policies are certified to ISO 27001 and are independently audited twice annually. ICON also maintains the Cyber
Essentials certification. During an acquisition process, we conduct security and privacy due diligence and risk assessments,
implement policies, deliver employee training, and securely integrate IT systems.
Our Global Data Protection Policy regulates the processing of personal data in accordance with the applicable data
protection laws of the countries where we operate, including Europe’s General Data Protection Regulation (GDPR)
framework. This policy governs ICON’s and its employees’ obligations concerning the processing of personal data, including
core privacy issues such as how we address data subject rights, data protection impact assessments and our obligations to
maintain records of processing activities (ROPAs).
ICON has a separate Personal Data Incident and Breach Response Policy and Process that governs the management of
personal data incidents and breaches within ICON. The policy requires incidents to be reported to ICON’s Global Data
Protection Officer (DPO) and Privacy Team, who manage them in collaboration with relevant internal stakeholders (e.g., IT
Security, Quality & Compliance), to ensure we comply with our legal and contractual obligations, including our reporting
obligations. Our privacy program is overseen by the CAO.
Our people and partners play a critical role in safeguarding data. ICON has training in place for all employees and
contingent workers on information security and privacy practices so that they understand their responsibilities with respect to
data security and privacy.
For further details on risks relating to information security and privacy refer to Appendix A.
26
Directors’ Report (continued)
Sustainable procurement
ICON maintains policies and practices to support responsible, sustainable, and ethical business practices. Our goal is to
source from suppliers whose values align with our own, including suppliers who are committed to diversity and inclusion,
and are socially and environmentally responsible and conscious.
We manage our suppliers through our Global Procurement department. The onboarding of new suppliers is completed
through a centrally managed due diligence process. Environmental sustainability, bribery, and corruption risks are a focus of
our collective third-party diligence and management process. We require our suppliers to abide by our Global Supplier Code
of Conduct which incorporates the Pharmaceutical Supply Chain Initiative (PSCI) principles for Responsible Supply Chain
Management and sets out our standards and expectations regarding:
•
•
•
•
Ethics and compliance
Labor and human rights
Health and safety
Environmental stewardship
ICON performs pre-engagement due diligence on our suppliers. This includes screening of sanctions lists, debarment, and
adverse media. Suppliers are continuously monitored against sanctions and debarment lists and are periodically re-
screened. Suppliers deemed higher risk are subject to enhanced due diligence and controls, which may include periodic
training, auditing, and assessments.
We hold our suppliers accountable for meeting their contractual obligations, including commitments relating to our Global
Supplier Code of Conduct and regulatory compliance. Contract non-compliance can result in termination of the business
relationship and exclusion from future business with our company.
We have also engaged with EcoVadis, CDP and Supplier IO to assess our key suppliers and allow us to take ESG status
into our decision making on vendor selection.
For further details on risks relating to sustainable procurement refer to Appendix A: Risk Factors.
Directors’ compliance statement
The Directors, in accordance with Section 225(2) of the Companies Act, acknowledge that they are responsible for securing
the Company’s compliance with its relevant obligations as defined within the Companies Act, (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, KPMG, Chartered Accountants, will continue in office.
On behalf of the Board
Steve Cutler
Rónán Murphy
Chief Executive Officer
Director
25 April 2023
27
Statement of Directors’ Responsibilities in respect of the Directors’ report and the
financial statements
The directors are responsible for preparing the annual report and the Group and Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare the Group and Company financial statements for each financial year. The
directors have elected to prepare the Group and Company financial statements in accordance with IFRS as adopted by the
EU and as applied in accordance with the Companies Act.
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 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 applicable Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements;
assess the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern; and
use the going concern basis of accounting unless they either intend to liquidate the Group or Company or to cease
operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any
time the assets, liabilities, financial position of the Group and Company and profit or loss of the Group and which enable
them to ensure that the financial statements comply with the provision of the Companies Act. They are responsible for
such internal controls as they determine are necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error, and have a general responsibility for safeguarding the assets
of the Company and the Group, and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The directors are also responsible for preparing a directors’ report that complies with the
requirements of the Companies Act.
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
Steve Cutler
Rónán Murphy
Chief Executive Officer
Director
28
Independent Auditor’s Report to the members of ICON plc
Report on the audit of the financial statements
Opinion
We have audited the financial statements of ICON plc (‘the Company’) and its consolidated undertakings (together, “the
Group”) for the year ended 31 December 2022, set out on pages 36 to 153, which comprise the Consolidated Statement of
Profit and Loss, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position,
Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows, Company Statement of Financial
Position, Company Statement of Changes in Equity, Company Statement of Cash Flows and related notes, including the
summary of significant accounting policies set out in note 1 of the consolidated financial statements.
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.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and the
Company as at 31 December 2022 and of the Group profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European
Union; and
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 and Company financial statements have been properly prepared in accordance with the requirements of
the Companies Act 2014.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law.
Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial
statements section of our report. We have fulfilled our ethical responsibilities under, and we remained independent of the
Company in accordance with ethical requirements that are relevant to our audit of financial statements in Ireland, including
the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), as applied to listed entities.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the director’s assessment of the entity’s ability to
continue to adopt the going concern basis of accounting included.
•
•
•
•
•
agreeing the underlying cash flow projections to management approved forecasts, assessing how these forecasts
are compiled, and assessing the accuracy of management’s forecasts;
evaluating the key assumptions within management’s forecasts;
considering liquidity and available financial resources;
assessing whether the stress testing performed by management appropriately considered the principal risks facing
the business; and
evaluating the feasibility of management’s mitigating actions in the stress testing scenarios.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s or the Company’s ability to continue as a going
concern for a period of at least twelve months from the date when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
29
Independent Auditor’s Report to the members of ICON plc (continued)
Detecting irregularities including fraud
We identified the areas of laws and regulations that could reasonably be expected to have a material effect on the financial
statements and risks of material misstatement due to fraud, using our understanding of the entity's industry, regulatory
environment and other external factors and inquiry with the directors. In addition, our risk assessment procedures included:
•
•
•
•
•
•
Inquiring with the directors as to the Group’s policies and procedures regarding compliance with laws and
regulations, identifying, evaluating and accounting for litigation and claims, as well as whether they have
knowledge of non-compliance or instances of litigation or claims.
Inquiring of directors as to the Group’s policies and procedures to prevent and detect fraud, as well as whether
they have knowledge of any actual, suspected or alleged fraud.
Inquiring of directors and the audit committee, regarding their assessment of the risk that the financial statements
may be materially misstated due to irregularities, including fraud.
Inspecting the Group’s regulatory and legal correspondence.
Reading Board and audit committee meeting minutes.
Performing planning analytical procedures to identify any usual or unexpected relationships.
We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the audit team. This
included communication from the group to component audit teams of relevant laws and regulations and any fraud risks
identified at the Group level and request to component audit teams to report to the Group audit team any instances of fraud
that could give rise to a material misstatement at group.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including companies and
financial reporting legislation. We assessed the extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items, including assessing the financial statement disclosures and agreeing
them to supporting documentation when necessary.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have
a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely to have such an effect: health and safety, anti-bribery,
employment law, environmental law, regulatory capital and liquidity.
Auditing standards limit the required audit procedures to identify non-compliance with these non-direct laws and regulations
to inquiry of the directors and inspection of regulatory and legal correspondence, if any. These limited procedures did not
identify actual or suspected non-compliance.
We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to
commit fraud. As required by auditing standards, we performed procedures to address the risk of management override of
controls and the risk of fraudulent revenue recognition. We identified a fraud risk in relation to the Group and Component
clinical trial service revenue, being the contract realizable value.
In response to the fraud risks, we also performed procedures including:
•
•
•
Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting
documentation.
Assessing significant accounting estimates for bias.
Assessing the disclosures in the financial statements.
As the Group is regulated, our assessment of risks involved obtaining an understanding of the legal and regulatory
framework that the Group operates and gaining an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in accordance
with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from
the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by
auditing standards would identify it.
30
Independent Auditor’s Report to the members of ICON plc (continued)
In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing
non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the
financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
In arriving at our audit opinion above, the key audit matters were as follows:
(We continue to perform procedures over the valuation of the customer relationship intangible asset. However, we have not
assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our
report this year.)
Group Key Audit Matters
Revenue recognition for clinical trial service contracts $4,640m (2021: $3,420m)
Refer to note 1 on page 41 (significant accounting policies) and note 2 on page 55 (financial disclosures)
31
Independent Auditor’s Report to the members of ICON plc (continued)
The key audit matter
How the matter was addressed in our audit
As discussed in Note 3 to the
consolidated financial statements,
the Company recognized revenue
of US$7,734 million for the year
ended 31 December 2022, a
portion of which relates to clinical
trial service revenue. As discussed
in Note 2 to the consolidated
financial statements, clinical trial
service revenue is recognized over
time, using an input measure,
being total project costs (inclusive
of third-party costs, principally
pass-through/ reimbursable
expenses) incurred at each
reporting period as a percentage of
forecasted total project costs, to
measure progress towards
satisfying the Company’s
performance obligation. The
transaction price is based on the
contract or latest change order
value, adjusted to reflect the
estimated realizable contract
value.
We identified the evaluation of
revenue recognition for clinical trial
service revenue as a key audit
matter. Complex and subjective
auditor judgment was required to
evaluate the Company’s estimate
of total forecast project costs and
the estimated realizable contract
values.
Our audit procedures included:
• We evaluated the design and tested the operating effectiveness of certain
internal controls related to the revenue process, including controls over total
forecast project costs and estimated realizable contract values.
• We tested the total forecast project costs and the realizable contract values
for a selection of clinical trial service contracts, by evaluating:
•
•
•
•
•
direct costs incurred, both during the year and cumulative over the
life of the contracts. We tested the accuracy and completeness of
the direct costs by comparing the amounts to source data
third-party costs incurred, both during the year and cumulative over
the life of the contracts. We tested the accuracy and completeness
of the third-party costs incurred by comparing the costs to invoices
received
findings from interviews with operational personnel of the Company
to assess progress to date, the estimate of remaining costs to be
incurred and factors impacting the amount of time and costs to
complete the selected contracts, including an understanding of the
nature and complexity of the work to be performed
correspondence of amendments to the scope or contract value, if
any, between the Company and the customer for the selected
contracts as part of our evaluation of contract progress —quarterly
movements in forecast project costs and project margins and
investigating the reasons for those movements, an
the reasonableness of the Company’s adjustments from total
contract value to arrive at realizable contract value. We confirmed
total contract value with customers and compared the assumptions
used to derive the adjustments from total contract value to realizable
contract value to underlying records.
• We also evaluated the Company’s methods, assumptions and data used to
accurately estimate total forecast project costs and realizable contract
values, by comparing historical estimates developed at contract inception to
actual results for a selection of clinical trial service contracts.
We found that the estimates and judgements used in determining the progress
towards completion and realisable contract value related to revenue recognition for
clinical trial services contracts were appropriate.
Company key audit matters
Investment in subsidiary undertakings $7,086.4 million (2021: $6,974.3 million)
Refer to note 1 on page 41 (significant accounting policies) and note 3 on page 141 (financial disclosures)
32
Independent Auditor’s Report to the members of ICON plc (continued)
The key audit matter
How the matter was addressed in our audit
Our audit procedures included:
• We compared the carrying value of investments in the Company's
Balance Sheet to the net assets of the subsidiary financial statements/
• We compared the carrying value of subsidiaries to the market
capitalisation of the Company at December 31, 2022.
Based on evidence obtained, we found management's assessment of the key
assumptions used in assessing the carrying value of investments in subsidiary
undertakings to be appropriate.
The carrying amount of the Company's
investments in subsidiary undertakings
represents 97.8% (2021: 96.1%) of the
Company's total assets.
The investment in subsidiary
undertakings is carried in the balance
sheet of the Company at cost less
impairment. At December 31, 2022, the
investment carrying value was $7,086.4
million.
There is a significant risk in respect of
the carrying value of these investments
if the future cash flows and trading
performance of these subsidiaries are
not sufficient to support the balance
sheet value.
Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at US$30.0 million (2021: US$30.0 million), determined
with reference to a benchmark of expected Group profit before tax (this estimated amount was based on earnings guidance
available at the planning stage of the audit adjusted for exceptional items) (of which it represents 4.76% (2021: 6.62%).
Due to the nature of the group, group profit before tax is the most relevant metric to the users of the financial statements in
assessing the financial performance of the Group.
With respect to the Company, we based our calculation of materiality on total assets due to its nature as a holding company.
As the calculated materiality was higher than Group materiality, we restricted our materiality to US$30.0 million (2021:
US$70.0 million).
Performance materiality for the Group financial statements and Company financial statements as a whole was set at
US$22.5m (2021: US$22.5m) and US$22.5m (2021: US$52.5m) respectively, determined with reference to benchmarks of
expected Group profit before tax for the Group and total assets for the Company ((of which it represents 3.57% (2021:
4.96%) and 0.31% (2021: 0.75%) respectively). We applied this percentage in our determination of performance materiality
based on the level of identified control deficiencies during the prior period.
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding US$1.5m (2021:
US$1.5m), in addition to other identified misstatements that warranted reporting on qualitative grounds. Our audit was
undertaken to the materiality and performance materiality level specified above and we applied materiality to assist us
determine what risks were significant risks and the procedures to be performed.
The structure of the Group’s finance function is such that the majority of transactions and balances are accounted for by the
central Group finance team. We performed comprehensive audit procedures, including those in relation to the significant risk
set out above, on those transactions accounted for at Group level. Our audit covered 96% of total Group revenue and 95%
of total Group assets, including 100% of the Company’s revenue and total assets.
We identified 4 (2021: 3) components in the scope of our audit, we subjected 1 (2021:2) to full scope audits for group
purposes and 1 to specified risk-focused audit procedures. The latter was not individually financially significant enough to
require a full scope audit for group purposes, but did present specific individual risks that needed to be addressed. We
instructed the component auditor as to the significant areas to be covered, including the relevant risks detailed above and
the information to be reported back.
Other information
The directors are responsible for the other information presented in the Annual Report together with the financial
statements. The other information comprises the information included in the directors’ report. The financial statements and
our auditor’s report thereon do not comprise part of the other information. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any
form of assurance conclusion thereon.
33
Independent Auditor’s Report to the members of ICON plc (continued)
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified material misstatements in the other information.
Based solely on our work on the other information, we report that:
•
•
•
we have not identified material misstatements in the directors’ report;
in our opinion, the information given in the directors’ report is consistent with the financial statements;
in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014.
Our opinions on other matters prescribed by the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose 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 Company’s financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
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. We have nothing to report in this regard.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information
required by section 5(2) to (7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large
undertakings and groups) Regulations 2017 for the year ended 31 December 2021 as required by the European Union
(Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) (amendment) Regulations
2018. We have nothing to report in this regard.
Respective responsibilities and restrictions on use
Responsibilities of directors for the financial statements
As explained more fully in their statement set out on page 28, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error; assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or
the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at
https://iaasa.ie/publications/description-of-the-auditors-responsibilities-for-the-audit-of-the-financial-statements/
34
Independent Auditor’s Report to the members of ICON plc (continued)
The purpose of our audit work and to whom we owe our responsibilities
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 our report, or for the opinions we have formed.
Sean O’Keefe
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
Ireland
April 28, 2023
35
Consolidated Statement of Profit and Loss
for the year ended 31 December 2022
31 December
2022
31 December
2022
31 December
2022
31 December
2021
31 December
2021
31 December
2021
Excluding
Exceptional
items
(Note 8)
Exceptional
items
Including
Exceptional
items
Excluding
Exceptional
items
(Note 8)
Exceptional
items
Including
Exceptional
items
Note
$’000
$’000
$’000
$’000
$’000
$’000
Revised*
Revised*
Revenue
2
7,733,386
—
7,733,386
5,472,826
—
5,472,826
Direct costs
Other operating
expenses
Operating profit
Share of losses
equity method
investments net of tax
Financing income
(5,521,522)
—
(5,521,522)
(3,970,025)
—
(3,970,025)
(1,334,235)
(70,838)
(1,405,073)
(900,455)
(201,719)
(1,102,174)
877,629
(70,838)
806,791
602,346
(201,719)
400,627
18
4
(3,136)
2,345
—
—
(3,136)
2,345
(2,161)
574
—
—
(2,161)
574
Financing expense
5
(234,201)
—
(234,201)
(111,145)
(75,391)
(186,536)
Profit before
taxation
Income tax expense
3
6
642,637
(70,838)
571,799
489,614
(277,110)
212,504
(79,679)
14,165
(65,514)
(51,061)
10,842
(40,219)
Profit for the
financial year
Earnings per
ordinary share
Basic
Diluted
7
7
562,958
(56,673)
506,285
438,553
(266,268)
172,285
6.21
6.13
2.57
2.53
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
On behalf of the Board
Steve Cutler
Rónán Murphy
Chief Executive Officer
Director
36
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Other Comprehensive Loss
Items that will not be reclassified to profit or loss:
Re-measurement of defined benefit liability
31 December
2022
31 December
2021
Note
$’000
Revised*
$’000
10
13,265
4,175
Total items that will not be reclassified to profit or loss
13,265
4,175
Items that are or may be reclassified subsequently to profit or loss, net of
tax:
Currency translation differences
Tax benefit on defined benefit pension
Loss on cash flow hedge
Amortisation of cash flow hedge
Settlement of cash flow hedge **
25
(88,444)
(61,655)
25
(754)
(3,728)
—
—
—
—
113
778
Total items that are or may be reclassified to profit or loss
(92,926)
(60,764)
Other comprehensive loss for the year, net of tax
Profit for the financial year
(79,661)
(56,589)
506,285
172,285
Total comprehensive income for the financial year
426,624
115,696
Attributable to:
Equity holders of the Company
Noncontrolling interest
426,624
115,696
—
—
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
** recycled through profit and loss in 2021.
On behalf of the Board
Steve Cutler
Rónán Murphy
Chief Executive Officer
Director
37
Consolidated Statement of Financial Position
as at 31 December 2022
Note
31 December
2022
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use leased assets
Goodwill
Intangible assets
Other non-current assets
Equity method investment
Financial assets
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade receivables
Unbilled revenue (contract assets)
Other current assets
Current taxes receivable
Current asset investments
Cash and cash equivalents
Total current assets
Total assets
EQUITY
Share capital
Share premium
Other undenominated capital
Share based payment reserve
Other reserves
Foreign currency translation reserve
Merger reserve
Retained earnings
Total equity attributable to the owners of the Company
LIABILITIES
Non-current liabilities
Non-current bank credit lines and loan facilities
Non-current lease liabilities
Non-current other liabilities
Non-current provisions
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Accounts payable
Unearned revenue (contract liabilities)
Accrued and other liabilities
Provisions
Current tax payable
Bank credit lines and loan facilities
Total current liabilities
Total liabilities
12
27
13
13
17
18
18
6
15
16
16
17
18
19
24
25
25
25
25
25
25
23
27
20
8
6
16
20
8
23
31 December
2021
Revised*
$’000
194,912
197,716
9,053,482
4,883,202
76,800
2,373
22,592
100,044
14,531,121
5,772
1,342,770
623,121
159,068
66,884
1,712
752,213
2,951,540
$’000
178,227
151,199
9,024,479
4,450,752
76,861
—
32,631
98,117
14,012,266
7,063
1,731,388
957,655
187,617
70,170
1,713
288,768
3,244,374
17,256,640
17,482,661
6,649
472,723
1,162
381,098
7,601
(175,065)
5,656,195
2,219,619
8,569,982
4,599,037
131,644
37,752
510
987,927
5,756,870
81,194
1,507,449
999,512
5,512
280,971
55,150
2,929,788
6,640
436,916
1,134
420,973
12,438
(86,621)
5,656,195
1,728,023
8,175,698
5,381,162
161,096
35,920
7,377
1,078,554
6,664,109
90,764
1,315,961
946,503
2,934
231,542
55,150
2,642,854
8,686,658
9,306,963
Total equity and liabilities attributable to the owners of the company
17,256,640
17,482,661
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
On behalf of the Board
Steve Cutler
Chief Executive Officer
Rónán Murphy
Director
38
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Consolidated Statement of Cash Flows
for the year ended 31 December 2022
Note
Year Ended
31 December
2022
Year ended 31
December
2021
Revised*
$’000
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$’000
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Profit for the financial year
Adjustments to reconcile net income to net cash generated from operating
activities
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Depreciation of right-of-use assets
Impairment of long lived assets
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Interest received
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Investing activities
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Investment in equity method investments
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Financing activities
Financing costs
Drawdown of bank credit lines and loan facilities
Repayment of bank credit lines and loan facilities
Repayments of obligations under lease liabilities
Tax benefit from the exercise of share options
Proceeds from exercise of share options, RSUs and PSUs
Share issuance costs
Repurchase of ordinary shares
Share repurchase costs
Net cash (used in)/generated by financing activities
Net increase in cash and cash equivalents
Effect of exchange rate changes
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
—
75,000
(875,000)
(54,617)
1,739
35,844
(17)
(99,983)
(17)
(917,051)
(446,725)
(16,720)
752,213
288,768
(52,205)
(89,955)
—
—
—
481
(482)
1,906
(5,612)
(145,867)
10
33,654
45,247
20,037
283,500
2,161
12,890
105,859
74,613
(574)
94,029
561
35,940
(6,054)
4,480
878,628
113,513
(17,656)
(61,121)
109,668
1,023,032
(55,105)
(354)
574
(91,202)
876,945
(29,126)
(64,624)
(5,914,475)
(10,000)
(2,450)
497
(480)
500
(4,077)
(6,024,235)
(31,056)
5,905,100
(877,780)
(54,884)
7,809
118,589
(853)
—
—
5,066,925
(80,365)
(7,727)
840,305
752,213
41
Notes to Consolidated Financial Statements
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies
Statement of compliance
The Group Financial Statements have been prepared in accordance with International Financial Reporting Standards
("IFRS") issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union ("EU") that are
effective for financial year ending 31 December 2022, and with those parts of the Companies Act applicable to companies
reporting under IFRS. The Company Financial Statements have been prepared in accordance with IFRS as adopted by the
EU, as applied in accordance with the Companies Act applicable to companies reporting under IFRS. IFRS adopted by the
EU differs in certain respects from IFRS issued by the IASB. Reference to IFRS hereafter refers to IFRS adopted by the EU.
A Company that publishes its Group and Company Financial Statements together can take advantage of the exemption in
Section 304 of the Companies Act from presenting to its members a Company Statement of Profit and Loss and Company
Statement of Comprehensive Income and related notes.
Basis of preparation
The Group and Company Financial Statements are presented in United States dollars ("U.S. dollars") and all values are
rounded to the nearest thousand ($‘000), except where otherwise indicated. They are prepared on the historical cost basis,
except for the measurement at fair value on date of grant of share options, the pension plan assets, derivative financial
instruments, other investments and financial assets. Other than the amended standards adopted by the Group, accounting
policies are applied consistently with the prior year. Certain comparative financial information has been revised to reflect
measurement period adjustments, in accordance with IFRS 3 Business Combinations (refer to note 14 for further details).
New standards and interpretations
The following standards and interpretations became effective for the Group during the financial year but do not have a
material effect on the results or financial position of the Group:
a. Amendments to IAS 16 Property, Plant and Equipment (PPE): Proceeds before Intended Use
b. Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: Costs to Fulfill a Contract
c. Amendments to IFRS 3 Business Combinations
a. Amendments to IAS 1 Classification of Liabilities as Current or Non-current and Disclosure of Accounting Policies
The following standards and interpretations are not yet effective for the Group and are not expected to have a material effect
on the results or financial position of the Group:
a. Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Effective date: 1 January
2023)
b. Amendments to IAS 12 Income Taxes (Effective date: 1 January 2023)
c. Amendments to IFRS 17 Insurance Contracts (Effective date: 1 January 2023)
d. Amendments to IFRS 16 Leases (Effective date: 1 January 2024)
Critical accounting judgements and key sources of estimation uncertainty
The preparation of consolidated financial statements requires management to make estimates and judgments that affect the
reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reported period.
We base our estimates and judgments on historical experience and on the other factors that we believe are reasonable
under current circumstances. Actual results may differ from these estimates if these assumptions prove to be incorrect or if
conditions develop other than as assumed for the purposes of such estimates. The following is a discussion of the
accounting policies used by us, which we believe are critical in that they require estimates and judgements by management.
The application of these critical accounting policies and estimates is discussed with the Audit Committee of the Board of
Directors.
42
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
Revenue recognition
Significant management judgments and estimates must be made and used in connection with the recognition of revenue in
any accounting period. Material differences in the amount of revenue in any given period may result if these judgments or
estimates prove to be incorrect or if management’s estimates change on the basis of development of the business or market
conditions. To date there have been no material differences arising from these judgments and estimates.We earn revenues
by providing a number of different services to our clients. These services, which are integral elements of the clinical
development process, include clinical trials management, contract staffing, consulting and laboratory services. The criteria
for revenue recognition is based on five steps: (1) identify the contract(s) with a customer; (2) identify the performance
obligation in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance
obligations in the contract; and (5) recognise revenue when (or as) the entity satisfies the performance obligation.
Clinical trial services are a single performance obligation satisfied over time i.e. the full-service obligation in respect of a
clinical trial (including those services performed by investigators and other parties) is considered a single performance
obligation. Promises offered to the customer are not distinct within the context of the contract. We have concluded that
ICON is the contract principal in respect of both direct services and in the use of third parties (principally investigator
services) that support the clinical research project. The transaction price is determined by reference to the contract or
change order value (total service revenue and pass-through/ reimbursable expenses) adjusted to reflect a realisable
contract value. An assessment of the realisable contract value is judgmental in nature. The realisable value assessment is
updated at each reporting period, having regard to (i) contract terms and (ii) customer experience.
Revenue is recognised on a percentage completion basis as the single performance obligation is satisfied. The progress
towards completion for clinical service contracts is measured therefore based on an input measure being total project costs
(inclusive of third party costs) at each reporting period. Measurement of the progress towards completion involves judgment
and estimation. Assessment of completion requires an evaluation of labour and related time cost incurred at the reporting
date and third party costs incurred at the reporting date. The assessment of third party costs incurred (principally
investigator costs) requires a review of activity performed and recorded by the third party services providers. The timing of
payments to third parties in respect of cost incurred reflect invoicing by third parties. The timing difference between the
activity performed and receipt of invoices from third parties may result in significant accrued amounts at reporting periods.
The assessment of progress towards completion also requires an up to date evaluation of the forecast costs to complete in
respect of these projects. Given the long-term nature of the clinical trials, and the complex nature of those trials, the forecast
costs to complete (being internal direct costs and costs that will be incurred by third parties (principally investigators)) is
judgmental. Forecast time (and related costs) is determined by reference to (i) contract terms and (ii) past experience.
Forecast third party costs to complete are determined by project by reference to (i) contract terms and (ii) past experience.
The Company provides data services to customers based on agreed-upon specifications, including the timing of delivery,
which is typically either weekly, monthly, or quarterly. If a customer requests more than one type of data report or series of
data reports within a contract, each distinct type of data report is a separate performance obligation. The contracts provide
for the Company to be compensated for the value of each deliverable. The transaction price is determined using list prices,
discount agreements, if any, and negotiations with the customers, and generally includes any out-of-pocket expenses.
The Company enters into contracts with some of its larger data suppliers that involve non-monetary terms. The Company
issues purchase credits to be used toward the data supplier's purchase of the Company's services based on the fair value of
the data obtained. In exchange, the Company receives monetary discounts on the data received from the data suppliers.
The fair value of the revenue earned from the customer purchases is recognised as services are delivered as described
above. At the end of the contract year, any unused customer purchase credits may be forfeited or carried over to the next
contract year based on the terms of the data supplier contract. The calculation of the fair value of certain non-monetary
terms involves management judgement and estimation.
Intangible assets acquired in a business combination
Significant management judgments and estimates must be made and used in connection with the recognition of intangible
assets associated with a business combination. The cost of a business combination is measured as the aggregate of the fair
values at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued in exchange for
control. The assets, liabilities and contingent liabilities of businesses acquired are generally measured at their fair values at
the date of acquisition. When the initial accounting for a business combination is determined provisionally, any subsequent
adjustments to the provisional values allocated to the identifiable assets, liabilities and contingent liabilities are made within
twelve months of the acquisition date and presented as adjustments to goodwill in the reporting period in which the
adjustments are determined.
Measurement of intangible assets involves the use of estimates for determining the fair value at the acquisition date. The
determination of the fair values of assets and liabilities, as well as of the useful lives of the assets is based on
43
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
management’s judgment. The valuation of intangible assets required management to develop discounted cash flow models
which required the use of reasonable and supportable inputs such as customer attrition data, discount rates developed from
various weighted average cost of capital assumptions, growth rates, margin forecasting and assessment of useful lives (see
note 13 - Intangible assets - goodwill and other). Management utilised external valuation experts, where necessary, to
ensure the valuation process was sufficiently detailed and robust to develop reliable valuations.
Taxation
Given the global nature of our business and the multiple taxing jurisdictions in which the Group operates, the determination
of the Group’s provision for income taxes requires significant judgments and estimates, the ultimate tax outcome of which
may not be certain. Although we believe our estimates are reasonable, the final outcome of these matters may be different
than those reflected in our historical income tax provisions and accruals.
Taxable profit differs from net profit as reported in the Consolidated Statement of Profit and Loss because it excludes items
of income or expense that are taxable or deductible in other years and further excludes items that are not taxable or
deductible. The Group’s liability for income tax is calculated using rates that have been enacted or substantively enacted at
the reporting date. Income tax is recognised in the Consolidated Statement of Profit and Loss except to the extent that it
relates to items recognised directly in equity.
Deferred income tax is provided, using the liability method, on all differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes except those arising from non-
deductible goodwill or on initial recognition of an asset or liability which affects neither accounting nor taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
expected to be realised or the liability to be settled.
Recognition of deferred tax assets is based on management’s belief that it is more likely than not that the income tax benefit
associated with certain temporary differences, income tax operating loss, capital loss carryforwards, and income tax credits,
would be realised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit would be available to allow all or part of the deferred income
tax asset to be utilised. The Group accounts for the impact of GILTI (“global intangible low-taxed income”) in the period it
arises and therefore have not provided for deferred taxes in respect of this item. The Group recognises the effect of income
tax positions only if those positions will more likely than not be sustained. If the estimate of future taxable income or tax
strategies changes at any time in the future, the Group would record an adjustment to the deferred tax asset. Recording
such an adjustment could have a material effect on the Group's financial condition or results of operations.
Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in
relation to the Group’s Financial Statements.
Basis of consolidation
The Group’s Financial Statements consolidate the financial statements of ICON plc and its subsidiaries. Subsidiaries are
consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which
control is transferred out of the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. Financial
statements of subsidiaries are prepared for the same reporting year as the Company and where necessary, adjustments are
made to the results of subsidiaries to bring their accounting policies into line with those used by the Group. The Group will
continue to prepare the individual statutory financial statements of subsidiary companies under GAAP applicable in their
country of incorporation but adjustments have been made to the results and financial position of such companies to bring
their accounting policies into line with those of the Group.
All intercompany balances and transactions, including unrealised profits arising from inter-group transactions, have been
eliminated in full. Unrealised losses are eliminated in the same manner as unrealised gains except to the extent that there is
evidence of impairment.
Foreign currency translation
The presentation and functional currency of the Company is US dollars ($). The presentation currency of the Group is US
dollars ($). The determination of the USD as the functional currency of the Company reflects consideration of the primary
and secondary indicators as set out in IAS 21. The directors considered in particular the currency in which funds from
financing activities are generated (debt and equity) and the currency in which receipts from operating activities are usually
retained. This assessment is consistent with the assessment that the functional currencies of the main subsidiary trading
44
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
entities are USD. The Company Financial Statements are presented in US dollars. Results and cash flows of non-dollar
denominated undertakings are translated into dollars at the actual exchange rates at the transaction dates or average
exchange rates for the year where this is a reasonable approximation.
The related statements of financial position are translated at the rates of exchange ruling at the reporting date. Goodwill and
fair value adjustments arising on acquisition of a foreign operation are regarded as assets and liabilities of the foreign
operation, are expressed in the functional currency of the foreign operation and are recorded at the exchange rate at the
date of the transaction, and subsequently retranslated at the applicable closing rates. Adjustments arising on translation of
the results of non-dollar undertakings at average rates, and on the restatement of the opening net assets at closing rates,
are recorded in the translation reserve within equity.
Transactions in currencies different to the functional currencies of operations are recorded at the rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the
functional currency at the rate of exchange at the reporting date. All translation differences, with the exception of translation
differences on long-term intercompany balances in the Consolidated Financial Statements where repayment is not foreseen,
are recorded in the Consolidated Statement of Profit and Loss. Translation differences on long-term intercompany balances,
in the Consolidated Financial Statements, where repayment is not foreseen are recorded within other comprehensive
income in the Statement of Comprehensive Income.
On disposal of a foreign operation, accumulated currency translation differences, together with any exchange differences on
foreign currency borrowings that provide a hedge of the net investment are recognised in the Consolidated Statement of
Profit and Loss as part of the overall gain or loss on disposal.
The principal exchange rates used for the translation of results, cash flows and statements of financial position into US
dollars were as follows:
Euro 1:$
Pound Sterling 1:$
Property, plant and equipment
Average
Year end
31 December
2022
31 December
2021
31 December
2022
31 December
2021
1.0512
1.1886
1.0705
1.1370
1.2347
1.3788
1.2083
1.3532
Items of property, plant and equipment are stated at cost less accumulated depreciation and any provisions for impairment
losses. Depreciation is calculated to write off the original cost of property, plant and equipment less its estimated residual
value over its expected useful life on a straight line basis. Residual values and useful lives of property, plant and equipment
are reviewed and adjusted if appropriate at each reporting date. At present it is estimated that all items of property, plant and
equipment have no residual value. The estimated useful lives applied in determining the charge to depreciation are as
follows:
Buildings
Computer equipment
Office furniture and fixtures
Laboratory equipment
Motor vehicles
Years
40
2-8
8
5
5
Leasehold improvements are amortised using the straight-line method over the estimated useful life of the asset or the lease
term, whichever is shorter.
On disposal of property, plant and equipment the cost and related accumulated depreciation and impairments are removed
from the financial statements and the net amount, less any proceeds, is taken to the Consolidated Statement of Profit and
Loss.
The carrying amounts of the Group’s property, plant and equipment are reviewed at each reporting date to determine
whether there is any indicator of impairment. Where such an indicator exists an impairment review is carried out. An
45
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
impairment loss is recognised whenever the carrying amount of an asset or its cash generation unit exceeds its recoverable
amount. Impairment losses are recognised in the Consolidated Statement of Profit and Loss.
Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the replaced item
can be measured reliably. All other repair and maintenance costs are charged to the Consolidated Statement of Profit and
Loss during the financial period in which they are incurred.
Right-of-use assets and lease liabilities
ICON determines if an arrangement is a lease at inception and recognises the rights and obligations on the Consolidated
Statements of Financial Position as right-of-use (ROU) assets with corresponding lease liabilities.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, plus lease payments made at
or before the commencement day and any initial direct costs, less any lease incentives received. They are subsequently
measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the lease
term.
The right-of-use assets are presented as a separate line in the Consolidated Statement of Financial Position. The Group
applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as
described in the ‘Property, Plant and Equipment’ policy.
Lease liabilities are recognised based on the present value of future minimum lease payments over the lease term at
commencement date or date of transition with the interest element of the finance lease charged to financing expense. As
most of ICON's leases do not provide an implicit rate, the discount rate used is based on the Group's incremental borrowing
rate derived from the rate of traded corporate bonds available at the commencement date adjusted for country risk, liquidity
and lease term.
Current lease liabilities are included in accrued and other liabilities in the Consolidated Statement of Financial Position and
non-current lease liabilities are presented as a separate line. The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying
amount to reflect the lease payments made.
Lease terms may also include options to extend or terminate. Such options are actively reviewed and adjustments to the
ROU asset and lease liability are made when it is reasonably certain the option will be exercised.
Amendments to IFRS 16 were made by the IASB in 2020 allowing rent concessions directly related to the COVID-19
pandemic not to be accounted as lease modifications. Rental concessions directly related to the COVID-19 pandemic are
recognised in the Consolidated Statement of Profit and Loss in the period they are received.
The Group accounts for lease and non-lease components separately with the exception of motor vehicle leases for which
lease and non-lease components are accounted as a single lease component. Lease components are reflected in the
Consolidated Statements of Financial Position and non-lease components expensed directly to the Consolidated
Statements of Profit and Loss.
The Group has elected to account for short-term leases using the practical expedient. Instead of recognising a right-of-use
asset and lease liability, the payments in relation to these are recognised as an expense in the Consolidated Statement of
Profit and Loss on a straight-line basis over the lease term.
In some cases, ICON enters into sublease agreements and becomes both a lessee and a lessor for the same underlying
asset. When the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two separate
contracts. Subleases are accounted for in the same way as other leases. The sub-lease is classified as a finance or
operating lease by reference to the right-of-use asset arising from the head lease.
Business combinations
Business combinations are accounted for using the acquisition method when control is transferred to the Group. The
consideration transferred is measured at fair value, as are the identifiable assets acquired and liabilities assumed. Where a
business combination agreement provides for an adjustment to the cost of the acquisition which is contingent upon future
events, the amount of the estimated adjustment is recognised on the acquisition date at the acquisition date fair value of this
contingent consideration. The accounting treatment of any changes to this estimate in subsequent periods will depend on
the classification of the contingent consideration. If the contingent consideration is classified as equity it shall not be re-
measured and the settlement shall be accounted for within equity. If the contingent consideration is classified as a liability
46
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
any adjustments to the assessment of contingent consideration determined as at acquisition date will be accounted for
through the Consolidated Statement of Profit and Loss, as the liability is measured at fair value at each reporting date.
The assets, liabilities and contingent liabilities of businesses acquired are measured at their fair values at the date of
acquisition. In the case of a business combination which is completed in stages, the fair values of the identifiable assets,
liabilities and contingent liabilities are re-determined at the date of each transaction until control is obtained. When the initial
accounting for a business combination is determined provisionally, any subsequent adjustments to the provisional values
allocated to the identifiable assets, liabilities and contingent liabilities are made within twelve months of the acquisition date
and presented as adjustments to the original acquisition accounting. Acquisition costs are expensed as incurred.
Goodwill
The Group measures goodwill at the acquisition date as the fair value of the consideration transferred plus the recognised
amount of any non controlling interests in the acquiree, if the business combination is achieved in stages, the fair value of
the pre-existing equity interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable
assets acquired and liabilities assumed. Goodwill on the acquisition of subsidiaries is included in ‘intangible assets –
goodwill and other’.
At the acquisition date, any goodwill acquired is allocated to the cash-generating units expected to benefit from the
combination's synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit to
which the goodwill relates. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the
basis of the relative values of the operation disposed of and the proportion of the cash-generating unit retained.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for
impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be
impaired.
Intangible assets
Other intangible assets are stated at cost less accumulated amortisation and impairment losses. Useful lives of intangibles
are reviewed and adjusted if appropriate at each reporting date. Amortisation is charged to the Consolidated Statement of
Profit and Loss on a straight-line basis over the estimated useful lives of intangible assets, currently estimated as follows:
Computer software
Customer relationships
Order backlog
Tradenames
Technology asset
Non-compete arrangements
Patient database
Impairment
Years
2-8
7-23
1-7
3-5
5-8
5
7
The Group assessed at the end of each reporting period whether there is objective evidence that a financial asset or group
of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of one or more events that occur after the initial recognition of
the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated.
Impairment losses in respect of other non-financial assets, other than goodwill, are reversed if there has been a change in
the estimates used to determine recoverable amount. Impairment losses are reversed only to the extent that the carrying
amount of the asset does not exceed the carrying value that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised. Impairment losses in respect of goodwill are not reversed.
47
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
Inventories
Inventories, which comprise laboratory inventories, are stated at the lower of cost and net realisable value. Cost is based on
the first-in, first-out principle and includes all expenditure incurred in acquiring the inventories and bringing them to their
present location and condition. Cost in the case of raw materials comprises the purchase price and attributable costs, less
trade discounts. Net realisable value is the estimated selling price in the ordinary course of business, less selling expenses.
Accounts payable
Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting
period. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
rate method.
Government grants
Government grants received that compensate the Group for the cost of an asset are recognised in the Consolidated
Statement of Financial Position initially as deferred income when there is reasonable assurance that it will be received and
that the Group will comply with the conditions attaching to it. Such grants are recognised in the Consolidated Statement of
Profit and Loss over the useful economic life of the asset which is consistent with the depreciation policy of the relevant
asset.
Grants that compensate the Group for expenses incurred are recognised in the Consolidated Statement of Profit and Loss
in the same periods in which the expenditure to which they relate is charged.
Under grant agreements, amounts received may become repayable in full or in part should certain circumstances specified
within the grant agreements occur, including downsizing by the Group, disposing of the related assets, ceasing to carry on
its business or the appointment of a receiver over any of its assets. The Group has not recognised any such loss
contingency having assessed as remote the likelihood of these events arising.
Provisions
A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present or legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to
settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects the time value of money and, where appropriate, the risks specific
to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance
cost.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the
restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.
Financial Instruments
The Group assesses the business models and contractual cash flows which apply to its financial assets and classified the
assets into the appropriate IFRS 9 categories accordingly.
Financial asset
category
Cash and cash
equivalents
Trade receivables
Current asset
investments
Classification and
measurement under IFRS 9
Financial assets at fair value
(initial recognition) followed by
amortised cost net of
impairments (subsequent
measurement).
Short-term financial assets at
fair value (initial recognition)
either through OCI or profit or
loss.
Classification test outcomes
Business model test result: hold to collect contractual cash
flows. Cash flow characteristics test result: solely payments of
principal and interest.
See details below.
Non-current financial
assets
Long-term financial assets at
fair value through profit or loss.
See details below.
(a)
Cash and cash equivalents
48
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less and
are stated at fair value on initial recognition followed by amortised cost, which approximates fair value.
(b)
Trade receivables
The Group's financial assets measured at amortised cost, the most significant of which are trade receivables and unbilled
receivables, are subject to IFRS 9's expected credit loss model.
For trade receivables and unbilled revenue, the Group applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables. See notes 16 and 26 for further details.
The expected credit losses on these financial assets are estimated based on the Group’s historical credit loss experience,
adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current, as
well as the forecast direction of conditions, at the reporting date.
The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into
bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s
recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or
loss.
Accounts receivable
Where the Company enters into an agreement to sell certain portfolios of its accounts receivable balances, the sale is
accounted for in accordance with IFRS 9. Agreements which result in true sales of the transferred receivables, as defined in
IFRS 9, which occur when receivables are transferred without recourse to ICON, are excluded from amounts reported in the
Consolidated Balance Sheet. Cash proceeds received from such sales are included in operating cash flows. The associated
finance costs are presented as interest expense.
(c)
Current asset investments and non-current financial assets
The Group classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value through OCI; and
those to be measured subsequently at fair value through profit or loss.
The classification depends on the entity's business model for managing financial assets and the contractual terms of the
cash flows.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time
of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
Purchases or sales of financial assets are recognised on trade date, the date the Group commits to purchase or sell the
asset. Financial assets are de-recognised when the rights to receive cash flows from the financial assets have expired or
have been transferred and the group has transferred substantially all the risks and rewards of ownership.
Subsequent measurement of debt instruments depends on the Group's business model for managing the asset and the
cash flow characteristics of the asset.
There are three measurement categories into which the Group classifies its financial instruments:
•
•
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign
exchange gains and losses.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the
49
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
carrying amount are taken through OCI, except for the recognition of impairment losses. When the financial asset
is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss
and recognised in other gains/(losses). Interest income from these financial assets is included in finance income
using the effective interest rate method.
•
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL is recognised in profit or loss.
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at
amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit
risk.
(d)
Interest bearing loans and borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Subsequent to initial recognition, current and non-current interest bearing loans and borrowings are
measured at amortised cost with any difference between cost and redemption value being recognised in the Consolidated
Statement of Profit and Loss over the period of the borrowings on an effective interest rate basis. Fees paid on the
establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or
all of the facility will be drawn down. In this case, the fee is deferred until draw down will occur. Where there is no evidence
that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment and amortised
over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
Borrowings are removed from the Consolidated Statement of Financial Position when the obligation specified in the contract
is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss as other income or finance costs.
(e)
Derivative financial instruments and hedging
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as either:
•
•
•
hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges)
hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable
forecast transactions (cash flow hedges), or
hedges of a net investment in a foreign operation (net investment hedges).
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and
hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the
cash flows of hedged items. The Group documents its risk management objective and strategy for undertaking its hedge
transactions.
The fair value of derivative financial instruments designated in hedge relationships are disclosed in note 26 – Financial
instruments. Movements in the hedging reserve in shareholders' equity are shown in shareholders' equity. The full fair value
of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is
more than 12 months. It is classified as a current asset or liability when the remaining maturity of the hedged item is less
than 12 months.
Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss, within other gains/(losses).
50
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognised in the cash flow
hedge reserve within equity. The changes in the time value of the options that relate to the hedged item are recognised
within OCI in the costs of hedging reserve within equity.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until
the forecast transaction occurs.
Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately
in profit or loss.
During the year ended 31 December 2022, the Group entered into two interest rate cap agreements ("2022 Caps") and an
interest rate swap agreement ("2022 Swap") to limit its exposure to changes in the variable interest rate on its Senior
Secured Credit Facilities. The interest rate caps and swap are accounted for as cash flow hedges and were considered
effective hedges on application of the provisions of IFRS 9. The effective portion of the hedges is recorded as a movement
within Other Reserves for the year ended 31 December 2022.
Put and call options in unconsolidated entities
On 24 July 2020, the Group entered into an agreement to jointly establish a new company, Oncacare, with a third-party. The
Group owns 49% of the voting share capital with the majority third party owning the remaining 51% voting share capital. The
majority investor has the right to sell the 51% majority voting share capital exclusively to the Group in a two and half year
period, commencing 1 January 2023 and the Group also has the right to acquire the 51% majority voting share capital from
1 August 2025. These option arrangements are derivative financial instruments which have been bifurcated and separately
recorded from the equity host contract as Oncacare is not part of the Group. These option arrangements will be measured
at their fair value at each reporting period with changes in the fair value of the financial instruments recorded through the
Consolidated Statement of Profit and Loss. On April 20, 2023, The Company, ICON Clinical Research Limited, completed
it's purchase of Oncacare. See Note 31 Subsequent Events for further details.
(f)
Investments in subsidiaries - Company
Investments in subsidiary undertakings are stated at cost less any accumulated impairment and are reviewed for impairment
if there are indicators that the carrying value may not be recoverable.
Intercompany loans receivable and payable are initially recognised at fair value. These are subsequently measured at
amortised cost, less any loss allowance, calculated on an expected credit loss basis.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Where ordinary shares are re-purchased by the Company they are cancelled and the nominal value of the shares is
transferred to other undenominated capital within equity.
Equity Method Investments
The Company’s investments that are not consolidated are accounted for under the equity method if the Company exercises
significant influence that is considered to be greater than minor. These investments are classified as equity method
investments on the accompanying Consolidated Statements of Financial Position. The Company records its pro rata share
of the earnings/losses of these investments in Share of equity method investments in the Consolidated Statements of Profit
and Loss. The Company reviews these for impairment whenever events or changes in circumstances indicate that the
carrying amounts may not be recoverable.
Employee benefits
(a) Pension and other post-employment benefits
Certain companies within the Group operate defined contribution pension plans. A defined contribution plan is a pension
plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to
51
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
employee service in the current and prior periods. Contributions to defined contribution pension plans are expensed as
incurred.
The Group operates defined benefit pension plans for certain of its United Kingdom and Swiss employees through
subsidiary companies. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined
benefit plans define the amount of pension benefit that an employee will receive on retirement, usually dependent on one or
more factors such as age, years of service and compensation. Obligations for contributions to defined benefit contribution
pension plans are recognised as an expense in the Consolidated Statement of Profit and Loss as service is received from
the relevant employees.
The Group’s net obligation in respect of the defined benefit pension plans is calculated separately by estimating the amount
of future benefit that employees have earned in return for their service in the current and prior periods. This benefit is
discounted to determine its present value, and the fair value of plan assets deducted. The discount rate used in respect of
the UK scheme is the yield at the reporting date on the iBoxx corporate bond over 15 years plus 10 basis points. The
discount rate used in respect of the Swiss schemes is determined by the Swiss corporate bond yields at the reporting date.
The calculation is performed by a qualified actuary using the projected unit credit method. The net finance income/cost are
recorded in operating costs in the Consolidated Statement of Profit and Loss. When benefits of a plan are improved, the
portion of the increased benefit relating to the past service by employees is recognised as an expense in the Consolidated
Statement of Profit and Loss on a straight line basis over the average period until the benefits become vested. To the extent
that the benefits vest immediately, the expense is recognised immediately in the Consolidated Statement of Profit and Loss.
(b) Share-based payments
Share-based payments comprise options to acquire ordinary shares in the Company, RSUs and PSUs in the form of
ordinary share entitlements after a certain period of time. These are awarded to certain key employees and Directors of the
Group based on service conditions such as term of employment and individual performance. The fair value of options, RSUs
and PSUs granted is recognised as an employee expense with a corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the Directors and other employees become unconditionally
entitled to the options, RSUs or PSUs. The fair value of options granted is measured using a binomial lattice model, taking
into account the terms and conditions upon which the options were granted. The fair value of RSUs and PSUs is equal to
the market price of a share at date of grant. The total amount to be expensed is determined by reference to the fair value of
the options, RSUs or PSUs granted. The amount recognised as an expense is adjusted to reflect the actual number of share
options, RSUs or PSUs that vest.
Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from
original estimates.
Share-based payment expense is recognised over the requisite service period for awards of equity instruments to
employees based on the grant date fair value of those awards expected to ultimately vest.
Replacement awards
In connection with the completion of the Merger, the Company issued replacement awards to the holders of PRA equity
awards on 1 July 2021. An exchange of share-based compensation awards in a business combination is treated as a
modification under IFRS 2. The replacement awards and the original acquiree awards are measured at fair value at the
acquisition date and calculated using the fair-value-based measurement principles in IFRS 2. Amounts attributable to pre-
combination vesting are accounted for as part of the consideration transferred for the acquiree. Amounts attributable to post-
combination vesting are accounted for separate from the business combination and are recognised as compensation cost in
the post-combination period.
(c) Share-based payments – Company
The Company operates a number of share-based payment plans the details of which are presented in note 11 Share-based
Payments to the Consolidated Financial Statements. The share-based payment expense associated with the share-based
payment plans is recognised by the entity which receives services in exchange for the share-based compensation.
The Statement of Profit and Loss of the Company is charged with the expense related to the services received by the
Company. The remaining portions of the share-based payments represent a contribution to Company’s subsidiaries and are
added to the carrying amount of those investments. Under an agreement, with certain subsidiaries, on the date of exercise
the Company is paid an amount equal to the fair value of the ordinary shares issued that is in excess of the award exercise
price with such amount reducing the Company’s investment in its subsidiaries. The net effect of the grant date fair value of
the Company’s share-based compensation to employees of the Company’s subsidiaries and recharges received from those
52
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
subsidiaries is presented as a movement in financial fixed assets (see note 3 Investment in subsidiaries, to the Company
only financial statements).
Revenue Recognition
The Company primarily earns revenues by providing a number of different services to its customers. These services, which
are integral elements of the clinical development process, include clinical trials management, consulting, contract staffing,
data services and laboratory services. These services, which are described below, can be purchased collectively or
individually as part of a clinical trial contract. There is not significant variability in how economic factors affect these services.
Contracts range in duration from a number of months to several years.
Revenue Recognition - Clinical trial service revenue
Under IFRS 15, a clinical trial service is a single performance obligation satisfied over time i.e. the full service obligation in
respect of a clinical trial (including those services performed by investigators and other parties) is considered a single
performance obligation. Promises offered to the customer are not distinct within the context of the contract. ICON is the
contract principal in respect of both direct services and in the use of third parties (principally investigator services) that
support the clinical research project. The transaction price is determined by reference to the contract or change order value
(total service revenue and pass-through/reimbursable expenses) adjusted downwards to reflect a realisable contract value.
Revenue is recognised as the single performance obligation is satisfied. The progress towards completion for clinical service
contracts is measured based on an input measure being project costs incurred as a proportion of total project costs
(inclusive of third-party costs) at each reporting period.
Revenue Recognition - Contracting services revenue
The Company has availed of the practical expedient which results in recognition of revenue on a right to invoice basis.
Application of the practical expedient reflects the right to consideration from the customer in an amount that corresponds
directly with the value to the customer of the performance completion to date. This reflects hours performed by contract
staff.
Revenue Recognition - Consulting services revenue
Consulting services contracts represent a single performance obligation satisfied over time. The transaction price is
determined by reference to contract or change order value. Revenue is recognised as the performance obligation is
satisfied. The progress towards completion for consulting contracts is measured based on total project inputs (time) at each
reporting period as a percentage of forecasted total project inputs.
Revenue Recognition - Laboratory services revenue
Revenue is recognised when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the
products or services are transferred to the customer. Revenue for laboratory services is measured as the amount of
consideration we expect to receive in exchange for transferring products or services. Where contracts with customers
contain multiple performance obligations, the transaction price is allocated to each performance obligation based on the
estimated relative selling price of the promised good or service. Service revenue is recognised over time as the services are
delivered to the customer based on the extent of progress towards completion of the performance obligation. The
determination of the methodology to measure progress requires judgement and is based on the nature of services provided.
This requires an assessment of the transfer of value to the customer. The right to invoice measure of progress is generally
related to rate per unit contracts, as the extent of progress towards completion is measured based on discrete service or
time-based increments, such as samples tested or labour hours incurred. Revenue is recorded in the amount invoiced since
those amounts corresponds to the value of the Company's performance and the transfer of value to the customer.
Revenue Recognition - Data services revenue
The Company provides data reports and analytics to customers based on agreed-upon specifications, including the timing of
delivery, which is typically either weekly, monthly, or quarterly. If a customer requests more than one type of data report or
series of data reports within a contract, each distinct type of data report is a separate performance obligation. The contracts
provide for the Company to be compensated for the value of each deliverable. The transaction price is determined using list
prices, discount agreements, if any, and negotiations with the customers, and generally includes any out-of-pocket
expenses. Typically, the Company bills in advance of services being provided with the amount being recorded as unearned
revenue.
When multiple performance obligations exist, the transaction price is allocated to performance obligations on a relative
standalone selling price basis. In cases where the Company contracts to provide a series of data reports, or in some cases
53
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
data, the Company recognises revenue over time using the “units delivered” output method as the data or reports are
delivered. Expense reimbursements are recorded to revenue as the expenses are incurred as they relate directly to the
services performed.
Certain arrangements include upfront customisation or consultative services for customers. These arrangements often
include payments based on the achievement of certain contractual milestones. Under these arrangements, the Company
contracts with a customer to carry out a specific study, ultimately resulting in delivery of a custom report or data product.
These arrangements are a single performance obligation given the integrated nature of the service being provided. The
Company typically recognises revenue under these contracts over time, using an output-based measure, generally time
elapsed, to measure progress and transfer of control of the performance obligation to the customer. Expense
reimbursements are recorded to revenue as the expenses are incurred as they relate directly to the service performed.
The Company enters into contracts with some of its larger data suppliers that involve non-monetary terms. The Company
issues purchase credits to be used toward the data supplier's purchase of the Company's services based on the fair value of
the data obtained. In exchange, the Company receives monetary discounts on the data received from the data suppliers.
The fair value of the revenue earned from the customer purchases is recognised as services are delivered as described
above. At the end of the contract year, any unused customer purchase credits may be forfeited or carried over to the
next contract year based on the terms of the data supplier contract.
Commissions
Incremental costs of obtaining a contract are recognised as an asset on the Consolidated Statement of Financial Position in
respect of those contracts that exceed one year. Where commission costs relate to contracts that are less than one year, the
practical expedient is applied as the amortisation period of the asset which would arise on deferral would be one year or
less.
Reimbursable expenses
Reimbursable expenses comprise investigator payments and certain other costs which are reimbursed by clients under
terms specific to each contract to the investigators. The Company includes reimbursed expenses in revenue and direct
costs as the Company is primarily responsible for fulfilling the promise to provide the specified service, including integration
of the related services into a combined output to the customer.
Direct costs
Direct costs consist of compensation, associated employee benefits and share-based payments for project-related
employees and other direct project-related costs.
Reimbursable expenses are presented within direct costs. This presentation is to align the presentation of costs with our
assessment that our clinical trial service is a single performance obligation satisfied over time. Reimbursable expenses are
recorded once the activity which forms the basis for the cost has occurred. Payments are made based on predetermined
contractual arrangements. Timing of payments may differ from the timing of the expense.
Other operating expenses
Other operating expenses consist of compensation, associated employee benefits and share-based payments for non-
project-related employees and other indirect costs associated with the business. Other operating expenses also include
depreciation expense and the amortisation of intangible assets.
Exceptional items
The Company has used the term “exceptional” to describe certain items which, in management’s view, warrant separate
disclosure by virtue of their size or incidence, or due to the fact that certain gains or losses are determined to be non-
recurring in nature. Exceptional items may include restructuring, transaction and integration-related expenses, significant
impairments, and material changes in estimates. Also see the replacement awards accounting policy described above.
Transaction and integration-related expenses
Transaction and integration-related expenses are the incremental costs directly attributable to the completion and integration
activities associated with the Group’s recent acquisitions. The costs consist of investment banking fees, advisory costs,
retention agreements with employees, contingent consideration valuation adjustments and ongoing integration activities.
The Group accounts for these transaction and integration-related costs as expenses in the period in which the costs are
incurred and the services are received.
54
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
Restructuring
Restructuring charges reflect certain one-time and associated unavoidable costs arising from reorganisation programmes
announced by Group management. These programmes generally result in asset impairments and workforce reductions in
order to optimise the Group’s structure and facilitate improved long-term performance. Impairment charges are taken when
the value-in-use of the asset is less than the asset’s carrying value. Workforce related charges are taken when an approved
reorganisation programme is communicated to the relevant employee groups.
Research and development credits
Research and development credits are available to the Group under the tax laws in certain jurisdictions, based on qualifying
research and development spend as defined under those tax laws. Research and development credits may be recognised
as a reduction of income tax expense. However, certain tax jurisdictions provide refundable credits that are not wholly
dependent on the Group's ongoing income tax status or income tax position. In these circumstances the benefit of these
credits is not recorded as a reduction to income tax expense, but rather as a reduction of operating expenditure.
Financing income
Interest income is recognised in the Consolidated Statement of Profit and Loss as it accrues using the effective interest rate
method and includes interest receivable on investments.
Financing expense
Financing expense comprises interest payable on borrowings calculated using the effective interest rate method, finance
charges on leases, foreign exchange gains and losses on bank loans, non-cash finance charges in respect of contingent
consideration and gains and losses on hedging instruments that are recognised in the Consolidated Statement of Profit and
Loss.
Financing expense also includes fees paid on the establishment of loan facilities which are recognised as transaction costs
of the loan to the extent that it is probable that some or all of the facility will be drawn down. These fees are deferred and
recognised in the Statement of Financial Position and are then amortised to the Consolidated Statement of Profit and Loss
over the term the facility is available to the Group.
Income tax
Income tax expense in the Consolidated Statement of Profit and Loss represents the sum of income tax currently payable
and deferred income tax.
Income tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
Consolidated Statement of Profit and Loss because it excludes items of income or expense that are taxable or deductible in
other years and further excludes items that are not taxable or deductible. The Group’s liability for income tax is calculated
using rates that have been enacted or substantively enacted at the reporting date. Income tax is recognised in the
Consolidated Statement of Profit and Loss except to the extent that it relates to items recognised directly in equity.
Deferred income tax is provided, using the liability method, on all differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes except those arising from non-
deductible goodwill or on initial recognition of an asset or liability which affects neither accounting nor taxable profit.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is expected to be realised or the liability to be settled.
Deferred tax assets are recognised for all deductible differences, carry forward of unused tax credits and unused tax losses,
to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and
the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax
assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit
would be available to allow all or part of the deferred income tax asset to be utilised.
55
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
1. Basis of preparation and statement of accounting policies (continued)
Earnings per ordinary share
Basic earnings per share is computed by dividing the profit for the financial year attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares outstanding during the financial period.
Diluted net income per ordinary share is computed by adjusting the weighted average number of ordinary shares
outstanding during the period for all potentially dilutive ordinary shares outstanding during the period and adjusting net
income for any changes in income or loss that would result from the conversion of such potential ordinary shares. There is
no difference in net income used for basic and diluted net income per ordinary share.
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The
Group determines and presents operating segments based on the information that internally is provided to the Chief
Executive Officer (CEO) and Chief Financial Officer (CFO) who together are considered the Group’s chief operating decision
makers, the ‘CODM’. An operating segment’s operating results are reviewed regularly by the CODM to make decisions
about resources to be allocated to the segment and assess its performance, and for which discrete financial information is
available.
Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire property,
plant and equipment and right-of-use assets.
Debt issuance costs
Debt issuance costs relating to the Group’s long-term debt are recorded as a direct reduction of long-term debt; these costs
are deferred and amortised to interest expense using the effective interest method, over the respective terms of the related
debt. Debt issuance costs relating to the Group’s revolving credit facilities are recorded as an asset; these costs are
deferred and amortised to interest expense using the straight-line method. Early repayment of debt facilities can result in
modification of the debt and the acceleration of the amortisation of debt issuance costs.
2. Segmental information
The Company has 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. The Company has expanded through internal growth, together with a number of strategic acquisitions to
enhance its expertise and capabilities in certain areas of the clinical development process.
The Company determines and presents operating segments based on the information that is internally provided to the chief
operating decision maker, together the ('CODM') in accordance with IFRS 8 Operating Segments. The Company determined
that the CODM was comprised of the Chief Executive Officer and the Chief Financial Officer.
The Company operates as one reporting segment, which is the provision of outsourced development services on a global
basis to the pharmaceutical, biotechnology and medical devices industries.
The Group’s listing for its shares is the NASDAQ market in the United States. Consequently, information reviewed by the
chief operating decision makers is prepared in accordance with US generally accepted accounting principles (“US GAAP”)
however, the information presented below is prepared in accordance with IFRS reporting standards. Reconciliations of the
Group’s profit for the financial year and shareholders’ equity from US GAAP to IFRS are set out on pages 149 to 153 of this
report.
Revenues are allocated to individual entities based on where the work is performed in accordance with the Company's
global transfer pricing model. Revenues and income from operations in Ireland are a function of our global contracting
model and the Group’s transfer pricing model.
ICON Ireland acts as the Group entrepreneur under the Company’s global transfer pricing model given its role in the
development and management of the Group, its ownership of key intellectual property and customer relationships, its key
role in the mitigation of risks faced by the Group and its responsibility for maintaining the Company’s global network. ICON
Ireland enters into the majority of the Company’s customer contracts.
ICON Ireland remunerates other operating entities in the ICON Group on the basis of a guaranteed cost plus mark-up for
the services they perform in each of their local territories. The cost plus mark-up for each ICON entity is established to
56
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
2. Segmental information (continued)
ensure that each of ICON Ireland and the ICON entities that are involved in the conduct of services for customers, earn an
appropriate arms-length return having regard to the assets owned, risks borne, and functions performed by each entity from
these intercompany transactions. The cost plus mark-up policy is reviewed annually to ensure that it is market appropriate.
The integration of entities acquired through the Merger into this global network and global transfer pricing model remains
ongoing.
The geographic split of revenue disclosed for each region outside Ireland is the cost plus revenue attributable to these
entities. The residual revenues of the Group, once each ICON entity has been paid its respective intercompany service fee,
generally fall to be retained by ICON Ireland. As such, revenues and income from operations in Ireland are a function of this
global transfer pricing model and comprise revenues of the Group after deducting the cost plus revenues attributable to the
activities performed outside Ireland.
There have been no changes to the basis of segmentation or the measurement basis for the segment results since the prior
year.
Geographical segment information
Revenue
Ireland
Rest of Europe
United States
Rest of World
Total
Property, plant and equipment and operating right-of-use assets
Ireland
Europe
United States
Rest of World
Total
Year ended
31 December
2022
Year ended 31
December
2021
$’000
$’000
1,984,567
1,365,911
1,618,350
1,175,515
3,566,610
2,573,005
563,859
358,395
7,733,386
5,472,826
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
51,654
98,641
132,615
46,516
56,357
119,445
162,814
54,012
329,426
392,628
57
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
3. Profit before taxation
Profit before taxation is stated after charging the following:
Auditor's remuneration:
Audit fees (1)
Other assurance fees (2)
Tax advisory fees (3)
Other non-audit fees (4)
Total fees
Year ended 31 December 2022
Year ended 31 December 2021
Statutory
auditor
Affiliated
firms
Total
Statutory
auditor
Affiliated
firms
Total
$’000
$’000
$’000
$’000
$’000
$’000
4,420
145
4,682
34
9,281
—
116
536
—
652
4,420
2,744
261
5,218
34
9,933
—
1,809
1,300
5,853
—
162
2,257
813
3,232
2,744
162
4,066
2,113
9,085
(1) Audit fees include annual audit fees for ICON plc.
(2) Other assurance fees principally consist of fees for the audit of remaining subsidiaries and fees for the audit of the financial statements
of employee benefit plans.
(3) Tax advisory fees are for tax compliance and tax advisory services.
(4) Other non-audit fees principally consist of fees for financial due diligence.
Directors’ remuneration disclosures as required by Section 305 of the Companies Act are set out below:
Directors’ emoluments
Emoluments
Benefits under long-term incentive schemes
Gain on exercise of share options
Pension contributions (defined contribution)
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
3,730
7,130
3,771
125
4,803
4,273
16,319
120
Further details regarding Directors’ shareholdings, share options and compensation are shown in note 9 – Payroll and
related benefits.
Retirement benefits accrue to one Director (2021: one Director) under a defined contribution scheme.
Included in the benefits under long-term incentive scheme are amounts relating to share entitlements, the calculation of
which was based on the share-based payment charge calculated under IFRS 2 Share-Based Payments.
Depreciation and amortisation
Depreciation of property, plant and equipment (note 12)
Depreciation of right-of-use assets (note 27)
Amortisation of intangible assets (note 13)
Total depreciation and amortisation
Loss on sale of property, plant and equipment
Year ended
31 December
2022
Year ended
31 December
2021
$’000
Revised*
$’000
48,692
45,215
33,654
45,247
518,656
283,500
612,563
360,234
244
249
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
58
Notes to Consolidated Financial Statements (continued)
for the year ended31 December 2022
4. Financing income
Interest receivable
Total finance income
All of the above relate to items not at fair value through profit and loss.
5. Financing expense
Interest payable on borrowings
Transaction and exceptional costs
Interest on lease liabilities
Facility fees (including amortisation)
Amortisation of gain on interest rate hedge
Total finance expense
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
2,345
2,345
574
574
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
211,786
—
4,470
17,875
70
94,029
75,391
4,113
12,890
113
234,201
186,536
The Company incurred interest costs from various financing arrangements during the years ended 31 December 2022 and
31 December 2021 as set out in the table above. These costs have been charged in the interest expense line of the
Consolidated Statement of Profit and Loss. In the year ended 31 December 2021 the Company incurred transaction related
financing costs (inclusive of the amortisation of financing fees that were previously capitalised) associated with the debt
facilities to finance the Merger.
All of the above relate to items not at fair value through profit and loss.
59
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
6.
Income tax expense
The components of the current and deferred tax expense for the years ended 31 December 2022 and 2021 were as follows:
Current tax expense
Current year
-
Ireland
- Other
Deferred tax expense/ (credit)
Origination and reversal of temporary differences
Over provided in prior years
Current tax
Deferred tax
Over provided in prior years
Total income tax expense in profit and loss
Tax recognised directly in equity
Deferred tax recognised directly in equity
Current tax recognised directly in equity
Total tax recognised in equity
Income tax recognised in other comprehensive income
Tax on currency impact on long-term funding
Tax impact of pension contributions
Total income tax recognised in other comprehensive income
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
55,073
132,612
19,907
96,043
187,685
115,950
(119,671)
(70,848)
(3,602)
1,102
(2,500)
(4,139)
(744)
(4,883)
65,514
40,219
25,780
(1,739)
(22,515)
(7,809)
24,041
(30,324)
7,211
754
7,965
49
—
49
The total tax expense of $65.5 million and $40.2 million for the years ended 31 December 2022 and 31 December 2021
respectively, reflects tax at standard rates on taxable profits in the jurisdictions in which the Group operates, foreign
withholding tax and the availability of tax losses.
The deferred tax credit of $119.7 million for the year ended 31 December 2022 and the deferred tax credit of $70.8 million
for the year ended 31 December 2021, relates to deferred tax arising in respect of net operating losses and temporary
differences in property, plant and equipment, the timing of certain goodwill amortisation on US acquisitions and the timing of
tax deductions available relating to the Group’s share-based compensation schemes.
60
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
6.
Income tax expense (continued)
A reconciliation of the expected tax expense, computed by applying the standard Irish tax rate to income before tax to the
actual tax expense, is as follows:
Profit before tax
Irish standard tax rate
Taxes at Irish standard tax rate
Over provision in respect to prior years
Foreign and other income taxed at higher rates
Rate differential from amortisation of intangible assets
Effect of change in tax rates
Increase in unrecognised tax benefits
Losses for which no benefit has been recognised
Research and development tax incentives
Impact of stock compensation
Share of loss of Associate already tax effected
Other
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
571,799
212,504
12.5 %
12.5 %
71,475
26,563
(2,500)
52,463
(59,330)
(300)
8,392
(777)
(2,608)
520
392
(2,213)
(4,883)
51,273
(31,228)
(128)
5,246
3,101
(3,120)
(13,258)
270
6,383
Tax expense on profit for the year
65,514
40,219
The net deferred tax asset at 31 December 2022 and 31 December 2021 was as follows:
Deferred taxation assets
Net operating losses carried forward
Accrued expenses
Property, plant and equipment
Deferred revenue
Deferred compensation
Share-based payment
Other
Total deferred taxation assets
Less: offset against deferred tax liabilities
Year ended
31 December
2022
Year ended
31 December
2021
$’000
45,498
63,836
6,010
66,566
2,917
43,048
17,748
Revised*
$’000
43,451
68,489
5,619
62,871
3,445
81,903
4,330
245,623
270,108
(147,506)
(170,064)
Deferred tax asset disclosed on Consolidated Statement of Financial Position
98,117
100,044
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
61
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
6.
Income tax expense (continued)
Deferred taxation liabilities
Property, plant and equipment
Goodwill and related assets
Other intangible assets
Other
Total deferred taxation liabilities
Less: offset against deferred tax assets
Year ended
31 December
2022
Year ended
31 December
2021
$’000
Revised*
$’000
10,927
37,150
19,607
33,354
1,078,302
1,193,897
9,054
1,760
1,135,433
1,248,618
(147,506)
(170,064)
Deferred tax liability disclosed on Consolidated Statement of Financial Position
987,927
1,078,554
Net deferred taxation liability
(889,810)
(978,510)
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
The movement in temporary differences during the year ended 31 December 2022 was as follows:
Recognised
in Income
Recognised
on
Acquisition
Recognised in
Other
Comprehensive
Income
Recognised
in Equity
Balance 31
December
2022
Balance 1
January
2022
Revised*
$’000
$’000
$’000
$’000
$’000
$’000
43,451
68,489
5,619
3,445
2,047
(4,653)
391
(528)
81,903
(13,075)
62,871
3,695
4,330
13,418
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(25,780)
—
—
—
—
45,498
63,836
6,010
2,917
43,048
66,566
17,748
270,108
1,295
—
—
(25,780)
245,623
Deferred taxation assets
Net operating loss carry
forwards
Accrued expenses
Property, plant and equipment
Deferred compensation
Share-based payment
Deferred revenue
Other
Total deferred taxation
assets
Deferred taxation liabilities
Property, plant and equipment
Goodwill on acquisition
Other
Other intangible assets
1,193,897
(115,595)
19,606
33,354
1,761
(8,679)
3,796
3,204
—
—
—
—
—
—
—
—
—
—
10,927
37,150
4,089 **
9,054
—
1,078,302
Total deferred taxation
liabilities
1,248,618
(117,274)
—
—
4,089
1,135,433
Net deferred taxation liability
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
** These adjustments relate to foreign currency translation on the deferred tax liabilities.
(978,510)
118,569
—
—
(29,869)
(889,810)
62
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
6.
Income tax expense (continued)
The movement in temporary differences during the year ended 31 December 2021 was as follows:
Balance 1
January
2021
Recognised
in Income
Recognised
on
Acquisition
Recognised in
Other
Comprehensive
Income
Recognised
in Equity
Deferred taxation assets
Net operating loss carry
forwards
Accrued expenses
Property, plant and equipment
Deferred compensation
Share-based payment
Deferred revenue
Other
$’000
$’000
Revised*
$’000
12,412
13,532
17,507
22,076
10,996
35,417 *
5,974
3,184
(355)
261
—
—
21,338
(6,049)
44,099
2,257
(11,662)
72,276
358
2,015
1,957 *
Balance 31
December
2021
Revised*
$’000
$’000
$’000
—
—
—
—
—
—
—
—
—
—
—
22,515
—
—
43,451
68,489
5,619
3,445
81,903
62,871
4,330
Total deferred taxation assets
67,599
8,738
171,256
—
22,515
270,108
Deferred taxation liabilities
Property, plant and equipment
Goodwill on acquisition
Other
1,359
1,990
16,257
31,629
1,009
1,725
(902)
—
—
Other intangible assets
13,398
(65,669) 1,246,168 *
—
—
—
—
—
—
19,606
33,354
1,654 **
1,761
—
1,193,897
0
Total deferred taxation
liabilities
47,395
(62,856) 1,262,425
—
1,654
1,248,618
Net deferred taxation asset/
(liability)
20,861
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
** These adjustments relate to foreign currency translation on the deferred tax liabilities.
71,594 (1,091,169)
20,204
—
(978,510)
Unrecognised deferred tax assets
Deferred tax assets relating to the following net operating losses have not been recognised to the extent that it is considered
unlikely that a benefit will be received in the future.
At 31 December 2022, non-US subsidiaries had operating loss carry-forwards for income tax purposes that may be carried
forward indefinitely, available to offset against future taxable income, if any, of approximately $37.9 million (31 December
2021: $42.3 million). At 31 December 2022, non–US subsidiaries also had additional operating loss carry forwards of $14.8
million which are due to expire between 2023 and 2029 and operating loss carry forwards of $18.2 million which are due to
expire between 2030 and 2039.
In total, the Company has unrecognised deferred tax assets of $43.4 million at 31 December 2022 and $45.5 million at
31 December 2021. The Company has not recognised these remaining deferred tax assets because it believes that it is
more likely than not that the losses and other deferred tax assets will not be utilised given their history of operating losses.
63
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
6.
Income tax expense (continued)
Unrecognised deferred tax liabilities
The Company has recognised a deferred tax liability of $1.6 million (2021: $0.8 million) for investments in foreign
subsidiaries where the Company does not consider the earnings to be indefinitely reinvested. For the deferred tax liability
not recognised in respect of temporary differences related to investments in foreign subsidiaries which are considered to be
indefinitely reinvested, it is not practicable to calculate the exact unrecognised deferred tax liability, however, it is not
expected to be material as Ireland allows a tax credit in respect of distributions from foreign subsidiaries at the statutory tax
rate in the jurisdiction of the subsidiary so that no material tax liability would be expected to arise in Ireland in the event
these earnings were ever remitted. In addition, withholding taxes applicable to remittances from foreign subsidiaries would
not be expected to be material given Ireland’s tax treaty network and the EU parent subsidiary directive.
64
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2019
7. Earnings per share
The following table sets forth the computation for basic and diluted net earnings per share for the years ended 31 December
2022 and 31 December 2021:
31
December
2022
31
December
2022
31
December
2022
31
December
2021
31
December
2021
31
December
2021
Revised*
Revised*
$’000
$’000
$’000
$’000
$’000
$’000
Excluding
Exceptional
items
Exceptional
items
Including
Exceptional
items
Excluding
Exceptional
items
Exceptional
items
Including
Exceptional
items
Numerator computations
Basic and diluted earnings per share
Profit for the period
Profit attributable to equity holders
562,958
(56,673)
506,285
438,553
(266,268)
172,285
562,958
(56,673)
506,285
438,553
(266,268)
172,285
Denominator computations
Number of Shares
Weighted average number of
ordinary shares outstanding – basic
Effect of dilutive potential ordinary
shares
81,532,320 81,532,320 81,532,320 67,110,186 67,110,186 67,110,186
1,004,506 1,004,506 1,004,506
872,613
872,613
872,613
Weighted average number of
ordinary shares outstanding - diluted 82,536,826 82,536,826 82,536,826 67,982,799 67,982,799 67,982,799
Earnings per Share
Basic earnings per ordinary share
Diluted earnings per ordinary share
$
6.90
6.81
$
(0.70)
(0.69)
$
6.21
6.13
$
6.53
6.45
$
(3.97)
(3.92)
$
2.57
2.53
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
The Company had 46,973 anti-dilutive shares in issue at 31 December 2022 comprised of 23,486 options and 23,487 RSUs
(31 December 2021: 34,303).
65
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2021
8. Exceptional items
Exceptional items are comprised of transaction and integration related, restructuring and financing expenses.
Transaction and integration related
Accelerated stock compensation charge
Restructuring charges
Other operating expenses
Financing expense
Profit before tax
Income tax expense
Exceptional items (net)
Year Ended
31 December
2022
31 December
2021
(in thousands)
39,695
124,427
—
31,143
70,838
—
46,187
31,105
201,719
75,391
70,838
277,110
(14,165)
(10,842)
56,673
266,268
Transaction and integration related
In the years ended 31 December 2022 and 31 December 2021 the Company incurred $39.7 million and $124.4 million,
respectively, of merger-related expenses which were accounted for separately from the business combination and expensed
as incurred within the “Other operating expenses” line item of the Consolidated Statement of Profit and Loss. These costs
consist primarily of investment banker fees, advisory costs, legal costs, accounting and consulting fees, employee retention
bonuses and ongoing integration activities.
Accelerated stock compensation charge
In the year ended 31 December 2021, the Company charged $46.2 million of one time stock compensation expense. This
one time charge related to the post combination portion of the accelerated vesting of awards following the completion of the
Merger.
Restructuring charges
A restructuring charge of $31.1 million was recognised during the year ended 31 December 2022 under a restructuring plan
adopted following a review of operations and are included within the “Other operating expenses” line item of the
Consolidated Statement of Profit and Loss. The restructuring plan reflected resource rationalisation across the business to
improve employee utilisation and an office consolidation programme to optimise the Company's office footprint. The
restructuring plan resulted in a charge of $2.7 million relating to workforce reductions, an impairment of ROU assets of
$24.5 million and fixed asset impairment of $4.0 million.
A restructuring charge of $31.1 million was recognised during the year ended 31 December 2021 under a restructuring plan
adopted following a review of operations and are included within the “Other operating expenses” line item of the
Consolidated Statement of Profit and Loss. The restructuring plan reflected resource rationalisation across the business to
improve employee utilisation and an office consolidation programme to optimise the Company's office footprint. The
restructuring plan resulted in a charge of $4.8 million relating to workforce reductions, an impairment of ROU assets of
$15.6 million, associated unavoidable costs totalling $6.3 million and fixed asset impairment of $4.4 million.
At 31 December 2022 and 31 December 2021 a total liability of $6.0 million and $10.3 million, respectively were included in
the Consolidated Statement of Financial Position relating to restructuring activities. At 31 December 2022 the total liability
included $1.4 million from lease and lease related liabilities of which $0.9 million is recorded in provisions and $0.5 million is
included within non-current provisions.The remaining provision of $4.6 million relates to workforce reduction and is included
within provisions.
66
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2021
8. Exceptional items (continued)
Opening liability
Additional charges in the year
Utilisation
Ending liability
9. Payroll and related benefits
Payroll costs
Year Ended
31 December
2022
31 December
2021
(in thousands)
10,311
4,364
(8,653)
6,022
4,675
11,273
(5,637)
10,311
The aggregate payroll costs of employees of the Group for the year ended 31 December 2022 were as follows:
Wages and salaries
Social welfare costs
Pension costs for defined contribution pension schemes
Pension costs for defined benefit pension schemes
Termination benefits
Share-based payment
Total charge to income
Year ended
31 December
2022
Year ended
31 December
2021
Note
$’000
$’000
3,025,356
2,282,082
579,714
351,333
76,516
53,898
744
2,714
561
4,758
55,790
105,859
3,740,834
2,798,491
10
10
8
11
Re-measurement of post-employment benefit obligations
10
(13,265)
(4,175)
Total payroll and related benefit costs
3,727,569
2,794,316
Average employee numbers
The average number of employees, including executive Directors, employed by the Group during the year ended
31 December 2022 was as follows:
Marketing
Administration
Clinical research
Laboratory
Total
Year ended
31 December
2022
Year ended
31 December
2021
530
3,560
32,421
2,653
385
2,605
21,521
1,858
39,164
26,369
67
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
9. Payroll and related benefits (continued)
Directors’ remuneration
Remuneration policy
The Compensation and Organisation Committee seeks to achieve the following goals with the Company’s executive
compensation programmes: to attract, motivate and retain key executives and to reward executives for value creation. The
Committee seeks to foster a performance-oriented environment by ensuring that a significant portion of each executive’s
cash and equity compensation is based on the achievement of performance targets that are important to the Company, its
shareholders and other stakeholders.
The Company’s executive compensation programme has three main elements: base salary, a bonus plan and equity
incentives in the form of share related awards granted under the Company’s equity incentive plans. All elements of key
executives’ compensation are determined by the Compensation and Organisation Committee based on the achievement of
the Group’s and individual performance objectives.
Non-Executive Directors’ remuneration
Non-Executive Directors are remunerated by way of Directors’ fees and are also eligible for participation in the share equity
incentive schemes. During 2022, each Non-Executive Director (excluding the Board Chair) was paid an annual retainer of
$90,000 and additional fees for Board Committee service.
Mr. Ciaran Murray’s Executive Chair term expired on 12 May 2018 and he transitioned to the role of Non-Executive Chair.
The current arrangement with the Chair provides for payment of €330,000 (translated at average rate for the year:
$346,891) annually.
Mr. Rónán Murphy was appointed as Lead Independent Director with effect from 1 January 2019 and receives an additional
fee of $25,000 for this role.
Non-Executive Directors are not eligible for performance related cash bonuses and no pension contributions are made on
their behalf. The Compensation and Organisation Committee sets non-Executive remuneration.
Executive Directors’ and Key Executive Officers’ remuneration
Total cash compensation is divided into a base salary portion and a bonus incentive portion. The Committee targets total
cash compensation with regard to healthcare/ biopharmaceutical companies of similar market capitalisation and peer CRO
companies, adjusted upward or downward based on individual performance and experience and level of responsibility. The
Compensation and Organisation Committee believes that the higher the executive’s level of responsibility within the
Company, the greater the percentage of the executive’s compensation that should be tied to the Company’s performance.
Target bonus incentive for executive officers range between 60% and 125% with actual pay outs for 2022 ranging from 48%
to 100%, of salary, based on Group and individual performance.
A total bonus of $1.5 million was awarded to the following individuals; Dr. Steve Cutler, Chief Executive Officer ($1.2 million)
and Mr. Brendan Brennan, Chief Financial Officer ($0.3 million) to reflect their contribution to the performance of the
Company during 2022. These amounts were approved by the Compensation and Organisation Committee and bonuses
were paid during the year ended 31 December 2023.
The Company’s executives are eligible to receive equity incentives, including stock options, restricted share units and
performance share units, granted under the Company’s equity incentive plans. If executives receive equity incentive grants,
they are normally approved annually at the first scheduled meeting of the Committee in the fiscal year. The grant date is
determined by the Committee, and grants are awarded at the closing price on the day of grant. Newly hired executives may
receive sign-on grants. In addition, the Committee may, in its discretion, issue additional equity incentive awards to
executives if the Committee determines such awards are necessary to ensure appropriate incentives are in place. The
equity awards granted to each participant is determined primarily by the Committee at the start of each year based on peer
groups and advice from independent compensation consultants.
All executive officers are eligible to participate in pension plans. The Company’s contributions are generally a fixed
percentage of their annual compensation, supplementing contributions by the executive. The Company has the discretion to
make additional contributions if deemed appropriate by the Committee. Contributions to this plan are recorded as an
expense in the Consolidated Statement of Profit and Loss.
68
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
9. Payroll and related benefits (continued)
The Directors, Executive Officers and Company Secretary have the following interests, all of which are beneficial, other than
as stated, in the shares and share options of the Company or other Group companies at the following dates:
Interest at
Interest at
31 December 2022
31 December 2021
Name
Name of company and
description of shares
Number of
shares
Options
Number of
shares
Options
Ciaran Murray
ICON plc
Ordinary Shares €0.06
1,680
58,646
1,274
58,646
Dr. Steve Cutler
ICON plc
Ordinary Shares €0.06
42,377
208,885
24,640
173,016
Brendan Brennan
ICON plc
Ordinary Shares €0.06
23,547
53,105
21,621
64,215
Rónán Murphy
ICON plc
Ordinary Shares €0.06
1,680
9,622
1,274
9,622
Dr. John Climax
ICON plc
Ordinary Shares €0.06
509,297
33,255
508,891
43,255
Joan Garahy
ICON plc
Ordinary Shares €0.06
1,680
5,005
1,274
5,005
Eugene McCague
ICON plc
Ordinary Shares €0.06
1,680
5,005
1,274
5,005
Julie O'Neill
ICON plc
Ordinary Shares €0.06
1,490
—
1,084
—
Dr. Linda Grais
ICON plc
Ordinary Shares €0.06
3,994
—
3,994
—
Diarmaid Cunningham
ICON plc
Ordinary Shares €0.06
7,456
27,893
5,546
21,699
69
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
9. Payroll and related benefits (continued)
Further details regarding the above share options are as follows:
Name
Mr. Ciaran Murray
Dr. Steve Cutler
Mr. Brendan Brennan
Mr. Rónán Murphy
Dr. John Climax
Options
Exercise
price
45,948
7,693
$71.95
$90.03
5,005
$125.74
6,128
25,156
29,613
32,272
42,386
37,461
35,869
9,306
9,584
8,796
9,176
8,842
7,401
$71.95
$83.47
$115.11
$140.38
$159.33
$174.96
$231.68
$83.47
$115.11
$140.38
$159.33
$174.96
$231.68
4,617
5,005
$90.03
$125.74
10,000
10,557
7,693
$68.39
$65.60
$90.03
5,005
$125.74
Grant date
Expiry date
4 March 2016
19 May 2017
18 May 2018
4 March 2016
3 March 2017
3 March 2018
3 March 2019
3 March 2020
3 March 2021
3 March 2022
3 March 2017
3 March 2018
3 March 2019
3 March 2020
3 March 2021
3 March 2022
19 May 2017
18 May 2018
4 March 2024
19 May 2025
18 May 2026
4 March 2024
3 March 2025
3 March 2026
3 March 2027
3 March 2028
3 March 2029
3 March 2030
3 March 2025
3 March 2026
3 March 2027
3 March 2028
3 March 2029
3 March 2030
19 May 2025
18 May 2026
18 March 2015
20 May 2016
19 May 2017
18 May 2018
18 March 2023
20 May 2024
19 May 2025
18 May 2026
Ms. Joan Garahy
5,005
$125.74
18 May 2018
18 May 2026
Mr. Eugene McCague
5,005
$125.74
18 May 2018
18 May 2026
Diarmaid Cunningham
2,050
2,885
5,499
5,737
5,528
6,194
$83.47
$115.11
$140.38
$159.33
$174.96
$231.68
3 March 2017
3 March 2018
3 March 2019
3 March 2020
3 March 2021
3 March 2022
3 March 2025
3 March 2026
3 March 2027
3 March 2028
3 March 2029
3 March 2030
70
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
9. Payroll and related benefits (continued)
The Directors, Executive Officer and Company Secretary held the following Restricted Share Units (“RSUs”) and
Performance Share Units (“PSUs”) awards as at 31 December 2022:
Name
RSUs
Award date
Vesting Date
PSUs(1)
Award Date
Vesting date
Ciaran Murray
1,388
21 May 2022
21 May 2023
Dr. Steve Cutler
Brendan Brennan
3,201
2,958
3,018
2,959
3,018
3,019
694
698
622
698
622
624
3 March 2020
3 March 2023
11,202
3 March 2020
3 March 2023
3 March 2021
3 March 2023
10,354
3 March 2021
3 March 2024
3 March 2022
3 March 2023
10,565
3 March 2022
3 March 2025
3 March 2021
3 March 2024
3 March 2022
3 March 2024
3 March 2022
3 March 2025
3 March 2020
3 March 2021
3 March 2022
3 March 2021
3 March 2022
3 March 2022
3 March 2023
3 March 2023
3 March 2023
3 March 2024
3 March 2024
3 March 2025
2,425
2,444
2,179
3 March 2020
3 March 2021
3 March 2022
3 March 2023
3 March 2024
3 March 2025
Rónán Murphy
925
21 May 2022
21 May 2023
Dr. John Climax
925
21 May 2022
21 May 2023
Joan Garahy
925
21 May 2022
21 May 2023
Eugene McCague
925
21 May 2022
21 May 2023
Julie O'Neill
925
21 May 2022
21 May 2023
Dr. Linda Grais
925
21 May 2022
21 May 2023
Diarmaid
Cunningham
435
436
521
437
521
521
3 March 2020
3 March 2021
3 March 2022
3 March 2021
3 March 2022
3 March 2022
3 March 2023
3 March 2023
3 March 2023
3 March 2024
3 March 2024
3 March 2025
1,516
1,528
1,824
3 March 2020
3 March 2021
3 March 2022
3 March 2023
3 March 2024
3 March 2025
(1) 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. The PSUs vest based on service and
specified EPS targets over the periods 2020 – 2022, 2021 – 2023 and 2022 – 2024. Depending on the actual amount of EPS from
2020 to 2024, up to a maximum of 44,037 additional PSUs may also be granted to Dr. Steve Cutler, Mr. Brendan Brennan and Mr.
Diarmaid Cunningham.
71
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
9. Payroll and related benefits (continued)
Details of transactions entered into by the Directors, Executive Officers and Company Secretary in shares and share options
of the Company during the year ended 31 December 2022 were as follows:
Share options exercised and sold
Name
Brendan Brennan
Dr. John Climax
Professor William Hall*
Mary Pendergast*
Number of Share
Options
18,511
10,000
1,541
10,000
Average
strike
price
$75.00
$40.83
$90.03
$40.83
* Professor William Hall and Ms. Mary Pendergast resigned from the Board of Directors on 26 July 2022.
RSUs vested
Dr. Steve Cutler
Brendan Brennan
Ciaran Murray
Rónán Murphy
Professor Hugh Brady*
Dr. John Climax
Joan Garahy
Professor William Hall*
Eugene McCague
Julie O'Neill
Mary Pendergast*
Diarmaid Cunningham
Number
of Shares
30,301
6,595
865
865
865
865
865
865
865
865
865
4,122
Average
Sales
price
$215.98
$220.15
$229.00
$217.23
Average
Vest
Price
$231.68
$231.68
$216.10
$216.10
$216.10
$216.10
$216.10
$216.10
$216.10
$216.10
$216.10
$231.68
* Professor Hugh Brady, Professor William Hall and Ms. Mary Pendergast resigned from the Board of Directors on 26 July 2022.
72
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
9. Payroll and related benefits (continued)
Shares (vested RSUs) sold
Dr. Steve Cutler
Brendan Brennan
Ciaran Murray
Rónán Murphy
Professor Hugh Brady*
Dr. John Climax
Joan Garahy
Professor William Hall*
Eugene McCague
Julie O'Neill
Mary Pendergast*
Diarmaid Cunningham
Number
of Shares
12,819
4,669
459
459
459
459
459
865
459
459
459
2,212
Average
Sales
Price
$225.60
$225.05
$214.52
$214.86
$214.53
$214.07
$214.02
$221.33
$214.78
$213.89
$214.09
$225.00
* Professor Hugh Brady, Professor William Hall and Ms. Mary Pendergast resigned from the Board of Directors on 26 July 2022.
The market price of the Company’s ordinary shares during the year ended 31 December 2022 moved in the range of
$173.90 to $296.03 (year ended 31 December 2021: in the range of $171.87 to $309.70). The closing share price at
31 December 2022 was $194.25 (at 31 December 2021: $309.70).
Summary compensation table - Year ended 31 December 2022
Name
Year
Salary
contribution
Company
pension
Performance
related
compensation
All other
compensation Subtotal
Share-
based
payments
***
Directors’
fees
Total
compensation
$’000
$’000
2022 —
—
$’000
—
$’000
$’000
$’000
$’000
—
—
267
363
$’000
630
2022 1,168
125
1,173
31 2,497
7,504
44
10,045
2022
556
70
342
30
998
1,385
—
2,383
Ciaran
Murray
Dr. Steve
Cutler
Brendan
Brennan
Rónán
Murphy
2022 —
2022 —
Professor
Hugh Brady*
Dr. John
Climax
Joan Garahy 2022 —
2022 —
Professor
William Hall*
Eugene
McCague
2022 —
2022 —
Julie O'Neill
2022 —
Mary
Pendergast*
Colin
Shannon**
2022 —
2022 —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
200
150
—
—
67
—
—
—
—
202
—
—
200
69
54
90
123
58
—
—
200
125
—
—
—
—
200
69
110
54
—
—
—
85
—
—
133
98
350
121
292
323
127
325
310
123
85
231
1,515
61 3,495 10,496
1,354
15,345
Linda Grais
2022 —
Total
2022 1,724
—
195
* Professor Hugh Brady, Professor William Hall and Ms. Mary Pendergast resigned from the Board of Directors on 26 July 2022.
** Mr. Colin Shannon resigned from the Board of Directors on 9 December 2022.
73
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
9. Payroll and related benefits (continued)
***Share-based payments is the IFRS 2 expense related to share options, RSUs and PSUs. The aggregate amount of the gains earned by
the Directors on the exercise of share options during the financial year is disclosed in Note 3 Profit before taxation under ‘Directors’
emoluments’.
Summary compensation table - Year ended 31 December 2021
Name
Year
Salary
Company
pension
contribution
Performance
related
compensation
All other
compensation
Subtotal
Directors’
fees
Total
compensation
Share-
based
payments
***
$’000
$’000
2021 —
—
$’000
—
$’000
$’000
$’000
$’000
—
—
216
372
$’000
588
2021 1,146
121
2,300
31 3,598
5,848
44
9,490
2021
607
76
914
35 1,632
1,294
—
2,926
Ciaran
Murray
Dr. Steve
Cutler
Brendan
Brennan
Rónán
Murphy
Professor
Hugh Brady*
Dr. John
Climax
2021 —
2021 —
2021 —
Joan Garahy 2021 —
Professor
William Hall*
Eugene
McCague
2021 —
2021 —
Julie O'Neill
2021 —
Mary
Pendergast*
Colin
Shannon**
2021 —
2021 —
Linda Grais
2021 —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
227
144
—
—
230
90
—
—
230
78
—
—
216
110
—
—
230
103
—
—
216
119
—
—
200
86
—
—
230
90
—
—
0
45
—
—
—
45
371
320
308
326
333
335
286
320
45
45
Total
2021 1,753
197
3,214
66 5,230
9,137
1,236
15,693
* Professor Hugh Brady, Professor William Hall and Ms. Mary Pendergast resigned from the Board of Directors on 26 July 2022.
** Mr. Colin Shannon resigned from the Board of Directors on 9 December 2022.
***Share-based payments is the IFRS 2 expense related to share options, RSUs and PSUs. The aggregate amount of the gains earned by
the Directors on the exercise of share options during the financial year is disclosed in Note 3 Profit before taxation under ‘Directors’
emoluments’.
10.
Retirement benefit obligations
The Group operates a number of defined contribution schemes and defined benefit pension schemes. The Group accounts
for pensions in accordance with IAS 19R Employee Benefits (“IAS 19R”).
(i)
Defined Contribution Schemes
Certain employees of the Group are eligible to participate in a defined contribution or profit sharing plans (the "Plans").
Participants in the Plans may elect to defer a portion of their pre-tax earnings into a pension plan, which is run by an
independent party. The Group matches each participant's contributions up to certain levels of the participant's annual
compensation. Contributions to the plan are recorded as a remuneration expense in the Consolidated Statement of Profit
and Loss. Contributions for the year ended 31 December 2022 and year ended 31 December 2021 were $46.3 million and
$37.1 million respectively.
74
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
10. Retirement benefit obligations (continued)
The Group's United States operations maintain retirement plans (the "U.S. Plans") that qualify as deferred salary
arrangements under Section 401(k) of the Internal Revenue Code. Participants in the U.S. Plans may elect to defer a
portion of their earnings, up to the Internal Revenue Service annual contribution limit. The Group matches participant's
contributions at varying amounts, subject to a maximum of 4.5% of the participant's annual compensation. Contributions to
the U.S. Plans are recorded, in the year contributed, as an expense in the Consolidated Statement of Profit and Loss.
Contributions for the year ended 31 December 2022 and year ended 31 December 2021 were $30.2 million and $23.7
million respectively.
(ii)
Defined Benefit Plans
ICON Development Solutions Limited Pension Plan
One of the Group’s subsidiaries, ICON Development Solutions Limited, which was acquired by the Group in 2003, operates
a defined benefit pension plan in the United Kingdom for certain employees, which is now closed to new members.
The plan is managed externally and the related pension costs and liabilities are assessed in accordance with the advice of a
professionally qualified actuary. Plan assets at 31 December 2022 and 31 December 2021 consist of units held in
independently administered funds.
Financial assumptions
The following assumptions were used in determining the fair value of the plan assets and the present value of the projected
benefit obligation at 31 December 2022:
Discount rate
Inflation rate
Future pension increases
Future salary increases
31 December
2022
31 December
2021
4.88 %
3.06 %
3.18 %
3.56 %
1.75 %
3.18 %
2.90 %
3.68 %
A single discount rate is used which, when used to discount the projected benefit cashflows underlying a pension scheme
with a 26 year duration, gives the same result as a full AA corporate bond yield curve.
The following assumptions were used at the commencement of the year in determining the net periodic pension cost for the
year ended 31 December 2022:
Discount rate
Future salary increases
31 December
2022
31 December
2021
1.75 %
3.68 %
1.50 %
3.40 %
75
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
10. Retirement benefit obligations (continued)
Mortality assumptions
Assumptions regarding mortality experience are set based on actuarial advice in accordance with published statistics and
experience. The mortality assumptions adopted at 31 December 2022 are 108% of the standard tables S3PMA/S3PFA_M,
Year of Birth, no age rating for males and females, projected using CMI_2020 converging to 1.25% p.a.. These imply the
following life expectancies, for persons retiring at age 62:
Male retiring in 2022
Female retiring in 2022
Male retiring in 2042
Female retiring in 2042
Consolidated Financial Statements
Funding status
Projected benefit obligation
Fair value of plan assets
Retirement benefit plan net asset (obligation)
31 December
2022
31 December
2021
24.4 years
24.3 years
26.2 years
26.1 years
25.8 years
25.7 years
27.8 years
27.7 years
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
(19,558)
(41,813)
26,050
6,492
36,198
(5,615)
Movement in the net benefit obligation recognised in accrued and other liabilities was as follows:
Present Value
of Obligations
Fair Value of
Plan Assets
$’000
$’000
(41,813)
36,198
(117)
(672)
—
580
(42,602)
36,778
—
27
18,983
(393)
18,617
3,932
—
(19)
514
495
(19,558)
(6,626)
—
—
—
(6,626)
(3,677)
70
19
(514)
(425)
26,050
Total
$’000
(5,615)
(117)
(92)
(5,824)
(6,626)
27
18,983
(393)
11,991
255
70
—
—
70
6,492
At 1 January 2022
Current service costs
Interest expense/(income)
Re-measurements
Experience adjustment
Gain or loss from change in demographic assumptions
Gain or loss from change in financial assumptions
Experience gain or loss
Exchange differences
Contributions:
- Employers
- Plan participants
Benefit payments
At 31 December 2022
76
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
10. Retirement benefit obligations (continued)
At 1 January 2021
Current service costs
Interest expense/(income)
Re-measurements
Experience adjustment
Gain or loss from change in demographic assumptions
Gain or loss from change in financial assumptions
Experience gain or loss
Exchange differences
Contributions:
- Employers
- Plan participants
Benefit payments
At 31 December 2021
Present Value
of Obligations
Fair Value of
Plan Assets
$’000
$’000
(43,988)
34,612
(134)
(665)
—
521
(44,787)
35,133
—
97
2,090
(90)
2,097
411
—
(23)
489
466
(41,813)
1,826
—
—
—
1,826
(386)
91
23
(489)
(375)
36,198
Total
$’000
(9,376)
(134)
(144)
(9,654)
1,826
97
2,090
(90)
3,923
25
91
—
—
91
(5,615)
Re-measurements are recognised in the Consolidated Statement of Comprehensive Income as follows:
Return on plan assets (excl. amounts included in interest income/expense)
Gain or loss from change in demographic assumptions
Gain or loss from change in financial assumptions
Experience gain or loss
Comprehensive income at end of year
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
(6,626)
27
18,983
(393)
1,826
97
2,090
(90)
11,991
3,923
Defined benefit pension expense recognised in the Consolidated Statement of Profit and Loss was as follows:
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
117
92
209
134
144
278
Current service cost recognised in profit or loss
Net interest expense recognised in profit or loss
Net periodic pension cost
77
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
10. Retirement benefit obligations (continued)
Plan Assets Fair Value
The fair value of plan assets at 31 December 2022 is analysed as follows:
Unit funds
31 December
2022
31 December
2021
$’000
$’000
26,050
36,198
The plan’s assets do not include any of the Group’s own financial instruments, nor any property occupied by, or other assets
used by the Group.
At 31 December 2022 the long-term expected rate of return on cash is determined by reference to traditional corporate bond
rates at the latest reporting date. The long-term expected returns on traditional corporate and government bonds are
determined by reference to corporate bond yields and gilt yields respectively at the reporting date. The long-term expected
returns on equities is based on the rate of return on government bonds with an allowance for out-performance. The long-
term expected return on high yield bonds, secured loans and multi asset credit is based on the return on traditional
corporate bonds with an allowance for out-performance.
The underlying asset split of the funds at 31 December 2022 and 31 December 2021 was as follows:
Government Bonds
Diversified Bonds
Equities
Corporate Bonds (including 50% high yield bonds)
Secured Loans and Multi Asset Credit
31 December
2022
31 December
2021
88 %
12 %
— %
— %
— %
— %
— %
24 %
37 %
39 %
The assets of the scheme are held on an investment platform with Mercer Limited which invests in a number of investment
funds with MGI and Mercer Sterling. The overall investment strategy is that approximately 88% of investments are in
government bonds and index linked gilts and 12% in diversified bonds. There is no self-investment in employer related
assets.
Sensitivity assumptions
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Change in Assumption
Change in Liabilities
Discount Rate
Rate of Inflation
Rate of Salary Growth
Rate of Mortality
Decrease of 0.25% p.a.
Increase of 0.25% p.a.
Increase of 0.25% p.a.
Increase in life expectancy of 1 year
Increase by 4.8%
Increase by 0.8%
Increase by 0.1%
Increase by 2.7%
The sensitivities shown above are approximate. Each sensitivity considers one change in isolation. The inflation sensitivity
includes the impact of changes to the assumptions for revaluation, pension increases and salary growth.
The plan typically exposes the Company to actuarial risks such as investment risk, interest rate risk, salary growth risk,
mortality risk and longevity risk. A decrease in bond yields, a rise in inflation or an increase in life expectancy would result in
an increase to plan liabilities. This would detrimentally impact the Statement of Financial Position and may give rise to
increased charges in future Statements of Profit and Loss. This effect would be partially offset by an increase in the value of
the plan’s bond holdings, and in qualifying death in service insurance policies that cover mortality risk. Additionally, caps on
inflationary increases are in place to protect the plan against extreme inflation.
78
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
10. Retirement benefit obligations (continued)
Cash flows and Maturity Profiles
The Group expects to contribute approximately $0.1 million of normal contribution to the defined benefit pension scheme for
the year ended 31 December 2023. The average duration of the defined benefit obligation at the period ending
31 December 2022 is 19 years.
Aptiv Solutions Pension Plan
On 7 May 2014, the Company acquired 100% of the common stock of Aptiv Solutions (“Aptiv”). The acquisition of Aptiv was
accounted for as a business combination in accordance with IFRS 3 Business Combinations. The Company has a defined
benefit plan covering its employees in Switzerland as mandated by the Swiss government. Benefits are based on the
employee’s years of service and compensation. The plan is managed externally and the related pension costs and liabilities
are assessed in accordance with the advice of a professionally qualified actuary. Plan assets at 31 December 2022 and
31 December 2021 consist of units held in independently administered funds.
Funding status
Projected benefit obligation
Fair value of plan assets
Retirement benefit plan net obligation
31 December
2022
31 December
2021
$’000
(5,806)
5,681
(125)
$’000
(7,644)
6,965
(679)
Movement in the net benefit obligation recognised in accrued and other liabilities was as follows:
Present Value of
Obligations
Fair Value of
Plan Assets
$’000
$’000
(7,644)
(146)
(30)
23
6,965
—
29
—
(7,797)
6,994
—
—
1,479
48
1,527
148
—
(82)
398
316
(5,806)
(985)
—
—
—
(985)
(126)
114
82
(398)
(202)
5,681
Total
$’000
(679)
(146)
(1)
23
(803)
(985)
—
1,479
48
542
22
114
—
—
114
(125)
At 1 January 2022
Current service costs
Interest (income)/expense
Past service cost
Re-measurements
Experience adjustment
Gain or loss from change in demographic assumptions
Gain or loss from change in financial assumptions
Experience gain or loss
Exchange differences
Contributions:
- Employers
- Plan participants
Benefit payments
At 31 December 2022
79
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
10. Retirement benefit obligations (continued)
At 1 January 2021
Current service costs
Interest expense/(income)
Past service cost
Re-measurements
Experience adjustment
Gain or loss from change in financial assumptions
Experience gain or loss
Exchange differences
Contributions:
- Employers
- Plan participants
Benefit payments
At 31 December 2021
PRA Switzerland AG Pension Plan
Present Value of
Obligations
Fair Value of
Plan Assets
$’000
$’000
(8,620)
(150)
(12)
82
7,601
—
11
—
Total
$’000
(1,019)
(150)
(1)
82
(8,700)
7,612
(1,088)
—
280
24
484
261
—
(95)
406
0
(7,644)
(234)
—
—
(234)
(230)
128
95
(406)
0
6,965
(234)
280
24
250
31
128
—
—
128
(679)
On 1 July 2021, the Company completed the Acquisition of PRA. PRA Switzerland AG, a subsidiary of the Company has a
defined benefit plan covering its employees in Switzerland as mandated by the Swiss government. Benefits are based on
the employee's years of service and compensation. The plan is managed externally and the related pension costs and
liabilities are assessed in accordance with the advice of a professionally qualified actuary. Plan assets at 31 December 2022
consist of units held in independently administered funds.
Funding status
Projected benefit obligation
Fair value of plan assets
Retirement benefit plan net obligation
31 December
2022
31 December
2021
$’000
(5,345)
4,059
(1,286)
$’000
(4,990)
3,017
(1,973)
80
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
10. Retirement benefit obligations (continued)
Movement in the net benefit obligation recognised in non-current other liabilities was as follows:
At 1 January 2022
Current service cost
Interest expense
Past service cost
Re-measurements
Gain or loss from change in financial assumptions
Experience gain or loss
Exchange differences
Contributions:
Employers
Plan participants
Benefit payments
Settlement
At 31 December 2022
At 1 January 2021
Current service cost
Interest expense
Past service cost
Re-measurements
Experience gain or loss
Exchange differences
Contributions:
Employers
Plan participants
Benefit payments
At 31 December 2021
Present Value of
Obligations
Fair Value of
Plan Assets
$’000
$’000
(4,990)
(404)
(20)
—
3,017
—
12
—
Total
$’000
(1,973)
(404)
(8)
—
(5,414)
3,029
(2,385)
1,293
(667)
626
49
—
(2,396)
946
844
(606)
(5,345)
106
—
106
(7)
325
2,396
(946)
(844)
931
4,059
Present Value of
Obligations
Fair Value of
Plan Assets
$’000
$’000
(4,890)
(207)
(19)
—
2,935
—
11
—
1,399
(667)
732
42
325
—
—
—
325
(1,286)
Total
$’000
(1,955)
(207)
(8)
—
(5,116)
2,946
(2,170)
(1)
(1)
149
—
(135)
113
(22)
3
3
(89)
135
135
(113)
157
2
2
60
135
—
—
135
(4,990)
3,017
(1,973)
81
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
11. Share-based payments
Share Options
On 21 July 2008 the Company adopted the Employee Share Option Plan 2008 (the “2008 Employee Plan”) pursuant to
which the Compensation and Organisation Committee of the Company’s Board of Directors may grant options to any
employee, or any director holding a salaried office or employment with the Company or a Subsidiary for the purchase of
ordinary shares. On the same date, the Company also adopted the Consultants Share Option Plan 2008 (the “2008
Consultants Plan”), pursuant to which the Compensation and Organisation Committee of the Company’s Board of Directors
may grant options to any consultant, adviser or non-Executive Director retained by the Company or any Subsidiary for the
purchase of ordinary shares.
On 14 February 2017 both the 2008 Employee Plan and the 2008 Consultants Plan (together the “2008 Option Plans”) were
amended and restated in order to increase the number of options that can be issued under the 2008 Consultants Plan from
0.4 million to 1.0 million and to extend the date for options to be granted under the 2008 Option Plans.
An aggregate of 6.0 million ordinary shares have been reserved under the 2008 Employee Plan, as reduced by any shares
issued or to be issued pursuant to options granted under the 2008 Consultants Plan, under which a limit of 1.0 million
shares applies. Further, the maximum number of ordinary shares with respect to which options may be granted under the
2008 Employee Option Plan, during any calendar year to any employee shall be 0.4 million ordinary shares. There is no
individual limit under the 2008 Consultants Plan. No options may be granted under the 2008 Option Plans after 14 February
2027.
Each option granted under the 2008 Employees Plan or the 2008 Consultants Plan (together the “2008 Option plans”) will
be evidenced by a Stock Option Agreement between the optionee and the Company. The exercise price will be specified in
each Stock Option Agreement, however, option prices will not be less than 100% of the fair market value of an ordinary
share on the date the option is granted.
PRA Equity Incentive Plans
The following represents the PRA equity incentive plans, which still have equity outstanding but have been terminated as of
1 July 2021, as to grants of future awards.
Pursuant to the Merger Agreement, effective on 1 July 2021, each outstanding stock option and restricted stock unit under
the PRA Plans was assumed by the Company and converted into a stock option or Restricted Share Unit exercisable for or
payable in Ordinary Shares based on the ratio of the average trading price per Ordinary Share for the ten days prior to 1
July 2021, and the corresponding value of the Merger consideration for each PRA Share. Accordingly, the plans as detailed
below were assumed by the Company.
PRA Health Sciences, Inc. 2020 Stock Incentive Plan was amended and restated and assumed by ICON effective as of 1
July 2021. The 2020 Stock Incentive Plan (“the 2020 Plan”), was approved by the PRA stockholders at their annual meeting
on 18 May 2020. The 2020 Plan allowed for the issuance of stock options, stock appreciation rights, restricted shares and
restricted stock units, other stock-based awards, and performance compensation awards as permitted by applicable laws.
The 2020 Plan authorised the issuance of 2,500,000 shares of common stock plus all shares that remained available under
the prior plan on 18 May 2020.
The PRA Health Sciences, Inc. 2018 Stock Incentive Plan was amended and restated and assumed by the Company
effective as of 1 July 2021. The 2018 Stock Incentive Plan (the “2018 Plan”), was approved by the PRA stockholders at their
annual meeting on 31 May 2018. The 2018 Plan allowed for the issuance of stock options, stock appreciation rights,
restricted shares and restricted stock units, other stock-based awards, and performance compensation awards as permitted
by applicable laws. The 2018 Plan authorised the issuance of 2,000,000 shares of common stock plus all shares that
remained available under the 2014 Plan on 31 May 2018 (which included shares carried over from the 2013 Plan).
The PRA Health Sciences, Inc. 2014 Omnibus Incentive Plan was amended and restated and assumed by the Company
effective as of 1 July 2021 (the “2014 Plan”). On 23 November 2014, the PRA Health Sciences, Inc. Board of Directors
approved the formation of the 2014 Plan for Key PRA Employees. The 2014 Plan allowed for the issuance of stock options,
stock appreciation rights, restricted shares and restricted stock units, other stock-based awards, and performance
compensation awards as permitted by applicable laws.
The 2013 Stock Incentive Plan for Key Employees of PRA Health Sciences and its Subsidiaries was amended and restated
and assumed by ICON effective as of 1 July 2021 (the “2013 Plan”). On 23 September 2013, the PRA Health Sciences, Inc.
Board of Directors approved the formation of the 2013 Plan for Key Employees of Pinnacle Holdco Parent, Inc. and its
subsidiaries. The 2013 Plan allowed for the issuance of stock options and other stock-based awards as permitted by
applicable laws. The number of shares available for grant under the 2013 Plan was 12.5% of the outstanding shares at
closing on a fully diluted basis. The 2013 Plan authorised the issuance of 2,052,909 shares of common stock.
82
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
Overall
Share option awards are granted with an exercise price equal to the market price of the Company’s ordinary shares at date
of grant. Share options typically vest over a period of five years from date of grant and expire eight to ten years from date of
grant. Share options granted to non-executive directors during 2018 vest over 12 months and expire eight years from the
date of grant. The maximum contractual term of options outstanding at 31 December 2022 is ten years.
Set out below is a summary of the total number of options outstanding and number of options available to grant under each
plan as at 31 December 2022:
Outstanding
Available to Grant
31 December
2022
31 December
2021
31 December
2022
31 December
2021
2008 Stock Option Plans
1,378,119
1,695,460
791,392
822,337
Total
1,378,119
1,695,460
791,392
822,337
The total number of share options outstanding and exercisable at 31 December 2022 is as follows:
Number of
Options
Weighted Average
Exercise Price
Outstanding at 31 December 2020
553,746
$108.53
Replacement awards on acquisition
Granted
Exercised
Forfeited
2,177,130
100,299
(1,065,529)
(70,186)
$108.78
$177.76
$111.29
$128.46
Outstanding at 31 December 2021
1,695,460
$110.38
Granted
Exercised
Forfeited
108,643
(348,286)
(77,698)
$229.94
$102.87
$143.08
Outstanding at 31 December 2022
1,378,119
$119.86
Exercisable at 31 December 2022
1,047,803
$102.29
The weighted average intrinsic value of the Company’s shares on date of exercise of share options during the year ended
31 December 2022 was $120.36 (31 December 2021: $126.90).
83
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
At 31 December 2022, the range of exercise prices and weighted average remaining contractual life of outstanding and
exercisable options was as follows:
Range Exercise
Price
Options Outstanding
Number of
Shares
Weighted
Average
Remaining
Contractual Life
Weighted Average
Exercise Price
Number of
Shares
Weighted Average
Exercise Price
Options Exercisable
14.88 - 96.15
103.81 - 124.00
125.74 - 147.26
159.33 - 231.68
494,565
226,489
386,518
270,547
2.70
5.58
5.65
6.24
494,565
203,605
303,054
46,579
14.88 - 231.68
1,378,119
4.69 $
119.86
1,047,803 $
102.29
Share option fair values 2022
The weighted average grant date fair value of share options granted by the Company during the year ended 31 December
2022 was $65.72 based on the following grants:
Grant Date
03 Mar 22
21 May 22
Number of Shares
Weighted Average Exercise Price
96,525
12,118
108,643
$231.68
$216.10
$229.94
Replacement awards
The fair value of share options granted by the Company as replacement awards during the year ended 31 December 2021
was $107.21 based on the following grant:
Grant Date
1 Jul 21
Number of Shares
Weighted Average Exercise Price
2,177,130
$108.78
Share option fair values 2021
The weighted average grant date fair value of share options granted by the Company during the year ended 31 December
2021 was $45.16 based on the following grants:
Grant Date
03 Mar 21
21 May 21
Number of Shares
Weighted Average Exercise Price
95,287
5,012
100,299
$174.96
$231.08
$177.76
84
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
Fair value of share options – Assumptions
The fair values of options granted during the year ended 31 December 2022 and the year ended 31 December 2021 were
calculated using a binomial option-pricing-model, using the following assumptions:
Weighted average exercise price
Expected volatility (1)
Expected dividend yield
Risk-free rate (2)
Rate of forced early exercise
Year ended 31
December 2022
Year ended 31 December 2021
Annual Awards
Replacement Awards
Annual Awards
$229.94
28.0 %
—
1.1% - 2.8%
10% p.a.
$108.78
29.0 %
—
0.1% - 0.8%
10% p.a.
$177.26
25.0 %
—
1.0% - 1.4%
10% p.a.
Minimum gain for voluntary early exercise
25% of exercise price
25% of exercise price
25% of exercise price
Rate of voluntary early exercise at
minimum gain
75% per annum
75% per annum
75% per annum
(1) Expected volatility has been determined based upon the volatility of the Company’s share price over a period which is
commensurate with the expected term of the options granted.
(2) Risk-free rate is dependent on the grant date and term of the award.
Restricted Share Units and Performance Share Units
On 23 April 2013 the Company adopted the 2013 Employees Restricted Share Unit and Performance Share Unit Plan (the
“2013 RSU Plan”) pursuant to which the Compensation and Organisation Committee of the Company’s Board of Directors
may select any employee, or any Director holding a salaried office or employment with the Company, or a Subsidiary to
receive an award under the plan. On 11 May 2015 the 2013 RSU Plan was amended and restated in order to increase the
number of shares that can be issued under the RSU Plan by 2.5 million shares. Accordingly, an aggregate of 4.1 million
ordinary shares have been reserved for issuance under the 2013 RSU Plan. The shares are awarded at zero cost and vest
over a service period. Awards under the 2013 RSU Plan may be settled in cash or shares at the option of the Company. No
awards may be granted under the 2013 RSU Plan after 11 May 2025.
On 30 April 2019 the Company approved the 2019 Consultants and Directors Restricted Share Unit Plan (the “2019
Consultants RSU Plan”), which was effective as of 16 May 2019, pursuant to which the Compensation and Organisation
Committee of the Company’s Board of Directors may select any consultant, adviser or non-executive Director retained by
the Company, or a Subsidiary to receive an award under the plan. 250,000 ordinary shares have been reserved for issuance
under the 2019 Consultants RSU Plan. The awards are at par value and vest over a service period. Awards granted to non-
executive directors during 2020 and 2021 vest over twelve months.
The Company has awarded RSUs and PSUs to certain key individuals of the Group. The fair value of RSUs is based on the
share price at the date of grant, with the expense spread over the vesting period. The following table summarises RSU and
PSU activity for the year ended 31 December 2022:
PSU
Outstanding
Number of
Shares
PSU
Weighted
Average
Grant Date
Fair Value
RSU
Outstanding
Number
of Shares
RSU
Weighted
Average
Grant Date Fair
Value
Outstanding at 31 December 2021
154,190 $
160.23
572,785 $
191.20
Granted
Shares vested
Forfeited
64,682 $
(46,087) $
(20,365) $
229.79
140.48
185.90
302,307 $
(195,029) $
(97,451) $
216.85
174.35
205.25
Outstanding at 31 December 2022
152,420 $
192.29
582,612 $
207.73
The PSUs vest based on service and specified EPS targets over the period 2020 – 2022, 2021 – 2023 and 2022 – 2024.
Depending on the actual amount of EPS from 2022 to 2024, up to an additional 76,210 PSUs may also be granted.
85
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
Share-based payment expense
Operating profit for the year ended 31 December 2022 is stated after charging $55.8 million in respect of share-based
payment expense. Share-based payment expense has been allocated as follows:
Direct costs
Other operating expenses
Transaction and integration related - exceptional item *
Total
Year ended 31
December 2022
Year ended 31
December 2021
$’000
$’000
17,331
38,459
—
19,151
40,521
46,187
55,790
105,859
* Represents the post combination portion of the accelerated vesting of awards following the completion of the Merger.
86
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Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
13. Intangible assets - goodwill and other (continued)
Impairment review of goodwill
Goodwill is subject to impairment testing on an annual basis, or more frequently if there are indicators of impairment. These
assets are allocated to groups of cash generating units (CGUs). The recoverable amount of each of the CGUs is determined
based on value-in-use calculations. Goodwill acquired through business combinations has been allocated to the Group’s
three CGUs. The CGUs identified represent the lowest level within the Group at which goodwill is monitored and are not
larger than the operating segment determined in accordance with IFRS 8 Operating Segments.
The Group has identified three CGUs in accordance with the provisions of IAS 36 Impairment of Assets.
A summary of the allocation of the carrying value of goodwill by CGU, is as follows:
Goodwill
Clinical Research
Strategic Solutions
Data Solutions
31 December
2022
31 December
2021
$’000
Revised*
$’000
7,284,244
7,307,655
1,372,648
1,377,059
367,587
368,768
9,024,479
9,053,482
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
Impairment testing methodology and results
Cash flow forecasts employed for the value-in-use calculations are for a five year period approved by management and a
terminal value which is applied to the year five cash flows. The terminal value reflects the discounted value of the cash flows
beyond year five which is based on the weighted average long-term growth rates for each CGU.
Management’s estimates of future cash flows are based upon current budgets and strategic plans and are reflective of
anticipated growth rates within the CRO industry, expected growth in the Group’s market share and reflective of past
experience. Key assumptions applied in determining expected future cash flows for these plans include management’s
estimate of future profitability, replacement capital expenditure requirements, trade working capital investment needs and tax
considerations. The Group’s cash flow projections are adjusted each year for actual and expected changes in performance.
The following assumptions were applied in determining the five year projected cash flows of the three CGUs at
31 December 2022:
Expected revenue growth rate
Expected growth rate for operating costs
Expected effective tax rate
Expected annual working capital growth rate
Expected capital expenditure growth rate
Discount rate
Long term growth
31 December
2022
Clinical
Research
Strategic
Solutions
Data Solutions
8.3 %
8.4 %
15.5 %
19.0 %
10.9 %
11.5 %
2.0 %
7.8 %
8.6 %
15.5 %
(3.2) %
11.9 %
11.5 %
2.0 %
7.8 %
7.7 %
15.5 %
— %
15.5 %
11.5 %
2.0 %
91
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
13. Intangible assets - goodwill and other (continued)
Expected revenue growth and the expected growth in operating costs are determined based upon the expected growth
rates used in preparing the Group’s budgets and strategic plans. In estimating budget revenue, consideration is given to
current levels of backlog (i.e. the value of new business awards not yet recognised in revenue) and the estimated timeframe
over which this is expected to be recognised within revenue, together with an estimate of revenue expected to be generated
from new awards not currently within backlog. In estimating revenue from new awards consideration is given to current RFP
(request for proposals) volumes, expected growth rates in both the CRO industry and the Group’s market share, and of past
experience. In estimating budgeted operating costs, consideration is given to required staffing levels, project related costs,
facility and information technology costs and other costs. Staff costs and project related costs generally increase in line with
revenue and are therefore estimated based on revenue growth expectations, while facility and information costs and other
costs are relatively fixed and are therefore projected based upon a lower growth rate. An expected long-term average tax
rate of 15.5% has been applied in determining the projected after tax cash flows.
Expected annual working capital growth and expected capital expenditure growth are based upon the expected growth rates
used in preparing the Group’s budgets and strategic plans. Long term growth rates were based on global macroeconomic
data.
A pre-tax discount rate of 11.5% (2021: between 11.6% and 12.1%) has been applied to the projected cash flows of the
CGUs in determining its value-in-use. This rate is reflective of both the time value of money and risks specific to the CGUs.
The discount rate is based upon the Group’s weighted average cost of capital which has been determined by applying the
Group’s long-term optimal capital structure to its costs of debt and cost of equity. The Group’s cost of debt has been
calculated by applying an appropriate margin over the risk-free interest rate. The Group’s cost of equity has been calculated
using the capital asset pricing model and includes an appropriate equity risk premium over the available risk-free interest
rate. The Group’s weighted average cost of capital is adjusted to reflected additional risk premiums associated with each
CGU.
No impairment was recognised in 2022 or 2021 as a result of the impairment testing which identified headroom in the
recoverable amount of the related CGUs as compared to their carrying value.
Sensitivity Analysis
A sensitivity analysis to determine if reasonable changes in key assumptions could lead to an impairment was conducted at
31 December 2022. The table below identifies the amounts by which each of the specified assumptions may either decline
or increase to arrive at a zero excess of the present value of future cash flows over the carrying value of goodwill in the
CGU:
Expected revenue growth rate decreased by
Expected long term growth rate decreased by
Discount rate increased by
*All other inputs remained constant
31 December
2022
Clinical
Research
Strategic
Solutions Data Solutions
3.9 %
21.4 %
9.5 %
1.8 %
16.1 %
7.9 %
1.9 %
9.2 %
5.2 %
Management believes that the assumptions originally used in the value-in-use models are sufficiently prudent to ensure no
reasonable change, in normal circumstances, in any of the above key assumptions would cause the carrying value of any
CGU to exceed its recoverable amount.
92
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
14. Business combinations
(a)
PRA Health Sciences, Inc.
On 1 July 2021 (the "Merger Date"), the Company completed the Acquisition of PRA by means of a merger whereby Indigo
Merger Sub, Inc., a Delaware corporation and subsidiary of ICON, merged with and into PRA Health Sciences, Inc., the
parent of the PRA Health Sciences Group ("the Acquisition" and "the Merger"). The combined Group has retained the name
ICON and brought together approximately 38,000 (as at the Merger date) employees across the globe, creating one of the
world’s most advanced healthcare intelligence and clinical research organisation. The Merger was accounted for as a
business combination using the acquisition method of accounting in accordance with IFRS 3 'Business Combinations'.
The combined Company leverages its enhanced operations to transform clinical trials and accelerate biopharma customers’
commercial success through the development of much needed medicines and medical devices. The new ICON has a
renewed focus on leveraging data, applying technology and accessing diverse patient populations to speed up drug
development.
Upon completion of the Merger, pursuant to the terms of the Merger Agreement, PRA became a wholly owned subsidiary of
the ICON Group. Under the terms of the Merger, PRA shareholders received per share $80 in cash and 0.4125 shares of
ICON stock. The trading of PRA common stock on NASDAQ was suspended prior to market open on 1 July 2021. .
In the years ended 31 December 2022 and 31 December 2021, the Company incurred $39.7 million and $124.4 million,
respectively, of Merger-related expenses which were accounted for separately from the business combination and expensed
as incurred within the Other Operating Expenses line item of the Consolidated Statement of Profit and Loss. These costs
consist primarily of investment banker fees, advisory fees, legal costs, accounting and consulting fees, and employee
retention bonuses. Included in transaction and integration costs for the years ended 31 December 2022 and 31 December
2021 are acquisition related costs (as defined by IFRS 3) of $0.8 million and $57.1 million, respectively. These costs include
finders fees, advisory, legal, accounting, valuation, and other professional or consulting fees.
The Company also incurred approximately $86.7 million of Merger-related financing fees and amortisation of previously
deferred fees which are included in the “Interest expense” line item in the Consolidated Statement of Profit and Loss for the
year ended 31 December 2021. During the year ended 31 December 2021, the Company deferred $76.2 million of financing
costs incurred as a result of the Senior Secured Credit Facility and Senior Secured Notes. These costs are being amortised
over the term of the related debt.
The Merger Date fair value of the consideration transferred consisted of the following:
Fair value of cash consideration
Fair value of ordinary shares issued to acquiree stockholders
Fair value of replacement share-based awards issued to acquiree employees
Repayment of term loan obligations and accrued interest *
(in thousands)
5,308,646
5,658,126
267,607
865,800
12,100,179
$
$
* This represents the portion of PRA debt paid by ICON. PRA also paid $401.6 million from available cash to settle debt
obligations that existed at the Merger Date.
93
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
14. Business combinations (continued)
The following table summarises the allocation of the consideration transferred based on the Merger Date fair values of
assets acquired and liabilities assumed, with the excess of the purchase price over the fair values of the identifiable net
assets acquired recorded as goodwill:
Cash and cash equivalents
Accounts receivable and unbilled revenue
Other current assets
Property, plant and equipment
Operating lease right-of-use assets
Goodwill *
Intangible assets
Deferred tax assets
Other assets
Accounts payable
Accrued expenses and other current liabilities
Current portion of operating lease liabilities
Unearned revenue
Non-current portion of operating lease liabilities
Deferred tax liabilities
Other non-current liabilities
Net assets acquired
Fair value
1 July
2021
(in thousands)
$
259,971
934,308
125,156
101,743
180,679
8,123,003
4,974,119
28,587
33,928
(50,259)
(380,342)
(36,775)
(723,278)
(146,903)
(1,119,762)
(203,996)
$
12,100,179
* The goodwill in connection with the Merger is primarily attributable to the assembled workforce of PRA and the expected
synergies of the Merger. None of the goodwill recognised is deductible for income tax purposes.
The following table summarises the fair value of identified intangible assets and their respective useful lives as of the Merger
Date (in thousands, except for estimated useful lives):
Estimated Fair Value
Estimated Useful Life
Customer relationships
Order backlog
Trade names
Patient database
Technology assets
Software
3,938,000
500,000
202,000
168,000
111,000
55,119
4,974,119
23 years
3 years
3 years
7 years
5 years
2-8 years
94
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
14. Business combinations (continued)
At June 30, 2022, the Company completed its review of the July 1, 2021 acquisition balance sheet of PRA and completed
the final valuation associated with certain assets acquired and liabilities assumed. During the year ended 31 December
2022, the Company recognised certain measurement period adjustments as shown in the table below:
Goodwill
Intangible assets
Deferred tax assets
Deferred tax liabilities
Other non-current liabilities
Measurement period
adjustments
(in thousands)
(36,579)
33,000
(2,910)
7,188
(699)
The impact of these measurement period adjustments has been incorporated with effect from the Merger Date and the
comparative financial statements have been revised.
15. Inventories
31 December
2022
31 December
2021
$’000
$’000
Laboratory inventories
7,063
5,772
The cost of inventories is recognised as an expense and included in direct costs in the Consolidated Statement of Profit and
Loss. For the year ended 31 December 2022, $74.0 million (2021: $64.1 million) was charged to the Consolidated
Statement of Profit and Loss . There was no material difference between the Consolidated Statement of Financial Position
value of inventories and their replacement costs.
16. Accounts receivable, unbilled services (contract assets) and unearned revenue (contract liabilities)
Accounts receivables and unbilled revenue are as follows:
Billed services (accounts receivable)
Unbilled services (unbilled revenue)
Trade accounts receivable and unbilled revenue, gross
Allowance for credit losses
Trade accounts receivable and unbilled revenue, net
31 December
2022
31 December
2021
$’000
$’000
1,751,950
1,349,851
957,655
623,121
2,709,605
1,972,972
(20,562)
(7,081)
2,689,043
1,965,891
Accounts receivables are amounts due from customers for services performed in the ordinary course of business. They are
generally due for settlement within 30-90 days and therefore are all classified as current. Accounts receivable are
recognised initially at the amount of consideration that is unconditional. Accounts receivable balances do not contain
significant financing components. The Group holds the accounts receivable with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortised cost.
All receivables are due within twelve months of the year ended 31 December 2022. Due to the short-term nature of the
current receivables, their carrying amount is considered to be the same as their fair value.
95
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
16. Accounts receivable, unbilled services (contract assets) and unearned revenue (contract liabilities) (continued)
Unbilled services and unearned revenue (contract assets and liabilities) were as follows:
31 December
2022
31 December
2021
$’000
$’000
$ Change
% Change
Unbilled services (unbilled revenue)
$
957,655 $
623,121
334,534
Unearned revenue (payments on account)
(1,507,449)
(1,315,961)
(191,488)
$
(549,794) $
(692,840)
143,046
53.7 %
14.6 %
20.6 %
Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to
our contracts with customers. We record assets for amounts related to performance obligations that are satisfied but not yet
billed and/or collected. These assets are recorded as unbilled revenue and therefore contract assets rather than accounts
receivables when receipt of the consideration is conditional on something other than the passage of time. Liabilities are
recorded for amounts that are collected in advance of the satisfaction of performance obligations or billed in advance of the
revenue being earned.
Unbilled services/revenue balances arise where invoicing or billing is based on the timing of agreed milestones related to
service contracts for clinical research. Contractual billing arrangements in respect of certain reimbursable expenses
(principally investigators) require billing by the investigator to the Company prior to billing by the Company to the customer.
The Company is the contract principal in respect of both direct services and in the use of third parties (principally
investigator services) that support a clinical trial. The progress towards completion for clinical service contracts is measured
based on total project costs (including reimbursable costs). Reimbursable expenses are included within direct costs and are
recorded based on activity undertaken by the third-party. Amounts owed to investigators and others in respect of
reimbursable expenses was $406.3 million at 31 December 2022 and $323.6 million at 31 December 2021 (see note 20
Accrued and other liabilities).
Unbilled services as at 31 December 2022 increased by $334.5 million as compared to 31 December 2021. Unearned
revenue increased by $191.5 million resulting in a decrease of $143.0 million in the net balance of unbilled services and
unearned revenue between 31 December 2021 and 31 December 2022. These fluctuations are primarily due to the
completion of the Merger on 1 July 2021 but are also partially due to timing of payments and invoicing related to the Group's
clinical trial management contracts. Billings and payments are established by contractual provisions including predetermined
payment schedules which may or may not correspond to the timing of the transfer of control of the Company's services
under the contract. Unbilled services arise from long-term contract when a cost-based input method of revenue recognition
is applied and revenue recognised exceeds the amount billed to the customer.
As of 31 December 2022 approximately $13.7 billion (2021: $13.3 billion) of revenue is expected to be recognised in the
future in respect of unsatisfied performance obligations. The Company expects to recognise revenue on approximately 48%
(2021: 48%) of the unrealised performance obligation over the next 12 months, with the remainder recognised thereafter
over the duration of the customer contracts.
Impairment of financial assets
At 31 December 2022, the Group maintained an impairment provision of $20.6 million (2021: $7.1 million). The credit loss
expense recognised on the Group's receivables and unbilled services was $17.8 million and $0.7 million for the twelve
months ended 31 December 2022 and 2021, respectively.
The Group's estimate of expected credit losses considers historical credit loss information that is adjusted, where necessary,
for current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the
estimation of expected credit losses. The Group's receivables and unbilled services are predominantly due from large and
mid-tier pharmaceutical and biotechnology companies that share similar risk characteristics. The Group monitors their
portfolio of receivables and unbilled services for any deterioration in current or expected credit quality (for example expected
delinquency level), and adjusts the allowance for credit losses as required. Receivables for which an impairment provision
was recognised were written off against the provision when there was no expectation of recovering additional cash.
96
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
16. Accounts receivable, unbilled services (contract assets) and unearned revenue (contract liabilities) (continued)
The Group considered that there was evidence of impairment if any of the following indicators were present:
•
•
•
significant financial difficulties of the debtor
probability that the debtor will enter a financial restructuring process, and
default or late payment
The closing loss allowance for trade receivables and contract assets as at 31 December 2022 and 31 December 2021
reconcile to the opening loss allowances as follows:
Balance at start of year
Receivables written off during the year as uncollectible
Increase in loss allowance recognised in profit or loss during the year
Unused amount reversed
Foreign currency translation
Balance at end of year
31 December
2022
31 December
2021
$’000
$’000
7,081
(3,913)
17,800
—
(406)
7,149
(116)
705
(544)
(113)
20,562
7,081
Further analysis of Group’s accounts receivable balances at 31 December 2022 and 31 December 2021 is as follows:
Not past due
Past due 0 to 30 days
Past due 31 to 60 days
Past due 61+ days
Accounts receivable
Gross
accounts
receivable
Gross
accounts
receivable
2022
$’000
2021
$’000
1,298,520
1,089,556
185,282
155,397
86,059
182,089
40,058
64,840
1,751,950
1,349,851
The carrying amounts of the Group’s accounts receivables are denominated in the following currencies:
Currency
US Dollar
Euro
Sterling
Other currencies
Total
31 December
2022
31 December
2021
$’000
$’000
1,310,111
1,027,467
348,194
235,899
19,641
74,004
17,439
69,046
1,751,950
1,349,851
97
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
17. Other assets
Non-current other assets
Lease deposits
Deferred employee savings scheme assets
Other receivables
Total
31 December
2022
31 December
2021
$’000
$’000
15,211
24,260
37,391
18,367
21,536
36,897
76,862
76,800
Lease deposits paid in respect of certain premises leased by the Group are refundable on expiry of the related leases.
Discounting of the non-current element has not been applied because the discount would be immaterial. However,
discounting may apply in the future if the non-current element becomes significant such that the discounting impact would
be material.
Non-current other receivables includes a loan of $9.2 million to Oncacare (see Note 29 Related parties for further details).
Other current assets
Personnel related prepayments
Facility and information system related prepayments
General overhead prepayments
Sales tax recoverable
Other receivables
Total
31 December
2022
31 December
2021
$’000
$’000
954
58,342
57,258
24,029
47,034
1,049
36,679
63,858
9,185
48,297
187,617
159,068
Other current assets do not contain any impaired assets. The maximum exposure to credit risk at the reporting date is the
carrying value of each receivable, other than prepayments which do not have credit risk. The Group does not hold any
collateral as security.
18. Financial asset investments
(a) Current asset investments - fair value through OCI
At start of year
Additions
Disposals/maturities
At end of year
31 December
2022
31 December
2021
$’000
$’000
1,712
482
(481)
1,713
1,729
480
(497)
1,712
Current asset investments comprise highly liquid investments with maturities of greater than three months and minimum “A-”
rated fixed and floating rate securities.
98
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
18. Financial asset investments (continued)
(b) Non-current financial assets - fair value through profit or loss
The Company entered into subscription agreements with a number of funds. Capital totalling $20.6 million had been
advanced under the terms of the subscription agreements at 31 December 2022 (2021: $16.9 million). The Company
determined that the interests in the funds meet the definition of equity securities without readily determinable fair values.
There was an increase in fair value of $6.3 million (2021: $3.2 million) recognised in profit during the year bringing the
carrying value of the subscriptions to $32.6 million at 31 December 2022 (2021: $22.6 million). At 31 December 2022, the
Company had committed to future investments of $23.3 million in respect of these funds.
(c) Equity method investments
The Company has invested $4.9 million to obtain a 49% interest in the voting share capital of Oncacare. The Company’s
investment in Oncacare is accounted for under the equity method due to the Company's ability to exercise significant
influence over Oncacare that is considered to be greater than minor. The Company records its pro rata share of the
earnings/losses of this investment in 'Share of equity method investment' in the Consolidated Statement of Profit and Loss
(see note 1 Basis of preparation and statement of accounting policies).
Oncacare is incorporated in Ireland and operates throughout Europe and the United States.
The majority investor has the right to sell the 51% majority voting share capital exclusively to the Company in a two and half
year period, commencing 1 January 2023 and ICON also has the right to acquire the 51% majority voting share capital from
1 August 2025. The following table represents our equity method investment at 31 December 2022:
Oncacare Limited
At start of year
Loss for the year/period
Carrying Value at end of year
31 December
2021
31 December
2020
$’000
$’000
2,373
(2,373)
—
4,534
(2,161)
2,373
During the year ended 31 December 2021, the Company provided a loan of $10 million to Oncacare in order to fund the
continued development of the business operations. The loan accrues annual interest at 1.6% and the loan is repayable on
30 June, 2025.
For the year ended 31 December 2022, the Company has recorded a loss of $3.1 million (31 December 2021: loss $2.2
million) representing its pro rata share of the losses in Oncacare. During the year ended 31 December 2022, the carrying
value of the Company's investment in Oncacare was reduced by $2.3 million of pro rata losses. The remaining $0.8 million
in pro rata losses served to reduce the carrying value of the Company's loan receivable from Oncacare. The outstanding
balance of the Company's loan receivable with Oncacare at 31 December, 2022 is $9.2 million.
On April 20, 2023, the Company completed the purchase of the majority investor’s 51% majority voting share capital of
Oncacare . As a result of this transaction, Oncacare became a wholly owned subsidiary of the ICON Group. See Note 31 for
further details.
19. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents
31 December
2022
31 December
2021
$’000
$’000
288,768
—
632,995
119,218
288,768
752,213
99
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2021
19. Cash and cash equivalents
Non-current other liabilities
Personnel related liabilities
Deferred government grants (note 22)
Retirement benefit plan net obligation (note 10)
Deferred employee savings scheme liabilities
Other liabilities
Total
31 December
2022
31 December
2021
$’000
Revised*
$’000
155
1,115
13,033
11,220
12,229
200
735
17,275
13,693
4,017
37,752
35,920
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
Deferred employee savings scheme liabilities are payable more than 5 years from the reporting date (see note 26 Financial
instruments). Discounting of the non-current element has not been applied because the impact would be immaterial.
However, discounting may apply in the future if the non-current element becomes significant such that the discounting
impact would be material.
Current accrued and other liabilities
Personnel related liabilities
Facility and information system related liabilities
General overhead liabilities*
Lease liabilities (note 27)
Other liabilities
Short-term government grants (note 22)
Total
31 December
2022
31 December
2021
$’000
$’000
395,862
413,185
16,896
12,055
530,204
459,814
43,656
12,852
42
49,757
11,647
45
999,512
946,503
*includes amounts due to third parties in respect of accrued reimbursable expenses of $406.3 million at 31 December 2022
and $323.6 million at 31 December 2021.
100
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
21. Disaggregation of Revenue
Revenue disaggregated by customer profile is as follows:
Top client
Clients 2-5
Clients 6-10
Clients 11-25
Other
Total
Year ended 31
December 2022
Year ended 31
December 2021
$’000
$’000
682,840
440,529
1,504,530
1,290,060
1,111,486
751,227
1,584,100
1,075,501
2,850,430
1,915,509
7,733,386
5,472,826
Our customers have similar profiles and economic characteristics, and therefore have similar degrees of risk and growth
opportunities.
22. Deferred government grants
At beginning of year
Grant additions
Amortised during the year
Foreign exchange movement
At end of year
Current (note 20)
Non-current (note 20)
Total
31 December
2022
31 December
2021
$’000
$’000
780
536
(155)
(46)
1,115
42
1,115
1,157
886
—
(47)
(59)
780
45
735
780
Under grant agreements amounts received may become repayable in full or in part should certain circumstances specified
within the grant agreements occur, including downsizing by the Group, disposing of the related assets, ceasing to carry on
its business or the appointment of a receiver over any of its assets.
101
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
23. Bank credit lines and loan facilities
The movement in net debt by category is as follows:
(in thousands)
Cash and cash equivalents
Net cash and cash equivalents
Financial assets at fair value through other
comprehensive income
Total cash and cash equivalents
Balance 1
Jan 2022
Net cash
inflow/
(outflow)
Other non-
cash
adjustments
Effects of
exchange
rates
Balance 31
Dec 2022
752,213
(446,725)
—
(16,720)
288,768
1,712
1
753,925
(446,724)
—
—
—
1,713
(16,720)
290,481
(in thousands)
Borrowings and lease
liabilities
Balance 1
Jan 2022
Drawn
down *
Repaid
Net cash
(inflow)/
outflow
Other non-
cash
adjustments
Effect of
exchange
rates
Balance
31 Dec
2022
Lease liabilities
(210,853)
—
54,617
54,617
(12,590)
(6,475)
(175,301)
Revolving Credit Facility
—
(75,000)
75,000
—
—
—
—
Senior Secured Credit
Facilities
(4,943,778)
— 800,000
800,000
(12,898)
— (4,156,676)
Senior Secured Notes
(492,534)
—
—
(4,977)
—
(497,511)
Total borrowings and
lease liabilities
(5,647,165)
(75,000) 929,617
854,617
(30,465)
(6,475) (4,829,488)
* Drawn down amounts reflect the gross amount of debt drawn down by the Company. Equivalent amounts per the
Consolidated Statement of Cash Flows reflect deduction of fees and debt discount paid directly to the lender.
The Company had the following debt outstanding as at 31 December 2022 and 31 December 2021:
(in thousands)
Credit Facilities:
Senior Secured Term Loan
Senior Secured Notes
Total debt
Less current portion of long-term debt
Total long-term debt
Less debt issuance costs and debt discount
Total long-term debt, net
Interest rate as of Maturity Date
Principal amount
31 December 2022
31 December
2022
31 December
2021
7.092 %
2.875 %
July 2028 $
4,201,213 $
5,001,213
July 2026
500,000
500,000
4,701,213
5,501,213
(55,150)
(55,150)
4,646,063
5,446,063
(47,026)
(64,901)
$
4,599,037 $
5,381,162
The Company incurred a $27.6 million debt discount in connection with the Senior Secured Credit Facility and Senior
Secured Notes.
As of 31 December 2022, the contractual maturities of the Company's debt obligations were as follows:
102
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
23. Bank credit lines and loan facilities (continued)
Current maturities of long-term debt:
(in thousands)
2023
2024
2025
2026
2027 and thereafter
Total
55,150
55,150
55,150
55,150
4,480,613
4,701,213
$
The Company's primary financing arrangements are its senior secured credit facilities (the "Senior Secured Credit
Facilities"), which consists of a senior secured term loan and a revolving credit facility, and the senior secured notes (the
"Senior Secured Notes").
Senior Secured Credit Facilities
In conjunction with the completion of the Merger Agreement, on 1 July 2021, ICON entered into a credit agreement
providing for a senior secured term loan facility of $5,515 million and a senior secured revolving loan facility in an initial
aggregate principal amount of $300 million. The proceeds of the senior secured term loan facility were used to repay in full
(i) PRA’s existing credit facilities and (ii) the Company's private placement notes outstanding and fund, in part, the
transaction. The senior secured term loan facility will mature in July 2028 and the revolving loan facility will mature in July
2026. The credit agreement governing the Senior Secured Credit Facilities provides that borrowings denominated in U.S.
Dollars will bear interest based on LIBOR or the base rate (as elected by the borrower), plus an applicable margin. On the
29th of November 2022, the Company agreed with its lenders to the early adoption of Term SOFR as the reference rate
within the Credit Agreement ahead of the June 2023 USD LIBOR cessation date. LIBOR is no longer an applicable
reference rate available to the Company under the terms of the Credit Agreement.
Borrowings under the senior secured term loan facility amortise in equal quarterly installments in an amount equal to 1.00%
per annum of the principal amount, with the remaining balance due at final maturity. The interest rate margin applicable to
borrowings under the senior secured term loan facility is USD Term SOFR and a Term SOFR Adjustment depending on the
interest period chosen plus an applicable margin of 2.25%. The senior secured term loan facility is subject to a floor of
0.50%.
The interest rate margin applicable to borrowings under the revolving loan facility will be, at the option of the borrower, either
(i) the applicable base rate plus an applicable margin of 1.00%, 0.60% or 0.25% based on ICON’s current corporate family
rating assigned by S&P of BB- (or lower), BB or BB+ (or higher), respectively, or (ii) Term SOFR plus a Term SOFR
Adjustment on the interest period chosen plus an applicable margin of 2.00%, 1.60% or 1.25% based on ICON’s current
corporate family rating assigned by S&P of BB- (or lower), BB or BB+ (or higher), respectively. In addition, lenders under the
revolving loan facility are entitled to commitment fees as a percentage of the applicable margin at the time of drawing and
utilization fees dependent on the proportion of the facility drawn. At December 31, 2022, $300.0 million remained undrawn
under the senior secured revolving loan facility.
The Borrowers’ (as defined in the credit agreement) obligations under the Senior Secured Credit Facilities are guaranteed
by ICON and the subsidiary guarantors. The Senior Secured Credit Facilities are secured by a lien on substantially all of
ICON’s, the Borrowers’ and each of the subsidiary guarantor’s assets (subject to certain exceptions), and the Senior
Secured Credit Facilities will have a first-priority lien on such assets, which will rank pari passu with the lien securing the
Senior Secured Notes (see below), subject to other permitted liens. The Company is permitted to make prepayments on the
senior secured term loan without penalty. The Company's long-term debt arrangements contain customary restrictive
covenants and, as of 31 December 2022, we were in compliance with our restrictive covenants in all material respects.
103
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
23. Bank credit lines and loan facilities (continued)
On 30 December 2022, the Company repaid $200.0 million of the senior secured term loan facility and made a quarterly
interest payment of $66.1 million. This repayment resulted in an additional charge associated with previously capitalised
fees of $1.8 million.
On 30 September 2022, the Company repaid $200.0 million of the senior secured term loan facility and made a quarterly
interest payment of $53.6 million. This repayment resulted in an additional charge associated with previously capitalised
fees of $1.9 million.
On 30 June 2022, the Company repaid $100.0 million of the senior secured term loan facility and made a quarterly interest
payment of $39.4 million. This repayment resulted in an additional charge associated with previously capitalised fees of
$0.9 million.
On 31 March 2022, the Company repaid $300.0 million of the senior secured term loan facility and made a quarterly interest
payment of $35.1 million. This repayment resulted in an additional charge associated with previously capitalised fees of
$3.2 million.
On 29 December 2021, the Company repaid $500.0 million of the senior secured term loan facility and made a quarterly
interest payment of $40.8 million. This repayment resulted in an additional charge associated with previously capitalised
fees of $5.6 million.
On 27 September 2021, the Company repaid $13.8 million of the senior secured term loan facility and made a quarterly
interest payment of $40.4 million.
Senior Secured Notes
In addition to the Senior Secured Credit Facilities, on 1 July 2021, a subsidiary of the Company issued $500 million in
aggregate principal amount of 2.875% senior secured notes due 2026 in a private offering (the “Offering”). The Senior
Secured Notes will mature on 15 July 2026. The proceeds from the Offering and borrowings made under the Senior
Secured Credit Facilities, together with cash on hand, were used to (i) fund the cash consideration payable by ICON for the
Merger, (ii) repay existing indebtedness of ICON and PRA and (iii) pay fees and expenses related to the Merger, the
Offering and the Senior Secured Credit Facilities. The Senior Secured Notes are guaranteed on a senior secured basis by
ICON and its direct and indirect subsidiaries that guarantee the Senior Secured Credit Facilities.
Fair Value of Debt
The estimated fair value of the Company’s debt was $4,650.3 million and $5,507.2 million at 31 December 2022 and
31 December 2021, respectively. The fair values of the Senior Secured Credit Facilities and Senior Secured Notes were
determined based on Level 2 inputs, which are based on rates at which the debt is traded among financial institutions.
Derivatives
The Company has entered into interest rate cap and swap agreements for purposes of managing its exposure to interest
rate fluctuations. These financial derivative agreements are designated as Cash Flow Hedges. See note 26 - Financial
Instruments for related information and disclosures.
104
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2021
24. Share capital
Group and Company
Authorised share capital:
Ordinary shares of par value €0.06
No. of Ordinary Shares
100,000,000
31 December
2022
31 December
2021
$’000
$’000
Allotted, called up and fully paid
81,723,555 (31 December 2021: 81,554,683) ordinary shares of €0.06 each
6,649
6,640
Issued, fully paid share capital
At beginning of year
Employee share options exercised
Restricted share units/ performance share units
Repurchase of ordinary shares
Issue of shares associated with a business combination
At end of year
6,640
4,580
21
16
(28)
—
77
23
—
1,960
6,649
6,640
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 ordinary shares of the Company. 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, for each ordinary share held with no individual having more than one
vote.
(a)
Employee share based payments
During the year ended 31 December 2022, 348,286 options were exercised by employees at an average exercise price of
$102.87 per share for total proceeds of $35.8 million. During the year ended 31 December 2022, 195,029 ordinary shares
were issued in respect of certain RSUs and 46,087 ordinary shares were issued in respect of PSUs previously awarded by
the Company.
During the year ended 31 December 2021, 1,065,529 options were exercised by employees at an average exercise price of
$111.29 per share for total proceeds of $118.6 million. During the year ended 31 December 2021, 446,404 ordinary shares
were issued in respect of certain RSUs and 44,132 ordinary shares were issued in respect of PSUs previously awarded by
the Company.
On 1 July 2021, the Company completed the acquisition of PRA. In accordance with the terms of the Merger Agreement, the
Company issued 27,372,427 shares of the Company's ordinary share capital at par value in exchange for all outstanding
PRA shares of common stock.
(b)
Share repurchase programme
A resolution was passed at the Company’s Annual General Meeting (“AGM”) on 22 July 2016, which authorised the
Directors to purchase (buyback) up to 10% of the outstanding shares in the Company. This authorisation was renewed at
the Company's AGM on each of 25 July 2017, 24 July 2018, 23 July 2019, 21 July 2020, 20 July 2021 and 26 July 2022. On
3 October 2016, the Company commenced a share buyback programme of up to $400 million. The share buyback
programme was completed during the year ended 31 December 2018 with a total of 4,026,576 ordinary shares redeemed
for a total consideration of $372.1 million. On 8 January 2019, the Company commenced a further share buyback
programme of up to 1.0 million ordinary shares which was completed during the year ended 31 December 2019. These
shares were redeemed by the Company for a total consideration of $141.6 million. On 22 October 2019, the Company
commenced a further share buyback programme. At 31 December 2019, 35,100 ordinary shares were redeemed by the
Company for a total consideration of $5.3 million. During the year ended 31 December 2020, 1,235,218 ordinary shares
were redeemed by the Company under this buyback programme for a total consideration of $175.0 million. On 18 February
105
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
24. Share capital (continued)
2022, the Company commenced a further share buyback programme. During the year ended 31 December 2022, 420,530
ordinary shares were redeemed by the Company for total consideration of $100.0 million.
All ordinary shares that were redeemed under the buyback programme were cancelled in accordance with the Constitution
of the Company and the nominal value of these shares transferred to other undenominated capital as required under Irish
Company law.
Under the repurchase programme, a broker purchased the Company’s shares from time to time on the open market or in
privately negotiated transactions in accordance with agreed terms and limitations. The programme was designed to allow
share repurchases during periods when the Company would ordinarily not be permitted to do so because it may be in
possession of material non-public or price-sensitive information, applicable insider trading laws or self-imposed trading
blackout periods. The Company’s instructions to the broker were irrevocable and the trading decisions in respect of the
repurchase programme were made independently of and uninfluenced by the Company. The Company confirms that on
entering the share repurchase plans it had no material non-public, price-sensitive or inside information regarding the
Company or its securities. Furthermore, the Company will not enter into additional plans whilst in possession of such
information. The timing and actual number of shares acquired by way of the redemption will be dependent on market
conditions, legal and regulatory requirements and the other terms and limitations contained in the programme. In addition,
acquisitions under the programme may be suspended or discontinued in certain circumstances in accordance with the
agreed terms. Therefore, there can be no assurance as to the timing or number of shares that may be acquired under the
programme.
106
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
25. Capital and reserves
Share-based payment reserve
Other undenominated capital
Other reserves
Currency reserve
Merger reserve
Retained earnings
Total
31 December
2022
31 December
2021
$’000
*Revised
$’000
381,098
420,973
1,162
7,601
1,134
12,438
(175,065)
(86,621)
5,656,195
5,656,195
2,219,619
1,728,023
8,090,610
7,732,142
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
Share-based payment reserve
The share-based payment reserve is used to account for share-based payments. The fair value of share-based payments is
expensed to the Consolidated Statement of Profit and Loss over the period the related services are received, with a
corresponding increase in equity. At 31 December 2022 the Group has recognised a cumulative charge for share-based
payments of $717.6 million net of deferred tax (2021: $661.7 million). The Group has also recognised a cumulative credit of
$57.8 million (2021: $81.8 million) in reserves for the current and deferred tax effects of the tax benefits relating to the
exercise of employee share options in excess of related cumulative compensation expense. The Group has reclassified a
cumulative credit of $394.2 million (2021: $322.5 million) to retained earnings in respect of exercised and expired share-
based awards.
Other undenominated capital
Other undenominated capital comprises the nominal value of shares repurchased and cancelled by the Company and
transferred from share capital to other undenominated capital as required under Irish Company Law. During the year ended
31 December 2022, 420,530 ordinary shares were repurchased and cancelled by the Group (31 December 2021: Nil).
Other reserves
The Group has recognised a non-distributable reserve of $5.3 million in accordance with agreements made between the
Group and Enterprise Ireland, an Irish government agency. The requirement for these non-distributable reserves will expire
between the period 2022 and 2025. In 2005 the Group also recognised a capital contribution of $6.1 million being the fair
value of outstanding ordinary shares transferred to Mr Peter Gray, formerly Vice Chair of the Board of Directors and formerly
Chief Executive Officer, by founding Directors, Dr. John Climax and Dr. Ronan Lambe.
During the year ended 31 December 2022, the Group entered into two interest rate cap agreements and an interest rate
swap agreement to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities. The
interest rate caps and swap are accounted for as cash flow hedges and were considered effective hedges on application of
the provisions of IFRS 9. The effective portion of the hedges for the year ended 31 December 2022 is recorded as a
movement of $3.7 million within Other Reserves.
Currency reserve
The currency reserve comprises all foreign exchange differences arising from the translation of the financial statements of
foreign currency denominated operations of the Group since 1 June 2004, the date of transition to IFRS. As at 31 December
2022, this amounted to a cumulative loss of $175.1 million (2021: loss of $86.6 million).
Share premium
Share premium is the difference between the nominal value of shares and the value of consideration for shares issued.
Merger reserve
On 1 July 2021, the Company completed the Acquisition of PRA by means of a merger whereby Indigo Merger Sub, Inc., a
Delaware corporation and subsidiary of the Company, merged with and into PRA, the parent of the PRA Health Sciences
Group. Upon completion of the Merger, pursuant to the terms of the Merger Agreement, PRA became a wholly owned
subsidiary of the Company. The transaction resulted in the issuance of 27,372,427 shares to the former stockholders of
107
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
25. Capital and reserves (continued)
PRA. The Company issued these shares at the prevailing market price and recognised the premium of $5,656.2 million on
issuance of these shares as a merger reserve as required under Irish Company Law.
Retained earnings
In addition to the profit for the financial year the Group has also recognised the re-measurement of the defined benefit
pension scheme in this reserve. In 2022, the Group recognised a re-measurement gain on the defined benefit pension
scheme of $13.3 million (31 December 2021: a re-measurement gain of $4.2 million). In 2022, the Group recognised share
issue costs of $0.0 million in this reserve (2021: $0.9 million). The Group has recognised a credit of $71.7 million (2021:
credit of $162 million) in respect of exercised and expired share-based awards that have been transferred from the share-
based payment reserve.
A resolution was passed at the Company’s Annual General Meeting (“AGM”) on July 22, 2016, which authorized the
Directors to purchase (buyback) up to 10% of the outstanding shares in the Company. This authorization was renewed at
the Company's AGM on each of July 25, 2017, July 24, 2018, July 23, 2019, July 21, 2020, July 20, 2021 and July 26, 2022.
On 18 February 2022, the Company commenced a further share buyback programme.During the year ended 31 December
2022, 420,530 ordinary shares were redeemed by the Company for total consideration of $100.0 million
26. Financial instruments
The Board of Directors have overall responsibility for the establishment and oversight of the Group’s risk management
framework. The Group is exposed to various financial risks in the normal course of its business. The principle financial risks
to which it is exposed include credit risks related to the creditworthiness of its customers and counterparties, with which it
invests surplus cash funds, liquidity risk associated with the availability of sufficient financial resources to meet liabilities as
they fall due, foreign currency risks, including both translation and transaction risk, and interest rate risk.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and
management standards and procedures, aims to develop a disciplined and constructive control environment in which all
employees understand their roles and obligations. The Audit Committee of the Board oversees how management monitors
compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
Credit risk
Credit risk arises from cash and cash equivalents, contractual cash flows of debt investments carried at fair value through
other comprehensive income and at fair value through profit or loss, favourable derivative financial instruments and deposits
with banks and financial institutions, as well as credit exposures to customers, including outstanding accounts receivable,
unbilled receivables and other receivables.
Credit risk is managed on a group basis. For banks and financial institutions, independently rated parties with a minimum
rating of BBB+ for overnight maturities and a minimum of A- for any bank deposits greater than overnight and up to three
months.
Current asset investments (recorded at fair value through other comprehensive income) comprise investments with
maturities of greater than three months. The minimum ratings required for investment are as follows: bank deposits (A-),
money market funds (AAA), liquidity funds (AAA) and fixed rate corporate bonds or floating rate notes (A- non-financial, AA-
financial).
The Group’s exposure to credit risk arises predominately in respect of the credit risk assessment of customers. Customer
credit risk is managed through application of credit procedures, in particular through risk assessment of new customers,
through assessment of credit quality, taking into account its financial position, past experience and other factors. The
compliance with credit terms is regularly monitored by line management.
Contract terms may range from several weeks to several years depending on the nature of the work to be performed.
Contracts are generally fixed price or unit based. In most cases, a portion of the contract fee is paid at the time the study or
trial is started. The balance of the contract fee is generally billable in instalments over the study or trial duration and may be
based on the delivery of certain performance targets or "milestones" or based on units delivered, or on a fixed monthly
payment schedule such as patient enrolment or database delivery.
Where customers request changes in the scope of a trial or in the services to be provided, a change order or amendment is
issued which may result either in an increase or decrease in the contract value.
108
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
26.
Financial instruments (continued)
The Group also contracts on a "fee-for-service" or "time and materials" basis.
During the course of a study, the Group will generally incur reimbursable expenses. Reimbursable expenses are typically
estimated and budgeted within the contract and are generally invoiced on a monthly basis based on actual expenses
incurred. Reimbursable expenses include payments to investigators, travel and accommodation costs and various other
expenses incurred over the course of the clinical trial which are fully reimbursable by the client.
Most of the Group’s contracts are terminable immediately by the customer with justifiable cause or with 30 to 90 days' notice
without cause. In the event of termination, the Group is usually entitled to all sums owed for work performed through the
notice of termination and certain costs associated with termination of the study. Termination or delay in the performance of a
contract occurs for various reasons, including, but not limited to, unexpected or undesired results, production problems
resulting in shortages of the drug, adverse patient reactions to the drug, the client's decision to de-emphasise a particular
trial, inadequate patient enrolment or investigator recruitment.
The Group’s top five customers accounted for approximately 28.3% and 31.6% of revenue during the years ended
31 December 2022 and 31 December 2021 respectively. During the year ended 31 December 2022, 8.8%of the Group’s
revenues were derived from its top customer (2021: 8.0%). The addition of new customer accounts, particularly large and
mid-tier pharma customers and biotech customers have resulted in a reduction in this concentration of revenues from our
top five customers.
The maximum exposure of credit risk pertaining to customers is the carrying value of accounts receivable and unbilled
revenue balances. The gross value of accounts receivable and unbilled revenue balances, by geographic region, at
31 December 2022 was as follows:
Europe
United States
Rest of World
Gross balance
Allowance for for credit losses
Accounts Receivable
Unbilled Revenue
31 December
2022
31 December
2021
31 December
2022
31 December
2021
$’000
$’000
$’000
$’000
1,024,777
684,600
380,932
690,465
619,071
468,304
36,708
46,180
108,419
315,538
244,800
62,783
1,751,950
1,349,851
957,655
623,121
(20,562)
(7,013)
—
—
Total, net of allowance for credit losses
1,731,388
1,342,838
957,655
623,121
The Group has four types of financial assets that are subject to the expected credit loss model:
•
•
•
•
trade receivables (billed amounts) for services provided to customers
unbilled receivables (contract assets) for services provided to customers
other receivables
cash and cash equivalents
Trade receivables, contract assets and other receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit
risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the
same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that
the expected loss rates for trade receivables are a reasonable approximation for the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of revenue over a period of 36 months before 31 December
2022. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors
affecting the ability of the customers to settle receivables. The group has identified the GDP and the unemployment rate of
the countries in which it sells its services to be the most relevant factors, and accordingly adjusts the historical loss rates
based on expected changes in these factors. See note 16 - Accounts receivable, unbilled services (contract assets) and
109
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
26.
Financial instruments (continued)
unearned revenue (contract liabilities) for assessment of the allowance for credit losses for both trade receivables and
contract assets.
Trade receivables, other receivables and contract assets are written off when there is no reasonable expectation of
recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to
engage in a repayment plan with the group, and a failure to make contractual payments for a period of greater than 120
days past due. Impairment losses on trade receivables, other receivables and contract assets are presented as net
impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the
same line item.
Liquid and capital resources
The Group’s liquid and capital resources at 31 December 2022 were as follows:
Current asset investments (note 18)
Cash and cash equivalents (note 19)
Total liquid resources
Shareholders’ equity
31 December
2022
$’000
31 December
2021
$’000
1,713
288,768
1,712
752,213
290,481
753,925
8,569,982
8,175,698
The principal operating cash requirements of the Group include payment of salaries, office rents, travel expenditures and
payments to investigators. Other cash requirements include capital expenditures for facilities and information system
enhancements and cash required to fund acquisitions and other growth opportunities. The CRO industry is generally not
capital intensive. The Group primarily finances its operations and growth through cash flows from operations, together with
amounts drawn under negotiated facilities as required.
The Group’s primary objectives in managing its liquid and capital resources are as follows:
•
•
•
to maintain adequate resources to fund its continued operations,
to ensure availability of sufficient resources to sustain future development and growth of the business,
to maintain sufficient resources to mitigate risks and unforeseen events which may arise.
The Group manages risks associated with liquid and capital resources through ongoing monitoring of actual and forecast
cash balances and by reviewing the existing and future cash requirements of the business. It ensures that sufficient
headroom is available under the Group’s existing negotiated facilities and negotiates additional facilities as required. Details
of the Group’s negotiated facilities are set out in note 23 Bank credit lines and loan facilities.
In conjunction with the completion of the Merger Agreement, on 1 July 2021, ICON entered into a credit agreement
providing for a senior secured term loan facility of $5,515 million and a senior secured revolving loan facility in an initial
aggregate principal amount of $300 million (the "Senior Secured Credit Facilities"). The proceeds of the senior secured term
loan facility were used to repay the outstanding amount of (i) PRA’s existing credit facilities and (ii) the Company's private
placement notes outstanding and fund, in part, the Merger. The senior secured term loan facility will mature in July 2028 and
the revolving loan facility will mature in July 2026. On the 29th of November 2022, the Company agreed with its lenders to
the early adoption of Term SOFR as the reference rate within the Credit Agreement ahead of the June 2023 USD LIBOR
cessation date. LIBOR is no longer an applicable reference rate available to the Company under the terms of the Credit
Agreement.
In addition to the Senior Secured Credit Facilities, on 1 July 2021, the Company issued $500.0 million in aggregate principal
amount of 2.875% senior secured notes due July 2026 (the “Senior Secured Notes”) in a private offering ("the Offering”).
The Senior Secured Notes will mature on 15 July 2026. The Issuer will pay interest on the Senior Secured Notes on January
15 and July 15 of each year. Interest on the Senior Secured Notes will accrue at a rate of 2.875% per annum.
110
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
26.
Financial instruments (continued)
The following table sets out details of the maturity of the Group’s financial liabilities into the relevant maturity groupings
based on the remaining period from the financial year end date to contractual maturity date:
Year ended 31 December 2022
Carrying
amount
Contractual
cash flows
6 months
or less
6-12
months 1-2 years
2-5 years
More than
5 years
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Bank credit lines and loan facilities (4,654,187) (4,701,213)
Interest on bank credit lines and
loan facilities
(665,450) (3,925,463)
(27,575)
(8,334) (1,677,091) (156,733) (158,214) (311,799) (887,590) (162,755)
(55,150)
(27,575)
Non-current lease liabilities
Non-current other liabilities*
Accounts payable
Accrued and other liabilities*
(131,644)
(23,604)
(81,194)
(991,137)
(142,189)
(23,604)
(81,194)
(81,194)
(991,137) (969,309)
—
(21,828)
—
0
—
0
—
—
(34,400)
(62,724)
(45,065)
(23,604)
—
0
Year ended 31 December 2021
Senior Notes
Interest on Senior Notes
Non-current lease liabilities
Non-current other liabilities*
Accounts payable
Accrued and other liabilities*
(5,890,100) (7,616,428) (1,234,811) (207,617) (401,349) (1,615,764) (4,156,887)
Carrying
amount
Contractual
cash flows
6 months
or less
6-12
months
1-2 years
2-5 years
More than
5 years
$’000
$’000
$’000
$’000
$’000
$’000
$’000
(5,436,312) (5,501,213)
(950,267)
(175,699)
(18,226)
(90,764)
(27,575)
(76,238)
—
(41)
(90,764)
(938,020) (913,045)
(8,438)
(161,096)
(18,226)
(90,764)
(938,020)
(55,150) (665,450) (4,725,463)
(27,575)
(76,996) (151,696) (439,049) (206,288)
(63,675)
(18,088)
—
—
(67,433)
—
—
—
(44,591)
(58)
—
—
—
(39)
—
(24,975)
(6,652,856) (7,674,189) (1,107,663) (129,585) (251,495) (1,171,932) (5,013,514)
*Non-current other liabilities above excludes retirement plan net benefit obligation (2022: $13 million and 2021: $16.2
million) and deferred government grants (2022: $1.1 million and 2021: $0.7 million). Accrued and other liabilities excludes
interest on senior notes presented separately above and deferred government grants (2022: $42,000 and 2021: $45,000).
Foreign currency risk
The Group is subject to a number of foreign currency risks given the global nature of its operations. The principal foreign
currency risks to which the business is subject includes both foreign currency translation risk and foreign currency
transaction risk. Although domiciled in Ireland, the Group presents its results in U.S. dollars. As a consequence, the results
of non-U.S. based operations, when translated into U.S. dollars, could be affected by fluctuations in exchange rates
between the U.S. dollar and the currencies of those operations.
The Group is also subject to foreign currency transaction exposures as the currency in which contracts are priced can be
different from the currencies in which costs relating to those contracts are incurred. The Group’s operations in the United
States are not materially exposed to such currency differences as the majority of revenues and costs are in U.S. dollars.
However, outside the United States the multinational nature of the Group’s activities means that contracts are usually priced
in a single currency, most often U.S. dollars, Euros or pounds Sterling, while costs arise in a number of currencies,
depending on, among other things, which of the Group’s offices provide staff for the contract and the location of investigator
sites.
Although many such contracts benefit from some degree of natural hedging due to the matching of contract revenues and
costs in the same currency, where costs are incurred in currencies other than those in which contracts are priced,
fluctuations in the relative value of those currencies could have a material effect on the results of the Group’s operations.
The Group regularly reviews its foreign currency exposures and usually negotiates currency fluctuation clauses in its
contracts which allow for price negotiation if certain exchange rate triggers occur.
111
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
26.
Financial instruments (continued)
The following significant exchange rates applied during the year:
Euro 1:$
Pound Sterling 1:$
Average Rate
Closing Rate
2022
2021
2022
2021
1.0512
1.1886
1.0705
1.1370
1.2347
1.3788
1.2083
1.3532
A simultaneous ten percent strengthening or weakening of the US Dollar, Euro and Sterling against all other currencies
(which remained constant) would have increased or decreased profit by $37.2 million, $19.6 million and $22.1 million
respectively (31 December 2021: $27.3 million, $23.1 million and $5.9 million respectively) as a consequence of the
retranslation of foreign currency denominated financial assets and liabilities at those dates. This change in profit is excluding
the effect of foreign currency denominated long term loans.
Interest rate risk
The Group is exposed to interest rate risk in respect of our cash and cash equivalents and available for sale investments.
Our treasury function actively manages our available cash resources and invests significant cash balances to ensure
optimum returns for the Company. Financial instruments are classified either as cash and cash equivalents or available for
sale investments depending upon the maturity of the related investment. Funds may be invested in the form of floating rate
notes and medium term minimum “A-” rated corporate securities. We may be subject to interest rate risk in respect of
interest rate changes on amounts invested. Interest rate risk is managed by monitoring the composition of the Company’s
investment portfolio on an ongoing basis having regard to current market interest rates and future trends.
In conjunction with the completion of the Merger, on July 1, 2021, ICON entered into a credit agreement providing for a
senior secured term loan facility of $5,515 million and a senior secured revolving loan facility in an initial aggregate principal
amount of $300 million (the "Senior Secured Credit Facilities"). The proceeds of the senior secured term loan facility were
used to repay the outstanding amount of (i) PRA’s existing credit facilities and (ii) the Company's private placement notes
outstanding and fund, in part, the Merger. The senior secured term loan facility will mature in July 2028 and the revolving
loan facility will mature in July 2026. The credit agreement governing the Senior Secured Credit Facilities provides that
borrowings denominated in U.S. Dollars will bear interest based on the London Interbank Offered Rate ("LIBOR") or other
base rate (as elected by the borrower), plus an applicable margin. On November 29, 2022, the Company agreed with its
lenders to the adoption of the Secured Overnight Financing Rate ("SOFR") as the benchmark rate within the Senior Secured
Credit Facilities, thus LIBOR is no longer the benchmark rate available to the Company under the terms of the Senior
Secured Credit Facilities.
As at the 31 December 2022 the outstanding principal amount of the Senior Secured Term Loan Facility was $4,201 million.
The applicable interest rate for the next quarterly interest period is expected to be 7.092%, Borrowings under the Senior
Secured Term Loan facility amortise in equal quarterly instalments in an amount equal to 1.00% per annum of the principal
amount, with the remaining balance due at final maturity. The interest rate margin applicable to borrowings under the senior
secured term loan facility is USD Term SOFR and a Term SOFR Adjustment depending on the interest period chosen plus
an applicable margin of 2.25%. The Senior Secured Term Loan Facility is subject to a floor of 0.50%.
In addition to the Senior Secured Facilities, on 1 July 2021, the Company issued $500 million in aggregate principal senior
notes due in 2026 in a private (“the Offering“). The Senior Secured Notes will mature in July 2026 and pay a fixed semi
annual coupon to investors of 2.875% per annum. This debt is not subject to movements in interest rate conditions.
We regularly evaluate our debt arrangements, as well as market conditions, and we will explore the opportunity to modify
our existing arrangements or pursue additional financing arrangements that may result in the issuance of new debt
securities by us or our affiliates.
112
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
26.
Financial instruments (continued)
The sensitivity analysis below represents the hypothetical change in the interest income and interest expense of a 1%
movement in market interest rates.
As reported
1% Increase
1% Decrease
Interest Income
Interest Expense
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2,345
574
229,731
182,423
8,322
9,772
277,546 *
206,398
1
1
181,982 *
150,178
*8% of the interest costs fixed due to high yield bond issuance. $20.5 million financing fees have been allocated to interest
cost which are not impacted by a change in interest rate.
Derivatives
The Company has entered into interest rate cap and swap agreements for purposes of managing its exposure to interest
rate fluctuations. These financial derivative agreements are designated as Cash Flow Hedges.
On November 29, 2022, the Company entered into two interest rate cap agreements ("2022 Caps") with an initial total
notional value of $2,101 million to limit its exposure to changes in the variable interest rate on its Senior Secured Credit
Facilities. Interest on the 2022 Caps began accruing on December 30, 2022 and the interest rate cap expires on December
31, 2024. The Company pays a fixed rate of 0.42% and receives a variable rate equal to the amount that the three-month
SOFR rate exceeds 4.75%.
On November 29, 2022, the Company entered into an interest rate swap agreement ("2022 Swap") with an initial notional
value of $1,101 million to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities.
Interest on the 2022 Swaps begins accruing on December 31, 2024 and the interest rate swap expires on December 31,
2026. The Company will pay a fixed rate of 3.4% and receive a variable rate of interest equal to the three-month SOFR on
the 2022 Swap.
The critical terms of the caps and swap are substantially the same as the underlying borrowings. The interest rate caps and
swap are accounted for as cash flow hedges as these transactions were executed to hedge the Company's interest
payments and for accounting purposes are considered highly effective. As such, the effective portion of the hedges is
recorded as unrealized gains (losses) on derivatives in Accumulated Other Comprehensive Income.
The fair value of these cash flow hedges represents the present value of the anticipated net payments the Company will
make to the counterparty, which, when they occur, are reflected as interest expense on the consolidate statement of income.
The fair value of the Company’s derivative financial instruments, on a gross basis, and the line items on the accompanying
consolidate balance sheets to which they were recorded are summarised in the following table:
December 31, 2022
Asset
Liability
Notional
(in thousands)
Derivatives designated as hedging instruments:
Interest Rate Caps
Other Assets and Liabilities
Interest Rate Swap
Other Assets and Liabilities
Total derivatives designated as hedging instruments
$12
$—
$12
$3,363
$307
2,100,606
1,100,606
$3,670
3,201,213
During 2023, the Company estimates that an additional $3.3 million will be reflected as interest expense in the consolidated
statements. At December 31, 2021 the fair value of the Company's derivative financial instruments was $nil as the Company
113
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
26.
Financial instruments (continued)
had no outstanding derivative financial instruments. The Company recognized $0.1 million of gain within OCI and
reclassified $0.1 million of gain from OCI to the income statement for the year end December 31, 2022.
Fair values
Certain financial instruments are measured in the Statement of Financial Position at fair value using a fair value hierarchy of
valuation inputs. The hierarchy prioritises the inputs into three levels based on the extent to which inputs used in measuring
fair value are observable in the market. Each fair value measurement is reported in one of three levels, which is determined
by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1:
Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2:
Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or
similar instruments in markets that are not active and model-based valuation techniques for which all
significant assumptions are observable in the market or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3:
Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market
participants would use in pricing the asset or liability.
The fair value of financial assets together with the carrying amounts shown in the Statement of Financial Position is as
follows:
31
December
2022
31
December
2022
31
December
2022
31
December
2022
31
December
2021
31
December
2021
31
December
2021
31
December
2021
Carrying
Amount
Fair
Value
Level 1
Fair
Value
Level 2
Fair Value
Level 3
Carrying
Amount
Fair
Value
Level 1
Fair
Value
Level 2
Fair Value
Level 3
$’000
$’000
$’000
$'000
$’000
$’000
$’000
$’000
Financial assets measured at fair value
Financial assets at fair
value through other
comprehensive
income
Financial assets at fair
value through profit
and loss
Derivative instruments
at fair value through
other comprehensive
income
1,713
1,713
—
—
1,712
1,712
—
—
32,631
—
—
32,631
22,592
—
—
22,592
(3.658)
—
(3.658)
—
—
—
—
—
30,686
1,713
(3.658)
32,631
24,304
1,712
0
22,592
The carrying values of accounts receivable (less provision for loss), unbilled revenue (contract assets), other current assets,
cash and cash equivalents and other non-current assets are carried at amortised cost and assumed to be approximate to
their fair values due to the short-term nature of these balances. As such their fair values have not been disclosed.
Current asset investments carried at fair value result in gains or losses being recognised in the Consolidated Statement of
Comprehensive Income. The fair value of current asset investments is their market price at the financial year end date. They
are measured on the basis of Level 1 inputs.
Long-term financial assets carried at fair value result in gains or losses being recognised in the Consolidated Statement of
Comprehensive Income. The fair value of long-term financial assets meet the definition of equity securities without readily
determinable fair values.
The carrying values of accounts payable, accrued and other liabilities and provisions (excluding contingent consideration)
and other non-current liabilities are carried at amortised cost and assumed to be approximate to their fair values.
114
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
26.
Financial instruments (continued)
Each category of asset and liability has remained within the same level of hierarchy as the prior year as there has been no
change in the extent to which the inputs used in measuring fair value are or are not observable within the market.
The following table shows reconciliation from the opening balances to the closing balances for Level 3 fair values:
Opening balance
Additions/(payments) made during the year
Credit to the Statement of Profit and Loss
Closing balance
Long-term
financial
assets
Long-term
financial
assets
2022
$’000
2021
$’000
22,592
15,765
5,612
4,427
3,577
3,250
32,631
22,592
The Group is also subject to call and put option arrangements relating to the 51% majority share capital in the equity method
investment, Oncacare, currently owned by a third-party. The majority investor has the right to sell the 51% majority voting
share capital exclusively to the Company in a two and half year period, commencing 1 January 2023 and ICON also has the
right to acquire the 51% majority voting share capital from 1 August 2025. These option arrangements are considered level
3 financial instruments due to it being necessary to use unobservable inputs in their valuation. The strike price of the options
was written to closely approximate fair value.
There have been no transfers between level 1/2 financial instruments and level 3 financial instruments during the current or
prior financial year.
The following table shows the valuation techniques used in measuring Level 3 fair values, as well as significant
unobservable inputs used:
Type
Valuation Technique
Long-term financial assets
Call and put option
arrangements over 51%
majority share ownership in
Oncacare is a derivative
financial instrument
The valuation model is
based on the NAV of the
fund as prepared by an
independent appraiser to
prepare a fair value
assessment of
investment assets each
year.
The valuation model is
based on the financial
benefit/obligation of the
Group possessing the
option to acquire, or
being faced with the
option to purchase, the
shares compared to
acquiring the shares at
the market rate.
Significant Unobservable
Inputs
The interest on the fund
are not traded on an
exchange, or data is not
published in respect of the
funds.
Inter-relationship between
significant unobservable inputs
and fair value measurement
The valuation is based on the NAV
of the fund as prepared by an
independent appraiser.
The strike price of the
options are based on an
earnings multiple which is
a significant unobservable
input to the fair value
calculation.
If the earnings multiple became less
than the market rate then the fair
value of the call option asset would
increase and the fair value of put
option liability would decrease.
115
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
27.
Leases
Right-of-use assets
The Group has recorded the following for right-of-use assets:
Depreciation charge for 2022
Right-of-use assets at 31 December 2022
Depreciation charge for 2021
Right-of-use assets at 31 December 2021
Premises
Equipment Motor vehicles
$'000
42,847
137,519
41,367
184,427
$'000
207
1,194
1,099
1,665
$'000
2,161
12,486
2,781
11,624
Total
$'000
45,215
151,199
45,247
197,716
Additions to right-of-use assets during 2022, net of early termination options now reasonably certain to be exercised, were
$28.7 million (2021: $10.2 million).
The weighted average remaining lease term at 31 December 2022 was 6.90 years (2021: 6.91 years).
During the year ended 31 December 2022, as a result of office consolidations, certain ROU assets have been impaired to
the extent they are considered onerous and an impairment loss of $24.5 million was recorded (2021: $15.6 million). See
note 8 Exceptional items.
Lease liabilities
Lease liabilities of $43.7 million have been included in accrued and other liabilities as at 31 December 2022 (2021:
$49.8 million).
Total lease payments for the year ended 31 December 2022 were $54.6 million (2021: $54.9 million).
Future minimum lease payments under non-cancelable leases as of 31 December 2022 were as follows:
2023
2024
2025
2026
2027
Thereafter
Total future minimum lease payments
Lease imputed interest
Total
Amounts recognised in profit or loss
The following amounts were recognised in profit and loss:
Depreciation of right-of-use assets
Interest on lease liabilities
116
31 December
2022
$'000
47,479
34,400
25,045
20,430
17,249
45,065
189,668
(14,367)
175,301
31 December
31 December
2022
$'000
45,215
4,470
2021
$'000
45,247
4,113
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
27.
Leases (continued)
Of the total cost of $49.7 million incurred in the year ended 31 December 2022, $41.6 million is recorded within other
operating expenses, $3.6 million is recorded within direct costs and $4.5 million is recorded within financing expense. During
2022, the Group had income from sub-leases of $1.2 million.
Of the total cost of $49.4 million incurred in the year ended 31 December 2021, $43.3 million is recorded within other
operating expenses, $2.0 million is recorded within direct costs and $4.1 million is recorded within financing expense. During
2021, the Group had income from sub-leases of $1.3 million.
During the year ended 31 December 2022 and the year ended 31 December 2021, the Group did not incur any costs related
to variable lease payments or short-term leases.
28. Commitments and contingencies
a) Capital commitments
The following capital commitments for the purchase of property, plant, equipment and computer software were authorised by
the Group at 31 December 2022 and 31 December 2021:
Contracted for
Total
(b) Guarantees
31 December
2022
31 December
2021
$’000
$’000
86,478
70,510
86,478
70,510
Where the Group enters into financial guarantee contracts to guarantee the indebtedness of other companies within the
Group, the Group considers these to be insurance arrangements and accounts for them as such. The Group treats the
guarantee contract as a contingent liability until such time as it becomes probable that the Group will be required to make a
payment under that guarantee. As set out in note 23 Bank credit lines and loan facilities, the Senior Secured Credit Facilities
are guaranteed by ICON plc.
The Company has guaranteed all of the commitments and liabilities referred to in Section 357(1) (b) of the Companies Act in
respect of the whole of the financial year ending 31 December 2022 for the subsidiary companies listed below. These
subsidiaries are availing of the exemption under Section 357 of the Companies Act not to file statutory financial statements.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
ICON Clinical Research Limited
DOCS Resourcing Limited
ICON Holdings Unlimited Company
ICON Clinical Research Property Holdings (Ireland) Limited
ICON Clinical Research Property Development (Ireland) Limited
ICON Holdings Clinical Research International Limited
ICON Clinical International Unlimited Company
ICON Investments Four Unlimited Company
ICON Investments Five Unlimited Company
Accellacare Limited
ICON Global Treasury Unlimited Company
ICON Clinical Global Holdings Unlimited Company
ICON Operational Financing Unlimited Company
ICON Operational Holdings Unlimited Company
PRA Clinical Limited
Research Pharmaceutical Services (Outsourcing Ireland) Limited
ICON Clinical Research Holdings (Ireland) Unlimited Company
117
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
28.
Commitments and contingencies (continued)
(c) Contractual obligations
The following represents Group contractual obligations and commercial commitments as at 31 December 2022:
Payments due by period
Total
$’000
Less than
1 year
$’000
Capital commitments
Total contractual obligations
86,478
86,478
86,478
86,478
1 to 5
years
$’000
—
—
More than
5 years
$’000
—
—
The Group expects to spend approximately $200 million in the next 12 months on further investments in information
technology. The Group believes that it will be able to fund additional foreseeable cash needs for the next twelve months
from cash flow from operations and existing cash balances. In the future, the Group may consider acquiring businesses to
enhance service offerings and global presence. Any such acquisitions may require additional external financing and the
Group may, from time to time, seek to obtain funds from public or private issues of equity or debt securities. There can be no
assurance that such financing will be available on terms acceptable to the Group.
The Company entered into subscription agreements with a number of funds (see note 18 Financial asset investments).
Capital totalling $20.6 million had been advanced under the terms of the subscription agreements at 31 December 2022
(2021: $16.9 million). The Company had committed to future investments of $23.3 million in respect of these funds. The
timing of the commitment is not specified in the subscription agreements.
29. Litigation
The Group is not party to any litigation or legal proceedings that the Group believes could reasonably be expected to have a
material adverse effect on the Group’s business, results of operations and financial position. However, from time to time, we
may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is
subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm
our business.
30. Related parties
(i) Transactions with Directors and Executive Officers
The total compensation of the Directors and Executive Officers (key management remuneration) for the years ended
31 December 2022 and 2021 was as follows:
Salary and fees
Bonus
Other benefits
Pension contributions
Share-based payment expense
Total
Year ended 31
December
2022
Year ended 31
December
2021
$’000
$’000
3,078
1,515
61
195
10,496
3,079
3,214
66
197
9,137
15,345
15,693
Details of ordinary shares, share options, RSUs and PSUs held by the Directors and Executive Officers and details of
transactions entered into by Directors and Key Executive Officers in shares and share options of the Company during the
year ended 31 December 2022 are set out in note 9 Payroll and related benefits.
118
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
30. Related parties (continued)
(ii) Other related party transactions
On 24 July 2020, a subsidiary of the Company, ICON Clinical Research Limited, entered into an agreement to jointly
establish a new company, Oncacare, with a third-party. The Company has invested $4.9 million to obtain a 49% interest in
the voting share capital of Oncacare. The Company provided corporate support services to Oncacare to the value of
$451,000 during the year ended 31 December 2022. $715,000 was recorded as due from Oncacare at 31 December
2022. During the year ended 31 December 2021, the Company provided a loan of $10.0 million to Oncacare in order to fund
the continued start up of the business' operations. The loan accrues annual interest at 1.6% and the loan is repayable on 30
June 2025. The Company has recorded losses of $3.1 million and $2.2 million representing its pro rata share of the losses
in Oncacare during the year ended 31 December 2022 and December 31, 2021, respectively. The carrying value of the
Company's investment in Oncacare was reduced by $2.3 million of pro rata losses. The remaining $0.8 million in pro rata
losses served to reduce the carrying value of the Company's loan receivable from Oncacare from $10.0 million to $9.2
million. At 31 December 2022 accrued interest of $183,000 remained outstanding.
The majority investor in Oncacare has the right to sell the 51% majority voting share capital exclusively to the Company in a
two and half year period, commencing 1 January 2023 and ICON also has the right to acquire the 51% majority voting share
capital from 1 August 2025. On 20 April 2023 the Company acquired the remaining shares of Oncacare from KM Worldwide
Business LTD for $5.1 million.
31. Subsequent events
The Company has evaluated subsequent events from the Balance Sheet date through 25 April 2023, the date at which the
consolidated financial statements were available to be issued.
On July 24 2020, a subsidiary of the Company, ICON Clinical Research Limited, entered into an agreement to jointly
establish a new company, Oncacare Limited (Oncacare), a specialized oncology site network in the US and EMEA regions,
with a third party. The Company has invested $4.9 million to obtain a 49% interest in the voting share capital of Oncacare.
On 20 April 2023, the Company completed the purchase of the majority investor’s 51% majority voting share capital of
Oncacare. The consideration paid by ICON to purchase the 51% majority voting share capital was $5.1 million. As a result
of this transaction, Oncacare and its subsidiaries became wholly owned subsidiaries of the ICON Group.
119
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32.
Subsidiary undertakings
As at 31 December 2022 the Group had the following principal subsidiary undertakings:
Name
Registered Office*****
ICON Clinical Research S.A.
ICON Clinical Research PTY Limited
Medpass International Pty Ltd
ICON Clinical Research Austria GmbH
DOCS International Belgium N.V.
ICON Pesquisas Clínicas LTDA.
ICON Clinical Research EOOD
ICON Clinical Research (Canada) Inc.
Oxford Outcomes LTD.
ICON Life Sciences Canada Inc.
ICON Chile Limitada
CRS (Beijing) Clinical Research Co.,
Limited (in liquidation)***
Cecilia Grierson 255, Floor 6°
City of Buenos Aires
C1107CPE
Argentina
Suite 201,
Level 2, 2-4 Lyon Park Road,
North Ryde,
NSW 2113
Australia
Level 2,
Pier 8, Shop 9,
23 Hickson Road,
Millers Point,
NSW 2000
Australia
Pyrkergasse 10/6
1190 Vienna
Austria
E19 Business Park
Battelsesteenweg 455D
2800 Mechelen, Belgium
Av. Ibirapuera 2332,
Torre II 4º Andar,
São Paulo, SP,
Brazil,
CEP 04028-003
2A, Saborna Str.,
4th floor, Sofia – 1000,
Republic of Bulgaria
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
7405 Trans-Canada Highway,
services
Suite 300 Saint-Laurent,
Quebec, H4T 1Z2
Canada
19th Floor
Clinical research
services
885 West Georgia Street
Vancouver BC V6C 3H4
Canada
100%
100%
3455 North Service Road
Unit #400
Burlington ON L7N 3G2
Canada
Clinical research
services
100%
Huerfanos 770
Piso 4
Oficina 402
Santiago
Chile
Clinical research
services
100%
Clinical research
services
100%
Floor 3, Building 3,
Hongda Industrial park,
No. 8, Hongda North Road,
Beijing Economic-Technological
Development Area,
Beijing
120
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
ICON Clinical Research (Beijing No.2) Co.,
Ltd
Floor 2, Building 5,
Hongda Industrial park,
No. 8, Hongda North Road,
Beijing Economic-Technological
Development Area,
Beijing
Nature of
business
Proportion held by
Group
Clinical research
services
100%
ICON Clinical Research (Beijing) Co., Ltd
Floor 1
Building No. 5,
No. 8 Hongda North Road,
Beijing Economic-Technologies
Developement Zone,
Beijing, China
Clinical research
services
100%
Ispitivanja ICON d.o.o
ICON Research Ltd.
Radnicka cesta 80,
Zagreb,
Croatia
Clinical research
services
100%
ICON Clinical Research s.r.o.
DOCS International Nordic Countries A/S
DOCS International Finland Oy
ICON Clinical Research S.A.R.L.
Mapi Research Trust**
Averion Europe GmbH
ICON Clinical Research Germany GmbH
ICON Clinical Research GmbH
ICON Clinical Research Hong Kong
Limited
V parku 2335/20,
Praha 4 - Chodov,
PSČ 148 00
Czech Republic
c/o BuusMark Advokater
Sankt Ols Gade 4
4000 Roskilde
Denmark
Mannerheimintie 12B,
00100 Helsinki
Finland
55 Avenue des Champs
Pierreux
Immeuble le Capitole
92000 Nanterre
France
27 rue de la Villette,
69003 Lyon,
France
Konrad-Zuse-Platz 11
81829 München
Germany
Heinrich-Hertz-Straße 26
63225
Langen
Hessen
Germany
Heinrich-Hertz-Straße 26
63225
Langen
Hessen
Germany
Unit 4333 & 4335C, 43/F
AIA Tower
183 Electric Road
North Point
Hong Kong
ICON Klinikai Kutató Korlátolt Felelősségű
Társaság
(ICON Clinical Research Limited Liability
Company)
Szepvolgyi ut 39
HU-1037 Budapest
Hungary
121
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
ICON Clinical Research India Private
Limited
Accellacare Limited
DOCS Resourcing Limited
ICON (LR) Limited
ICON Clinical Global Holdings Unlimited
Company
ICON Clinical International Unlimited
Company
ICON Clinical Research Limited
ICON Clinical Research Property
Development (Ireland) Limited
ICON Clinical Research Property Holdings
(Ireland) Limited
ICON Holdings Clinical Research
International Limited
ICON Holdings Unlimited Company
ICON Investments Five Unlimited
Company
ICON Investments Four Unlimited
Company
ICON Operational Financing Unlimited
Company
CHENNAI ONE IT PARK ITE/
ITES SEZ North Block
Block B, 4th Floor,
Thoraipakkam
Chennai
Tamil Nadu-TN
600097
India
South County Business Park,
Leopardstown,
Dublin 18
Republic of Ireland
South County Business Park,
Leopardstown,
Dublin 18
Republic of Ireland
South County Business Park,
Leopardstown,
Dublin 18
Ireland
South County Business Park,
Leopardstown,
Dublin 18
Ireland
South County Business Park,
Leopardstown,
Dublin 18
Republic of Ireland
South County Business Park,
Leopardstown,
Dublin 18
Ireland
South County Business Park,
Leopardstown,
Dublin 18
Republic of Ireland
South County Business Park,
Leopardstown,
Dublin 18
Republic of Ireland
South County Business Park,
Leopardstown,
Dublin 18
Republic of Ireland
South County Business Park,
Leopardstown,
Dublin 18
Republic of Ireland
South County Business Park,
Leopardstown,
Dublin 18
Ireland
South County Business Park,
Leopardstown,
Dublin 18
Republic of Ireland
South County Business Park,
Leopardstown,
Dublin 18
Ireland
122
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Investment holding
company
100%
Clinical research
services
100%
Clinical research
services
100%
Property
management
company
Property
management
company
100%
100%*
Investment holding
company
100%
Investment holding
company
100%
Investment holding
and financing
company
100%*
Investment holding
and financing
company
100%
Investment holding
and financing
company
100%
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
ICON Operational Holdings Unlimited
Company
South County Business Park,
Leopardstown,
Dublin 18
Ireland
ICON Global Treasury Unlimited Company South County Business Park,
Leopardstown,
Dublin 18,
Ireland
Nature of
business
Proportion held by
Group
Investment holding
company
100%
Investment holding
and financing
company
100%
ICON Clinical Research Israel LTD.
Building E, 13th Floor
4 Haharash Street
Hod Hasharon 4524402 Israel
Clinical research
services
100%
ICON Japan K.K.
ICON Investments Limited
ICON Clinical Research Korea Yuhan
Hoesa/ ICON Clinical Research Korea Ltd.
Mapi Korea Yuhan Hoesa/ Mapi Korea LLC
(In Voluntary Liquidation)
ICON Luxembourg S.à r.l.
ICON CRO Malaysia SDN. BHD.
4-3-9 Toranomon,
Minato-ku,
Tokyo,
Japan
22 Grenville Street
St Helier
JE4 8PX
Jersey
142 Taeheran-ro
Gangnam-gu,
18th Floor (Yeoksam-dong,
Capital Tower)
Seoul
Republic of Korea
16th Floor
396 Seocho-daero
Seocho-gu
Seoul 06619
Republic of Korea
61, rue de Rollingergrund
L-2440 Luxembourg
Level 11
1 Sentral
Jalan Rakyat
Kuala Lumpur Sentral
50470 Kuala Lumpur
Malaysia
Clinical research
services
100%*
Investment holding
company
100%*
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
Clinical research
services
100%
100%
ICON Clinical Research México, S.A. de
C.V.
Clinical research
Av. Barranca del Muerto 329 3rd
services
Floor
Col. San Jose Insugentes
03900 Mexico D.F.
100%
DOCS International B.V.
ICON Clinical Research (New Zealand)
Limited
ICON Clinical Research Perú S.A.
ICON Clinical Research Services
Philippines, Inc.
DOCS International Poland Sp. z o.o.****
Boeing Avenue 62-68
1119PE Schiphol-Rijk
The Netherlands
Clinical research
services
100%
Plaza Level,
41 Shortland Street,
Auckland,
New Zealand 1010
Av. Paseo de la República 5895
Oficina 606
Miraflores
Lima 18
Perú
24th Floor Salcedo Towers,
169 H.V. Dela Costa Street,
Salcedo Village,
Makati City,
Philippines 1227
Ul. Grojecka 5
02-019 Warszawa
Polska
123
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
Symphony Clinical Research Sp zoo
ICON Clinical Research S.R.L.
ICON Clinical Research (Rus) LLC
ICON Clinical Research d.o.o. Beograd
ICON Clinical Research (Pte) Limited
Mapi Life Sciences Singapore Pte. Ltd.
ICON Clinical Research Slovakia, s.r.o.
Accellacare South Africa (PTY) LTD
ul. Potokowa 26
80-283
Gdansk
Poland
8th Floor,
246c Caleca Floresca, Sector 1,
Bucharest 14476
Romania
29 Serebryanicheskaya
Embankment, Moscow, 109028,
Russian Federation
Clinical research
services
100%
Clinical research
services
100%
4th Floor,
Clinical research
services
Bulevar Zorana Djindjica 64a,
11070 Belgrade,
Serbia
100%
30 Loyang Way
#02/12
Loyang Industrial Estate
508769
Singapore
30 Loyang Way
#02/12
Loyang Industrial Estate
508769
Singapore
Karadžičova 2 Bratislava -
mestskáčasťStaréMesto ,
Slovenská republika, 81109,
Slovakia
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
Block 29 Second Floor
The Highlands Estate
The Woodlands
Woodlands Drive
Woodmead, Gauteng
2191
Johannesburg
South Africa
100%
ICON Clinical Research España, S.L.
Accellacare España S.L.
Calle Josep Pla
Numero 2, Torre Diagonal Mar
Piso 11, Modulo 1
Barcelona
Spain
Calle Marques de Valdavia 103
Portal 5
28100
Alcobendas
Madrid
Spain
Clinical research
services
100%
Clinical research
services
100%
DOCS International Sweden AB
Kolonivagen 1
SE-226 60 Lund, Sweden
Clinical research
services
100%
DOCS International Switzerland GmbH
ICON Clinical Research (Switzerland)
GmbH
c/o Experfina AG
Picassoplatz 8
4052 Basel
Switzerland
c/o Experfina AG
Picassoplatz 8
4052 Basel
Switzerland
124
Clinical research
services
100%
Clinical research
services
100%
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
ICON Clinical Research Taiwan Limited
6th Floor No. 2, Sec 5
Xinyi Road
Xinyl District
Taipei
Taiwan
ICON Clinical Research (Thailand) Limited 1 Empire Tower,
ICON Ankara Klinik Arastirma Dis Ticaret
Anonim Sirketi
DOCS Ukraine LLC
ICON Clinical Research LLC
Accellacare UK Limited
Aptiv Solutions (UK) Ltd
DOCS International UK Limited
ICON (LR) Limited
ICON Clinical Research (U.K.) Limited
ICON Clinical Research (U.K.) No. 2
Limited
ICON Clinical Research (U.K.) No. 3
Limited
ICON Clinical Research (U.K.) No. 4
Limited
ICON Clinical Research (U.K.) No. 5
Limited
24th Floor, Unit 2408,
South Sathorn Road,
Yannawa, Sathorn,
Bangkok, 10120
Thailand
Söğütözü mah.
Eskişehir Yolu Cad. 2176. SK
No:9
Posta Kodu:06510
Çankaya Ankara
Turkiye
Clinical research
4th Floor,
services
St. Poleva 24,
Kiev,
Ukraine, 03056
Clinical research
4th Floor,
services
St. Poleva 24,
Kiev,
Ukraine, 03056
100%
100%
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
125
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
ICON Development Solutions Limited
ICON Investments (UK) Ltd
Improving Treatments Limited
Medeval Group Limited
MeDiNova Lakeside Clinical Research
Limited
MeDiNova Merc (UK) Limited
VSK (Kenilworth) Limited
ICON Clinical Research (U.K.) No. 6
Limited
CRN NORTH AMERICA, LLC
DBA
SYMPHONY CLINICAL STAFFING
ICON Clinical Research, LP
ICON Early Phase Services, LLC
Addplan, Inc.
Beacon Bioscience, Inc
C4 MedSolutions, LLC
CHC Group, LLC
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
500 South Oak Way Green Park
Reading
RG2 6AD
United Kingdom
3 Parkway North
Suite 200
Deerfield, IL 60015
United States
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
100%
8307 Gault Lane,
San Antonio,
TX 78209-1015
United States
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
100%
Clinical research
services
100%
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
100%
100%
100%
126
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
CRN Holdings, LLC
3 Parkway North
Suite 200
Deerfield, IL 60015
United States
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Global Pharmaceutical Strategies Group,
LLC
ICON Clinical Investments, LLC
ICON Clinical Research LLC
ICON Laboratory Services, Inc.
ICON Tennessee, LLC
ICON US Holdings Inc.
MMMM Consulting, LLC
MMMM Group, LLC
MolecularMD Corp.
PriceSpective LLC
PubsHub LLC
Accellacare of Christie Clinic, LLC
Clinical Resource Network, LLC
DBA
SYMPHONY CLINICAL RESEARCH
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Investment
Company
731 Arbor Way Suite 100 Blue
Bell, PA United States, 19422
Clinical research
services
100%
100%
100%
100%
123 Smith Street,
Farmingdale,
NY 11735
United States
320 Seven Springs Way,
Suite 500,
Brentwood,
TN 37027
Clinical research
services
Clinical research
services
100%
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
100%
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
100%
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
101 West University Avenue
Champaign
IL 61820
United States
3 Parkway North
Suite 200
Deerfield, IL 60015
United States
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
127
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
Nature of
business
Proportion held by
Group
DOCS Global, Inc.
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
Clinical research
services
100%
Managed Care Strategic Solutions, L.L.C. 731 Arbor Way
Accellacare of Charlotte, LLC
Accellacare of Hickory, LLC
Accellacare of Raleigh, LLC
Accellacare of Rocky Mount, LLC
Accellacare of Salisbury, LLC
Accellacare of Wilmington, LLC
Accellacare of Winston-Salem, LLC
Accellacare US Inc.
Complete Healthcare Communications
LLC
Complete Publication Solutions, LLC
Accellacare of Charleston, LLC
Suite 100
Blue Bell, PA
United States, 19422
1700 Abbey Place
Suite 201
Charlotte
North Carolina 28209
United States
221 13th Ave Place NW
Suite 201
Hickory
North Carolina 28601
United States
3521 Haworth Drive
Suite 100
Raleigh
North Carolina 27609
United States
901 N. Winstead Avenue
Rocky Mount
North Carolina 27804
United States
410 Mocksville Avenue
Salisbury
North Carolina 28144
United States
1907 Tradd Court
Wilmington
North Carolina 28401
United States
1901 S. Hawthorne Road
Suite 306
Winston-Salem
North Carolina 27103
United States
1901 S. Hawthorne Road
Suite 306
Winston-Salem
North Carolina 27103
United States
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
731 Arbor Way
Suite 100
Blue Bell, PA
United States, 19422
180 Wingo Way
Suite 203
Mt. Pleasant
South Carolina 29464
United States
128
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
Accellacare of Bristol, LLC
ICON Government and Public Health
Solutions, Inc.
RPS Research S.A.
Pharmaceutical Research Associates Pty
Limited
RPS Research Austria GmbH
IMP-Logistics Bel, FLLC
Pharmaceutical Research Associates
Belgium B.V.
RPS Bermuda, Ltd.
1958 West State Street
Bristol
Tennessee 37620
United States
1265 Ridge Road, Suite A
Hinckley
OH 44233
United States
Cecilia Grierson 255
Floor 6
City of Buenos Aires
C1107CPE
Argentina
C/- ICON Clinical Research Pty
Ltd.
Suite 201, Level 2
2-4 Lyon Park Road
North Ryde NSW 2113 Australia
Tegetthoffstraße 7
1010 Vienna, Austria
28, Malinina st. bld.4, Liter A 1-2/
k,
Office #3, Minsk Republic of
Belarus 220101
E19 Business Park
Battelsesteenweg 455D
2800 Mechelen, Belgium
Victoria Place, 5th Floor
31 Victoria Street
Hamilton HM 10 Bermuda
Pharmaceutical Research Associates Ltda. Av. Ibirapuera 2332,
RPS do Brasil Serviços de Pesquisas
LTDA.
RPS China Inc.
Torre II 4º Andar,
São Paulo, SP,
Brazil,
CEP 04028-003
Av. Ibirapuera 2332,
Torre II 4º Andar,
São Paulo, SP,
Brazil,
CEP 04028-003
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
Clinical research
services
100%
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
c/o Tricor Services BVI Limited
P.O. Box 3340
Road Town
Tortola, British Virgin Islands
Clinical research
services
100%
Pharmaceutical Research Associates
Bulgaria EOOD
51b Bulgaria Blvd., Floor 4
Sofia, Bulgaria 1404
3065613 Nova Scotia Company
1741 Lower Water Street, Suite
600
Halifax, Nova Scotia B3J 0J2
Pharmaceutical Research Associates ULC 1741 Lower Water Street, Suite
600
Halifax, Nova Scotia B3J 0J2
Clinical research
services
Clinical research
services
100%
100%
Clinical research
services
100%
Services de Recherche Pharmaceutique
Srl
1741 Lower Water Street, Suite
600
Halifax, Nova Scotia B3J 0J2
Clinical research
services
100%
PRA Health Sciences Chile SpA
PRA Health Sciences China, Inc.
Miraflores 222 piso 28
Santiago, Chile
Room 301, Floor 3, Building No.
5, Hongda Industrial Park, No. 8
Hongda North Road, Beijing
Economic-Technological
Development Area, Beijing
Clinical research
services
Clinical research
services
100%
100%
129
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
PRA Health Sciences Colombia Ltda.
Research Pharmaceutical Services Costa
Rica, LTDA.
Calle 116 No. 7 – 15
Torre Cusezar Oficina 1002
Bogotá
Cundinamarca
Colombia
110111
Sabana Business Center, piso
11
Bulevar Rohrmoser y Calle 68
San José, Costa Rica 10108
Pharm Research Associates d.o.o. za
klinicka ispitivanja
Radnička cesta 180,
10 000 Zagreb, Croatia
Pharmaceutical Research Associates CZ,
s.r.o.
Prague 7
Jankovcova 1569/2c
Postal Code 170 00
Czech Republic
Pharmaceutical Research Associates
Denmark ApS
Havneholmen 29
1561 Copenhagen, Denmark
RPS Egypt (Limited Liability Company)
RPS Estonia OÜ
40 Road 254, Shell Building, 5th
Floor
Degla, Maadi, 11431 Cairo,
Egypt
Maadi 11431, Cairo, Egypt
Pärnu road 22
10141 Tallinn, Republic of
Estonia
Pharmaceutical Research Associates
Finland Oy
Vattuniemenranta 2
00210 Helsinki, Finland
ReSearch Pharmaceutical Services France
S.A.S.
IMP Logistics Georgia LLC
Pharmaceutical Research Associates
Georgia LLC
35 Rue d'Alsace
Tour So Quest
92300 Levallois-Perret, France
Mtatsminda District
Freedom Square N4 (Plot 66/4)
Tbilisi, Georgia
42-42a (Building No. 1)
Alexander Kazbegi Avenue
Vake-Saburtalo District
Tbilisi, Georgia
Pharmaceutical Research Associates
GmbH
Gottlieb-Daimler Strasse 10
68165 Mannheim, Germany
Pharmaceutical Research Associates
Greece A.E.
RPS Guatemala, S.A.
81 Ifigeneias Street
Nea Ionia 142 31
Attikis, Athens, Greece
5 Avenida 5-55, Zona 14
Edificio Europlaza World
Business Center
Torre II, Nivel 9
Guatemala City, Guatemala
PRA Health Sciences (Hong Kong) Limited Unit 4321 & 4336A, 43/F
AIA Tower, 183 Electric Road
North Point, Hong Kong
Pharmaceutical Research Associates
Magyarország Kutatás-Fejlesztési Korlátolt
Felelősségű Társaság
Szepvolgyi ut 39
HU-1037 Budapest
Hungary
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
Clinical research
services
100%
100%
Clinical research
services
Clinical research
services
100%
100%
Clinical research
services
100%
Clinical research
services
Clinical research
services
100%
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
Clinical research
services
100%
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Pharmaceutical Research Associates
Hungary Research and Development Ltd.
RPS Iceland ehf.
Skipholti 50D
105 Reykjavik, Iceland
Clinical research
services
100%
130
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
Pharmaceutical Research Associates India
Private Limited
Research Pharmaceutical Services
(Outsourcing Ireland) Limited
Pharmaceutical Research Associates
Israel Ltd.
Pharmaceutical Research Associates Italy
S.r.l.
PRA Development Center KK
PRA Health Sciences KK
PRA Health Sciences Kenya Limited
RPS Latvia SIA
UAB RPS Lithuania
RPS Malaysia Sdn. Bhd.
Pharmaceutical Research Associates
Mexico S. de R.L. de C. V.
Regus Kaledonia, Unit No 1B
Office No 538, Floor 5 Sahar
Road
Off Western Express Highway
Andheri(E) Mumbai
Mumbai City
400059 IN
India
South County Business Park,
Leopardstown,
Dublin 18
Ireland
Building E, 13th Floor
4 Haharash Street
Hod Hasharon 4524402 Israel
Via Porlezza, No. 12
Milan
20123
Italy
1-3 Kyutaro-machi 4-chome,
Chuo-ku, Osaka 541-0056
Japan
1-3 Kyutaro-machi 4-chome,
Chuo-ku, Osaka 541-0056
Japan
LR No. 1870/1/176, ALN House,
Eldama Ravine Close,
off Eldama Ravine Road,
Westlands
PO Box 764, Sarit Centre,
Nairobi, Kenya 00606
Blaumaņa iela 22
1011 Riga, Latvia
Upês street 21,
LT-08128 Vilnius, Lithuania
10th Floor, Menara Hap Seng
No. 1 & 3, Jalan P Ramlee
50250 Kuala Lumpur, Malaysia
Ave. Insurgentes Sur No. 1602,
Desp. 503
Col. Credito Constructor Mexico
Benito Juarez, Distrito Federal
C.P. 03940 Mexico
RPS Research México, S. de R.L. de C.V. Ave. Insurgentes Sur No. 1602,
RPS Research Servicios, S. de R.L. de
C.V.
Pharmaceutical Research Associates
Group B.V.
PRA International Operations B.V.
ReSearch Pharmaceutical Services
Netherlands B.V.
Desp. 502
Col. Credito Constructor Mexico
Benito Juarez, Distrito Federal
C.P. 03940 Mexico
Ave. Insurgentes Sur No. 1602,
Desp. 502
Col. Credito Constructor Mexico
Benito Juarez, Distrito Federal
C.P. 03940 Mexico
Van Swietenlaan 6
9728 NZ, Groningen
The Netherlands
Van Swietenlaan 6
9728 NZ, Groningen
The Netherlands
Herengracht 466
1017 CA Amsterdam, The
Netherlands
131
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
Clinical research
services
Clinical research
services
100%
100%
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
Pharmaceutical Research Associates New
Zealand Limited
RPS Research Norway AS
RPS Panama Inc.
RPS Perú S.A.C.
RPS Research Philippines, Inc.
Grant Thornton New Zealand
Limited,
L3, 134 Oxford Terrace,
Christchurch, 8140 , New
Zealand
c/o EconPartner AS
Dronning Mauds gate 15
0250 Oslo, Norway
Urbanización Nuevo Reparto el
Carmen No. 58
Calle Primera, Edificio Moreno &
Moreno. Local Planta Baja,
Distrito de Panamá, Panamá
Av. Paseo de la República 5895
Oficina 606
Miraflores
Lima 18
Perú
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
24th Floor,
Salcedo Towers
H.V. Dela Costa St
Barangay Bel-Air
Salcedo Village
Makati City, Philippines
Clinical research
services
100%
Pharmaceutical Research Associates Sp. z
o.o.
Ul. Grojecka 5
02-019 Warszawa
Poland
PRA International Portugal, Unipessoal,
Lda.
Av. da Republica, 50-10
1069-211, Lisboa, Portugal
Research Pharmaceutical Services Puerto
Rico, Inc.
Pharmaceutical Research Associates
Romania S.R.L.
Joint Stock Company IMP Logistics
Pharmaceutical Research Associates doo
Belgrade
c/o Fast Solutions, LLC
Citi Tower
252 Ponce de Leon Avenue,
Floor 20
San Juan, Puerto Rico 00918
8th Floor, Sky Tower
246c Caleca Floresca
Bucharest 14476 Romania
8, Energetikov str, v. Lesnoy
Gorodok Odintsovsky city
disctrict
Moscow region Russia 143080
19th Avenue
Vladimira Popovica 38-40
Belgrade, 11070 Serbia
Pharmaceutical Research Associates
Singapore Pte. Ltd.
#02-06/10, 21 Biopolis Road
Nucleos, Singapore 138567
Pharmaceutical Research Associates SK
s.r.o.
Bardosova 2/A
831 01 Bratislava, Slovakia
PRA Pharmaceutical S A (Proprietary)
Limited
RPS Research South Africa (Proprietary)
Limited
2nd Floor Building 29 Highlands
Estate
Woodlands Office Park
20 Woodlands Drive Woodmead
Gauteng 2191 South Africa
15 Greenwich Grove, Station
Road, Rondebosch, Western
Cape, 7700, South Africa
Clinical research
services
100%
Clinical research
services
Clinical research
services
100%
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
Clinical research
services
Clinical research
services
100%
100%
100%
Clinical research
services
100%
132
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
Pharmaceutical Research Associates
Korea Limited
Pharmaceutical Research Associates
España, S.A.U.
RPS ReSearch Ibérica, S.L.U.
RPS Spain S.L.
PRA International Sweden AB
PRA Switzerland AG
Pharmaceutical Research Associates
Taiwan, Inc.
RPS Research (Thailand) Co., Ltd.
142 Taeheran-ro
Gangnam-gu,
18th Floor (Yeoksam-dong,
Capital Tower)
Seoul
Republic of Korea
Avenida de Europa, 19
Edificio 1, 2a Planta
Pozuelo de Alarcon (Madrid)
Spain 28224
Avenida de Europa, 19
Edificio 1, 2a Planta
Pozuelo de Alarcon (Madrid)
Spain 28224
Avenida de Europa, 19
Edificio 1, 2a Planta
Pozuelo de Alarcon (Madrid)
Spain 28224
Kolonivagen 1
SE-226 60 Lund, Sweden
Lange Gasse 15
Basel 4052 Switzerland
Aurora Building, 5th Floor
No. 2, Sec 5, Xinyi Road,
Xinyi District, Taipei, Taiwan
24th Floor, Empire Tower, Tower
3
Unit 2408, 1 South Sathorn
Road
Yannawa Sub-District, Sathorn
District
Bangkok 10120 Thailand
Nature of
business
Proportion held by
Group
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
Clinical research
services
Clinical research
services
100%
100%
100%
Clinical research
services
100%
Pra Turkey Sağlik Araştirma Ve Geliştirme
Limited Şirketi
IMP-Logistics Ukraine, LLC
Pharmaceutical Research Associates
Ukraine, LLC
Kisikli Caddesi; No. 28, K:1-2
Altunizade, Istanbul
Turkey 34662
Clinical research
services
100%
8,Viskozna st. Kyiv Ukraine
02094
Clinical research
services
Clinical research
4th Floor,
services
St. Poleva 24,
Kiev,
Ukraine, 03056
100%
100%
IMP Logistics UK Limited
Cannon Place, 78 Cannon
Street
London EC4N 6AF England
Pharm Research Associates (UK) Limited Cannon Place, 78 Cannon
Pharm Research Associates Russia
Limited (in Voluntary Liquidation)
Sterling Synergy Systems Limited
ClinStar LLC
Nextrials, Inc.
Pharmaceutical Research Associates CIS,
LLC
Street
London EC4N 6AF England
The Pinnacle 170 Midsummer
Boulevard Milton Keynes MK9
1BP
Cannon Place, 78 Cannon
Street
London EC4N 6AF England
2710 Gateway Oaks Drive, Suite
150N
Sacramento, CA 95833-3505
2710 Gateway Oaks Drive, Suite
150N
Sacramento, CA 95833-3505
2710 Gateway Oaks Drive, Suite
150N
Sacramento, CA 95833-3505
133
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Clinical research
services
100%
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
Nature of
business
Proportion held by
Group
Pharmaceutical Research Associates
Eastern Europe, LLC
2710 Gateway Oaks Drive, Suite
150N
Sacramento, CA 95833-3505
Clinical research
services
100%
Care Innovations, Inc.
Care Innovations, LLC
CRI NewCo, Inc.
CRI Worldwide, LLC
International Medical Technical
Consultants, LLC
Parallel 6, Inc.
PRA Early Development Research, Inc.
PRA Health Sciences, Inc.
PRA Holdings, Inc.
PRA International, LLC
PRA Receivables, LLC
ReSearch Pharmaceutical Services, LLC
ReSearch Pharmaceutical Services, Inc.
Roy RPS Holdings LLC
RPS Global Holdings, LLC
RPS Parent Holding LLC
Source Healthcare Analytics, LLC
Sunset Hills, LLC
Symphony Health Solutions Corporation
CRI International, LLC
Lifetree Clinical Research, LC
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
1209 Orange Street
Wilmington, DE 19801
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
251 Little Falls Drive
Wilmington, DE 19808
Princeton South Corporate Ctr.,
Suite 160
100 Charles Ewing Blvd., Ewing,
NJ 08628
15 West South Temple, Suite
600
Salt Lake City, UT 84101
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
Clinical research
services
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Clinical research
services
100%
Pharmaceutical Research Associates, Inc. 100 Shockoe Slip, 2nd Floor
Richmond, VA 23219
Clinical research
services
RPS Global S.A.
RPS Latin America S.A
Plaza Cagancha 1145, 4th Floor
Montevideo, Uruguay 11100
Clinical research
services
Plaza Cagancha 1145, 4th Floor
Montevideo, Uruguay 11100
Clinical research
services
100%
100%
100%
134
Notes to Consolidated Financial Statements (continued)
for the year ended 31 December 2022
32. Subsidiary undertakings (continued)
Name
Registered Office*****
PRA Clinical Limited
South County Business Park,
Leopardstown,
Dublin 18
Ireland
Nature of
business
Proportion held by
Group
Clinical research
services
100%
ICON Clinical Research Holdings (U.K.)
Limited
500 South Oak Way Green Park
Reading RG2 6AD United
Kingdom
Investment holding
company
100%
ICON Clinical Research Holdings (Ireland)
Unlimited Company
South County Business Park,
Leopardstown,
Dublin 18
Ireland
Investment holding
company
100%
* majority of which is held directly
** Mapi Research Trust is an association, its members are ICON Subsidiary entities.
***CRS (Beijing) Clinical Research Co., Limited liquidated on 7 February 2023.
****DOCS International Poland Sp. z.o.o changed names to ICON Clinical Research Sp. z.o.o. with effect from 15 March
2023
*****Principal office address used for U.S. entities
33. Approval of financial statements
The Board of Directors approved these financial statements on 25 April 2023.
135
Company Statement of Financial Position
for the year ended 31 December 2022
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investment in subsidiaries
Other non-current assets
Deferred tax asset
Total non-current assets
Current assets
Other current assets
Amounts due from subsidiary undertakings
Deferred tax asset
Current taxes receivable
Cash and cash equivalents
Total current assets
Total assets
EQUITY
Share capital
Share premium
Merger reserve
Other undenominated capital
Share-based payment reserve
Other reserves
Retained earnings
Attributable to equity holders
Total equity
LIABILITIES
Non-current liabilities
Non-current other liabilities
Non-current deferred tax liability
Total non-current liabilities
Current liabilities
Accounts payable
Amounts due to subsidiary undertakings
Accrued and other liabilities
Current taxes payable
Total liabilities
Total equity and liabilities
On behalf of the Board
Steve Cutler
Rónán Murphy
Chief Executive Officer
Director
136
Note 31 December
2022
$’000
31 December
2021
$’000
1
9
2
3
4
5
6
7
4
6
7
276
727
—
7,086,423
32
329
7,087,787
2,437
146,898
2
—
6,944
156,281
369
2,619
14
6,974,348
33
491
6,977,874
1,236
265,788
—
19
9,129
276,172
7,244,068
7,254,046
6,649
472,723
5,656,195
1,162
326,803
(108,321)
866,648
7,221,859
6,640
436,916
5,656,195
1,134
342,637
(107,843)
897,509
7,233,188
7,221,859
7,233,188
5,353
—
5,353
773
1,001
14,748
334
16,856
6,680
—
6,680
1,717
1,283
10,814
364
14,178
22,209
20,858
7,244,068
7,254,046
Company Statement of Changes in Equity
for the year ended 31 December 2022
Number
of shares
Share
Capital
Share
Premium
Merger
Reserve
Other
Unde-
nominated
Capital
Share
Based
Payment
Reserve
Other
Reserve
Currency
Reserve
Retained
Earnings
Total
Equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 1 January 2022
81,554,683
6,640 436,916 5,656,195
1,134 342,637
6,071 (113,914) 897,509 7,233,188
Total comprehensive loss for the year
Loss for the year
Other comprehensive income
Foreign currency translation
—
—
—
—
—
—
—
—
(2,552)
(2,552)
—
—
—
—
—
—
—
(478)
—
(478)
Total other comprehensive loss
—
—
—
—
—
—
—
(478)
—
(478)
Total comprehensive loss for the year
—
—
—
—
—
—
—
(478)
(2,552)
(3,030)
Transactions with owners, recorded directly in equity
Share based payment
Exercise of share options
Share issue costs
Issue of restricted share units/ performance share units
Repurchase of ordinary shares
Share repurchase costs
Transfer of exercised and expired share based awards
—
—
—
348,286
21
35,807
—
241,116
(420,530)
—
—
—
16
(28)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
28
—
55,874
—
—
—
—
—
—
(71,708)
—
—
—
—
—
—
—
—
—
—
—
—
—
(17)
—
55,874
35,828
(17)
16
—
(99,983)
(99,983)
—
—
(17)
71,708
(17)
—
Total contributions by and distributions to owners
168,872
9
35,807
—
28
(15,834)
—
—
(28,309)
(8,299)
Balance at 31 December 2022
81,723,555
6,649 472,723 5,656,195
1,162 326,803
6,071 (114,392) 866,648 7,221,859
As permitted by section 504 of the Companies Act, the Company has not presented a Company Statement of Profit and Loss. The loss for the 2022 financial year of the Company amounted to $(2,552,000)
(2021: profit $35,945,000).
137
Company Statement of Changes in Equity
for the year ended 31 December 2021
Number
of shares
Share
Capital
Share
Premium
Merger
Reserve
Other
Undenom
inated
Capital
Share-
based
Payment
Reserve
Other
Reserve
Currency
Reserve
Retained
Earnings
Total
Equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 1 January 2021
52,788,093
4,580 318,404
—
1,134 131,557
6,071 (113,388) 700,402 1,048,760
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Foreign currency translation
—
—
—
—
—
—
—
—
35,945
35,945
—
—
—
—
—
—
—
(526)
—
(526)
Total other comprehensive income
—
—
—
—
—
—
—
(526)
35,945
35,419
Total comprehensive income for the year
—
—
—
—
—
—
—
(526)
35,945
35,419
Transactions with owners, recorded directly in equity
Issue of shares associated with a business combination
27,372,427
1,960
— 5,656,195
—
—
—
—
— 5,658,155
Replacement share-based awards issued to acquiree
employees
Share-based payment
Exercise of share options
Share issue costs
Issue of restricted share units
Transfer of exercised and expired share-based awards
—
—
—
—
—
—
1,065,529
—
328,634
—
77 118,512
—
—
23
—
—
—
—
—
—
—
—
—
— 267,607
— 105,488
—
—
—
—
— (162,015)
—
—
—
—
—
—
—
—
— 267,607
— 105,488
— 118,589
(853)
(853)
—
—
—
—
—
—
— 162,015
23
—
Total contributions by and distributions to owners
28,766,590
2,060 118,512 5,656,195
— 211,080
—
— 161,162 6,149,009
Balance at 31 December 2021
81,554,683
6,640 436,916 5,656,195
1,134 342,637
6,071 (113,914) 897,509 7,233,188
As permitted by section 504 of the Companies Act , the Company has not presented a Company Statement of Profit and Loss. The profit for the 2021 financial year of the Company amounted to
$35,945,000 (2020: profit $228,691,000).
138
Company Statement of Cash Flows
for the year ended 31 December 2022
Note
Year ended
31 December
2022
Year ended
31 December
2021
(Loss)/profit for the financial year
Adjustments to reconcile net income to net cash generated from
operating activities
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment of subsidiary undertakings
Depreciation of right-of-use assets
Impairment of right-of-use assets
Interest on lease liabilities
Share-based payment
Operating cash inflow before changes in working capital
(Increase)/decrease in other current assets
Decrease in non-current assets
Decrease in income taxes receivable
(Decrease)/increase in accounts payable
Increase/(decrease) in accrued and other liabilities
(Decrease)/increase in non-current liabilities
Cash provided by operations
Interest paid
Income taxes paid
Net cash inflow from operating activities
Investing activities
Purchase of computer software
Purchase of property, plant and equipment
Decrease in amounts due from/to subsidiary undertakings
Increase in investment in subsidiaries
Net cash generated by/(used in) investing activities
Financing activities
Proceeds from exercise of share options
Share issuance costs
Payment of lease liabilities
Repurchase of ordinary shares
Share repurchase costs
Net cash (used in)/generated by financing activities
Net decrease in cash and cash equivalents
Effect of exchange rate changes
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
139
1
2
3
9
9
2
1
6
3
$’000
$’000
(2,552)
35,945
98
13
—
123
29
86
1,042
1,317
699
3
13,443
12,746
(1,201)
1
140
(944)
4,155
(133)
—
17
5,212
42,729
195
4
140
1,682
(856)
(900)
14,764
42,994
(3)
—
(17)
—
14,761
42,977
—
(32)
—
(2)
118,318
213,053
(69,644)
(671,490)
48,642
(458,439)
35,844
118,612
(17)
(1,415)
(99,983)
(17)
(853)
(1,368)
—
—
(65,588)
116,391
(2,185)
(299,071)
—
9,129
6,944
—
308,200
9,129
Notes to Company Financial Statements
for the year ended 31 December 2022
1. Property, plant and equipment
–
PLC
Cost
At 1 January 2022
Additions
Disposals
Foreign currency movement
Leasehold
improvements
Computer
equipment
Office furniture
& fixtures
$’000
$’000
$’000
965
—
(533)
(79)
1,910
3
(1,125)
(158)
1,775
29
(765)
(136)
Total
$’000
4,650
32
(2,423)
(373)
At 31 December 2022
353
630
903
1,886
Depreciation
At 1 January 2022
Charge for the year
Eliminated on Disposals
Foreign currency movement
958
1
(533)
(78)
1,886
16
(1,125)
(156)
1,437
81
(764)
(113)
4,281
98
(2,422)
(347)
At 31 December 2022
348
621
641
1,610
Net book value
At 31 December 2022
At 31 December 2021
Cost
At 1 January 2021
Additions
Disposals
Foreign currency movement
5
7
9
24
262
338
Leasehold
improvements
Computer
equipment
Office furniture
& fixtures
$’000
$’000
$’000
276
369
Total
$’000
1,039
2,054
1,910
5,003
—
—
(74)
2
—
(146)
—
—
(135)
2
—
(355)
At 31 December 2021
965
1,910
1,775
4,650
Depreciation
At 1 January 2021
Charge for the year
Estimated on disposals
Foreign currency movement
1,031
1,996
1,455
4,482
1
—
(74)
29
—
(139)
93
—
(111)
123
—
(324)
At 31 December 2021
958
1,886
1,437
4,281
Net book value
At 31 December 2021
At 31 December 2020
7
8
24
58
338
455
369
521
140
Computer
Software
$’000
1,219
—
1,219
—
(115)
(16)
1,088
1,205
—
—
1,205
13
(115)
(15)
1,088
—
14
Notes to Company Financial Statements (continued)
for the year ended 31 December 2022
2.
Intangible assets
Cost
At 1 January 2021
Foreign exchange movement
At 31 December 2021
Additions
Disposals
Foreign exchange movement
At 31 December 2022
Amortisation
At 1 January 2021
Charge during the year
Foreign exchange movement
At 31 December 2021
Charge during the year
Eliminated on disposal
Foreign exchange movement
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
141
Notes to Company Financial Statements (continued)
for the year ended 31 December 2022
3.
Investment in subsidiaries
Cost
At 1 January 2021
Acquisition of PRA
Additions
Redemptions
Impairment charge
Share-based payment
Share subscription payment from subsidiary companies
At 31 December 2021
Additions
Redemptions
Share-based payment
Share subscription payment from subsidiary companies
At 31 December 2022
Investment in
Subsidiary
Undertakings
$’000
590,821
5,925,751
772,500
(101,000)
(86)
100,647
(314,285)
6,974,348
183,051
(83,000)
42,431
(30,407)
7,086,423
142
Notes to Company Financial Statements (continued)
for the year ended 31 December 2022
4. Deferred taxation
The net deferred tax asset at 31 December 2022 and 31 December 2021 was as follows:
Deferred taxation assets:
Accrued expenses and payments on account
Property, plant and equipment
Loans to subsidiaries
Total deferred taxation assets
Deferred taxation liabilities:
Property, plant and equipment
Accrued expenses and payments on account
Total deferred taxation liabilities
31 December
2022
31 December
2021
$'000
$'000
318
11
—
329
—
—
—
435
6
50
491
0
—
0
Net deferred taxation asset
329
491
Deferred taxation assets
Accrued expenses and payments on account
Property plant and equipment
Loans to subsidiaries
Total deferred taxation assets
Deferred taxation liabilities
Property, plant and equipment
Accrued expenses and payments on account
Total deferred taxation liabilities
Balance 1
January 2022
Recognised in
Income
Balance 31
December
2022
$'000
$'000
$'000
435
6
50
(117)
5
(50)
491
(162)
—
—
—
—
—
—
318
11
—
329
—
—
—
Net deferred taxation asset
491
(162)
329
143
Notes to Company Financial Statements (continued)
for the year ended 31 December 2022
4. Deferred taxation (continued)
Deferred taxation assets
Accrued expenses and payments on account
Property, plant and equipment
Loans to subsidiaries
Total deferred taxation assets
Deferred taxation liabilities
Property, plant and equipment
Accrued expenses and payments on account
Total deferred taxation liabilities
Balance 1
January 2021
Recognised in
Income
Balance 31
December
2021
$'000
$'000
$'000
376
9
50
435
(1)
—
(1)
59
(3)
—
56
1
—
1
435
6
50
491
0
—
0
Net deferred taxation asset
434
57
491
At 31 December 2022 and 31 December 2021 the Company had no operating loss carry forwards for income tax purposes.
At 31 December 2022 the Company had an unrecognised deferred tax asset in respect of unutilised foreign tax credits
carried forward of $8.8 million (2021: $7.8million).
5. Other current assets
Prepayments
Other receivables
Total
6. Amounts due from/to subsidiary undertakings
Amounts due from subsidiary undertakings
Amounts due to subsidiary undertakings
31 December
2022
31 December
2021
$’000
$’000
301
2,136
98
1,138
2,437
1,236
31 December
2022
31 December
2021
$’000
$’000
146,898
265,788
(1,001)
(1,283)
Amounts owed by subsidiary undertakings are non-interest bearing and repayable on demand. All amounts fall due within
one year. No allowance for expected credit losses has been recorded as amounts are expected to be fully recovered.
144
Notes to Company Financial Statements (continued)
for the year ended 31 December 2022
7. Accrued and other liabilities
Non-current other liabilities
Non-current lease liabilities
Non-current other liabilities
Total
Current liabilities
Current lease liabilities
Accruals and other liabilities
Total
8. Related parties
31 December
2022
31 December
2021
$’000
$’000
364
4,989
1,558
5,122
5,353
6,680
31 December
2022
31 December
2021
$’000
$’000
832
13,916
1,050
9,764
14,748
10,814
The Company entered into the following transactions with subsidiary companies during the period:
Year ended
31 December
2022
Year ended
31 December
2021
$’000
$’000
8,309
13,930
9,117
41,237
22,239
50,354
(42,431)
(100,647)
118,318
213,053
(69,644)
6,282,880
6,243
213,053
Statement of Profit and Loss
Expenses recharged to subsidiary companies
Dividend received from subsidiary companies (a)
Total
Statement of Cash Flows
Share based payment related to subsidiaries
Decrease in amounts due from/to subsidiary undertakings (a)
Increase in investment in subsidiaries (b)
Total
(a)
(b)
During 2022, the Company received dividends of $13.9 million (2021: $41.2 million) from its subsidiary undertaking,
ICON Clinical International Unlimited Company (2021 dividends were received from ICON Clinical Research Limited
($35.9 million) and ICON Clinical International Unlimited Company ($5.3million)).
During 2022, the Company subscribed for shares in its subsidiary, ICON Global Holdings Unlimited Company, in the
amount of $183.1 million, and redeemed shares in its subsidiary ICON Global Treasury Limited, in the amount of
$83.1 million. During 2021, the Company completed the Acquisition of PRA Health Sciences, Inc. by means of a
merger, in the amount of $5,925.8 million as well as additions and disposals related to its subsidiaries ICON Global
Holdings Unlimited Company and ICON Global Treasury Unlimited, in the aggregate of $357.2 million.
145
Notes to Company Financial Statements (continued)
for the year ended 31 December 2018
8. Related parties (continued)
Directors and Executive Officers of the Parent Company are the same as those for the Group. For information on
transactions with Directors and Executive Officers see note 30 Related parties, to the Consolidated Financial Statements,
and for information on Directors’ remuneration see note 9 Payroll and related benefits.
9. Leases
Right-of-use assets
The Company has the following right-of-use assets:
Depreciation charge for 2022
Right-of-use assets at 31 December 2022
Depreciation charge for 2021
Right-of-use assets at 31 December 2021
Premises
Equipment Motor vehicles
$'000
1,041
727
936
1,911
$'000
$'000
1
—
28
9
—
—
353
699
Total
$'000
1,042
727
1,317
2,619
Additions to right-of-use assets during 2022 were $0.3 million (2021: $0.974 million).
The weighted average remaining lease term as at 31 December 2022 is 1.09 years (2021: 2.18 years).
Lease liabilities
Future minimum lease payments under non-cancellable leases as of 31 December 2022 were as follows:
2023
2024
2025
2026
2026
Thereafter
Total future minimum lease payments
Lease imputed interest
Total
Minimum rental
payments
$'000
832
295
51
21
—
—
1,199
(3)
1,196
Lease liabilities are presented as current and non-current. Current lease liabilities of $0.8 million have been included in
accrued and other liabilities as at 31 December 2022 (2021: $1.1 million).
Amounts recognised in profit or loss
The following amounts were recognised in profit and loss:
Depreciation of right-of-use assets
Interest on lease liabilities
31 December
2022
31 December
2021
$'000
1,042
3
$'000
1,317
17
The depreciation cost of right-of-use assets is recorded within other operating expenses and interest on lease liabilities is
recorded within finance costs.
During the year ended 31 December 2022, the Company did not incur any costs related to variable lease payments.
146
Notes to Company Financial Statements (continued)
for the year ended 31 December 2022
10. Litigation
The Company is not party to any litigation or other legal proceedings that the Company believes could reasonably be
expected to have a material adverse effect on the Company’s business, results of operations and financial position.
However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary
course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise
from time to time that may harm our business.
11. Financial instruments
The Company is exposed to various financial risks in the normal course of the business. The Company’s financial
instruments typically comprise cash and accounts payable. The main purpose of these financial instruments is to provide
finance for the Company’s operations. The main risks arising from the Company’s financial instruments are credit risk,
liquidity risk, foreign exchange risk and interest rate risk.
Credit risk
Intercompany loans receivable and payable are initially recognised at fair value. These are subsequently measured at
amortised cost, less any loss allowance. An expected credit loss assessment was performed in respect of the receivables at
31 December 2021 and 31 December 2022. The identified impairment loss was immaterial.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. Credit risk in respect of the Company arises on balances due from group companies. As the Group
is financially sound and the subsidiary entities that the Company trades with are in a position to make payments as and
when they fall due, the Company has assessed the exposure to credit risk as low.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s
liquidity risk arises from the repayment of short-term debt and other obligations as they fall due. The Company minimises
liquidity risk by ensuring that sufficient cash balances and committed bank lines of credit are available to meet its obligations
as they fall due. The Company’s bank credit lines and facilities are the same as the Group. Details of the Group’s bank
credit lines and facilities are set out in note 23 Bank credit lines and loan facilities.
The following table sets out details of the maturity of the Company’s financial liabilities into the relevant maturity groupings
based on the remaining period from the financial year end date to the contractual maturity date:
At 31 December 2022
Accounts payable
Lease liability
Accruals and other
liabilities
At 31 December 2021
Accounts payable
Lease liability
Accruals and other
liabilities
Carrying
Amount
$’000
Contractual
Cashflows
$’000
6 mths or
less
$’000
6 to 12
mths
$’000
1 to 2
years
$’000
2 to 5
years
$’000
More than
5 years
$’000
—
—
1,196
1,199
—
416
—
415
—
295
—
72
—
—
18,905
20,101
18,905
11,688
20,104
12,104
2,228
2,643
1,337
1,632
1,616
1,688
3,139
3,139
Carrying
Amount
$’000
Contractual
Cashflows
$’000
6 mths or
less
$’000
6 to 12
mths
$’000
1 to 2
years
$’000
2 to 5
years
$’000
More than
5 years
$’000
—
—
—
—
2,608
2,631
638.5
637.5
—
818
—
536
—
—
14,886
17,494
14,886
17,517
7,984
8,623
1,780
2,418
300
1,118
2,427
2,963
2,395
2,395
147
Notes to Company Financial Statements (continued)
for the year ended 31 December 2022
11. Financial instruments (continued)
Foreign currency risk
While the functional currency of the Company is USD, the functional currency of the branches is Euro. As a consequence,
the results, when translated into U.S. dollars, could be affected by fluctuations in exchange rates against the U.S. dollar. At
31 December 2022 the Company had $Nil US dollar denominated bank loans (2021: $Nil).
Interest rate risk
The Company finances its operations through a mixture of shareholders’ funds, borrowings and working capital. The
Company borrows in required currencies at both fixed and floating interest rates. In general the Company borrows at floating
rates of interest but may borrow at fixed rates depending on rates available having regard to current market rates and future
trends. The Company has no external borrowings.
Fair values
Financial instruments are measured in the Statement of Financial Position at fair value using a fair value hierarchy of
valuation inputs. The hierarchy prioritises the inputs into three levels based on the extent to which inputs used in measuring
fair value are observable in the market. Each fair value measurement is reported in one of three levels, which is determined
by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1:
Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2:
Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical
or similar instruments in markets that are not active and model-based valuation techniques for which all
significant assumptions are observable in the market or can be corroborated by observable market data
for substantially the full term of the assets or liabilities.
Level 3:
Inputs are generally unobservable and typically reflect management’s estimates of assumptions that
market participants would use in pricing the asset or liability.
The carrying values of amounts due from subsidiary undertakings, cash and cash equivalents, other current assets,
accounts payable and accruals and other liabilities are carried at amortised cost and assumed to be approximate to their fair
values due to the short-term nature of these balances.
Amounts owed by subsidiary undertakings are non-interest bearing and repayable on demand. All amounts are therefore
recorded as due within one year. Fair value is deemed to equal carrying value on this basis.
Each category of asset and liability has remained within the same level of hierarchy as the prior year as there has been no
change in the extent to which the inputs used in measuring fair value are or are not observable within the market.
12. Approval of financial statements
The Board of Directors approved the Company Financial Statements on 25 April 2023.
148
Reconciliation from IFRS to US Accounting Policies
The Consolidated Financial Statements set out on pages 36 to 135 have been prepared in accordance with International
Financial Reporting Standards (“IFRS”), as adopted by the European Union (“EU IFRS”), which differ in certain significant
respects from generally accepted accounting principles applicable in the U.S. (“U.S. GAAP”). The material differences as
they apply to the Consolidated Financial Statements are as follows:
(a) Financial statement format
The format of the financial statements and certain note disclosures differ under U.S. GAAP from those under EU IFRS. The
Group prepared a U.S. Securities and Exchange Commission Form 20-F Report which was made available to all
shareholders in February 2023. The financial statements included in such Form 20-F are prepared in accordance with U.S.
GAAP.
(b) Merger with PRAI
The Group accounts for business combinations under EU IFRS in accordance with the IFRS 3 Business Combinations. As
permitted by IFRS 1 First Time Adoption of International Financial Reporting Standards the Group has only restated
business combinations from 1 June 2001 onwards. Business combinations prior to this date have not been restated. In
addition, goodwill has no longer been amortised since 1 June 2001, but rather is tested annually for impairment. U.S. GAAP
adopts different criteria to EU IFRS for establishing the method of accounting to be adopted for business combinations. On
28 January 2000, the Group completed a transaction with Pacific Research Associates Inc. (“PRAI”), a Group specialising in
data management, statistical analysis and medical and regulatory consulting based in San Francisco, USA. The merger with
PRAI was accounted for using acquisition accounting principles in accordance with EU IFRS whilst U.S. GAAP required that
the merger be accounted for using the pooling-of-interest method of accounting. U.S. GAAP pooling-of-interest accounting
has resulted in a number of adjustments. Most significantly:
(i)
the Group’s historic U.S. GAAP financial statements have been restated to reflect the combined results of ICON
and PRAI;
(ii)
the costs of the merger were expensed for U.S. GAAP purposes and included in the cost of acquisition for IFRS;
(iii) goodwill arising on IFRS has been amortised over its expected useful life up to 31 May 2001. No goodwill arose on
the merger under U.S. GAAP;
(iv) the tax charge arising on the conversion of PRAI from an S-Corporation to a C-Corporation is treated as a pre-
acquisition charge under IFRS.
(c) Share-based payment expense
IFRS requires that the fair value of share-based payments be expensed to the Consolidated Statement of Profit and Loss
over the period the related services are received, with a corresponding increase in equity. The Group has accounted for
share-based payments under U.S. GAAP in accordance with ASC 718, Compensation – Stock Compensation, which also
requires that the fair value of share-based payments be expensed to the Consolidated Statement of Profit and Loss over the
period the related services are received, with a corresponding increase in equity.
There is a difference in recorded expense because firstly, different periods are in scope for both treatments due to the
different effective dates under both standards and secondly, due to different models used to calculate the fair value of
options. Under U.S. GAAP the Black-Scholes model was used for the calculation of the expense, whereas under IFRS the
binomial model has been used.
U.S. GAAP requires that the accelerated graded vesting attribution approach is applied in respect of awards with straight
line graded vesting. IFRS requires that each instalment of an award where there is graded vesting is treated as a separate
grant with a different fair value. Each instalment is therefore separately measured and charged to the Consolidated
Statement of Profit and Loss over the related vesting period. This results in accelerated expense recognition under IFRS.
(d) Stock-based Compensation Arrangements in a Business Combination
An exchange of share-based payment awards in a business combination is treated as a modification under IFRS 2. The
replacement awards and the original acquiree awards should both be measured at fair value at the acquisition date and
calculated using the fair-value-based measurement principles in IFRS 2.
U.S. GAAP requires the attribution of compensation cost for the acquirer’s replacement awards in the post-combination
financial statements to be based on the acquirer’s attribution policy (i.e., straight-line approach or graded-vesting approach).
Under IFRS, however, the graded vesting approach is required for all awards with graded vesting features based on the
requirements in IFRS 2.
149
Reconciliation from IFRS to US Accounting Policies (continued)
(e) IAS 19R Defined Benefit Pensions
The Group has recognised the net interest expense of the defined benefit pension scheme within payroll costs (operating
expenses) in the Consolidated Statement of Profit and Loss under IAS19R which is consistent with the U.S. GAAP
treatment of this cost. Additional net credits related to the defined benefit pension schemes refer to the adjustment required
to reverse the application of the corridor approach permitted under U.S. GAAP and the different net interest expense
recorded under IFRS and U.S. GAAP.
(f) Current tax and deferred tax assets
Deferred tax asset
U.S. GAAP, ASC 740, Income Taxes requires recognition of a deferred tax asset in respect of the cumulative amount of
compensation cost recognised in the financial statements in respect of unexercised options that will give rise to a future tax
deduction. The tax deduction is based on the intrinsic value of the options, with the full tax deduction recorded in profit or
loss in the year of exercise.
IFRS also requires that a deferred tax asset is recognised in respect of options not yet exercised where a tax deduction will
arise. IAS 12 Income taxes requires that the tax deduction is estimated. The fair value estimate is based on the share price
at the exercise date.
Current tax benefit
U.S. GAAP, ASC 740, Income Taxes requires recognition of a current tax benefit of certain tax deductions arising from
Share-based payment windfall gains in the Consolidated Statement of Operations. IFRS requires that the current tax benefit
of these Share-based payment windfall gains is recognised through Equity, in the Share-based payment reserve.
(g) IFRS 16 Leases
Under U.S. GAAP, ASC 842 Leases, lessees account for leases as operating or finance. Costs in respect of operating
leases are charged to the Consolidated Statement of Operations on a straight-line basis over the lease term. Lease costs
for all leases under IFRS 16 are comprised of the depreciation of right-of-use assets and the interest charge in respect of
the associated lease liability.
(h) Contract Assets and Contract Liabilities in a Business Combination
In October 2021, the FASB issued ASU 2021-08 "Business Combinations (Topic 805) - Accounting for Contract Assets and
Contract Liabilities from Contracts with Customers". The amendments in this ASU require that an entity (acquirer) recognise
and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the
acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had
originated the contracts. The Company has adopted the amendments in this ASU for year ended 31 December 2021 and
has applied the amendments of this ASU to the Merger with PRA, completed on 1 July 2021.
IFRS 3 Business Combinations does not have a similar fair value measurement exception for contract assets and contract
liabilities. As a result, contract liabilities will be have a lower valuation under IFRS compared to U.S. GAAP with the valuation
adjustment being charged to revenue over the life of the contract with the customer.
(i) Measurement period adjustments (acquisition accounting)
Under U.S. GAAP, ASC 805 Business Combinations, any adjustments which are made to provisional acquisition accounting
(i.e., measurement period adjustments) are reflected in the current period. Under IFRS, measurement period adjustments
are reflected through retrospective application to the period in which the acquisition occurred. As such, measurement period
adjustments recorded during 2022, in connection with the finalisation of acquisition accounting for the PRA Acquisition, have
been applied retrospectively for IFRS purposes. Measurement period adjustments primarily consist of final acquisition
accounting adjustments to goodwill, intangible assets and the related deferred tax impact.
150
Reconciliation from IFRS to US Accounting Policies (continued)
The following is a summary of the material adjustments to profit for the financial year and shareholders’ equity, which would
be required, had the Consolidated Financial Statements been prepared in accordance with U.S. GAAP:
(i) Effect on profit for the financial year
Year ended
31 December
2022
Year ended
31 December
2021
$’000
Revised*
$’000
Profit for the financial year attributable to equity holders and noncontrolling interest as
stated under IFRS
506,285
172,285
U.S. GAAP adjustments
Share-based payment expense under IFRS (c) (d)
Share-based payment expense under U.S. GAAP (c) (d)
Fair value adjustment to unearned revenue under IFRS (h)
Amortisation adjustment related to measurement period adjustment under IFRS (i)
Right-of-use asset amortisation adjustment under IFRS (g)
Deferred tax adjustments on share-based payments (f)
Current tax adjustments on share-based payments (f)
Deferred tax adjustments on leases (f)
Additional costs defined benefit pension scheme (e)
55,790
105,859
(70,523)
(133,844)
8,000
(2,167)
1,179
6,572
(313)
(156)
637
8,000
2,167
(91)
(8,486)
7,809
(438)
(76)
Net income as stated under U.S. GAAP
505,304
153,185
Basic earnings per Ordinary Share under U.S. GAAP
$6.20
$2.28
Diluted earnings per Ordinary Share under U.S. GAAP
$6.13
$2.25
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
151
Reconciliation from IFRS to US Accounting Policies (continued)
(ii) Effect on shareholders’ equity
31 December
2022
31 December
2021
$’000
Revised*
$’000
Total equity attributable to the owners and noncontrolling interest as stated under IFRS
8,569,982
8,175,698
U.S. GAAP adjustments
Goodwill (net) arising on PRA merger related stock compensation (c)
(58,199)
(58,199)
Intangibles amortisation adjustment related to measure period adjustment under IFRS (i)
Fair value adjustment to unearned revenue under IFRS (h)
Right-of-use asset amortisation adjustment under IFRS (g)
Deferred tax adjustments on leases (f)
Goodwill (net) arising on merger with PRAI (b)
Deferred tax adjustments on share-based payments (f)
—
16,000
2,634
(834)
(14,009)
(17,611)
2,167
8,000
2,515
(677)
(14,009)
(48,668)
Total equity attributable to the owners and noncontrolling interest as stated under U.S.
GAAP
8,497,963
8,066,827
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
(iii) Effect on total assets
Total assets as stated under IFRS
U.S. GAAP adjustments
Right-of-use asset amortisation adjustment under IFRS (g)
Goodwill (net) arising on PRA merger related stock compensation (c)
Goodwill (net) arising on merger with PRAI (b)
Goodwill on fair value adjustment to unearned revenue under IFRS (h)
Measurement period adjustments under IFRS (i)
Deferred tax adjustments on share-based payments (f)
Deferred tax adjustments on right-of-use assets (f)
Deferred tax asset and liability offset (f)
31 December
2022
31 December
2021
$’000
Revised*
$’000
17,256,640
17,482,661
2,634
1,092
(58,199)
(14,009)
16,000
—
(58,199)
(14,009)
16,000
8,656
(17,614)
(48,668)
(174)
—
(174)
(269)
Total assets as stated under U.S. GAAP
17,185,278
17,387,090
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
152
Reconciliation from IFRS to US Accounting Policies (continued)
(iv) Effect on total liabilities
Total liabilities as stated under IFRS
U.S. GAAP adjustments
Fair value adjustment to unearned revenue under IFRS (h)
Lease liability valuation adjustment under IFRS (g)
Measurement period adjustments under IFRS (i)
Deferred tax adjustments on leases (f)
Deferred tax asset and liability offset (f)
31 December
2022
31 December
2021
$’000
Revised*
$’000
8,686,658
9,306,963
—
—
—
657
—
8,000
(1,423)
6,489
503
(269)
Total liabilities as stated under U.S. GAAP
8,687,315
9,320,263
* The comparatives have been revised for IFRS 3 measurement period adjustments. Refer to note 14 for further details.
153
Appendix A: Risk Factors
Risk Related to Our Business and Operations
The potential loss or delay of our large contracts, or of multiple contracts, could adversely affect our results.
Our clients may discontinue using our services completely or cancel some projects either without notice or upon
short notice. The termination or delay of a large contract, or of multiple contracts, could have a material adverse effect on
our revenue and profitability. Historically, clients have canceled or discontinued projects and may in the future cancel their
contracts with us for reasons including, amongst others:
•
•
•
•
•
the failure of products being tested to satisfy safety or efficacy requirements;
unexpected or undesired clinical results of the product;
a decision that a particular study is no longer necessary or viable;
poor project performance, quality concerns, insufficient patient enrollment or investigator recruitment; and
production problems resulting in shortages of the drug.
As a result, contract terminations, delays or other changes are part of our clinical services business. In the event of
termination, our contracts often provide for fees for winding down the trial but these fees may not be sufficient for us to
maintain our margins, and termination may result in lower resource utilization rates. In addition, we may not realize the full
benefits of our unsatisfied performance obligation of contractually committed services if our clients cancel, delay or reduce
their commitments under our contracts with them. Therefore, the loss, early termination or delay of a large contract or
contracts could adversely affect our revenues and profitability.
If we do not generate new business awards, or if new business awards are delayed, terminated, reduced in scope
or fail to go to contract, our business, financial conditions, results of operations or cash flows may be materially
adversely affected.
Our business is dependent on our ability to generate new business awards from new and existing customers and
maintain existing customer contracts. If we were unable to generate new business awards on a timely basis and contract for
those awards, that could have a material impact on our business, financial condition, results of operations or cash flows.
We depend on a limited number of customers and a loss of, or significant decrease in, business from one or more
of them could affect our business.
While no customers individually contributed more than 10% of our revenues during the years ended December 31,
2022 and December 31, 2021, our top five customers represented 28.3% and 31.6% of our revenues, respectively. The loss
of, or a significant decrease in, business from one or more of these key customers could have a material adverse impact on
our results of operations and financial results.
The inability of biotechnology customers to raise adequate financing or funding could affect our business.
A portion of our revenue is generated from sales and services to the biotechnology industry. The clients we serve
are commonly subject to financial pressures, including, but not limited to, the ability to obtain adequate financing or generate
sufficient funding. To the extent our clients face such pressures, or they change how they utilize our offerings, the demand
for our services, or the prices our clients are willing to pay for those services, may decline. Any such decline could have a
material adverse effect on our business, operating results and financial condition.
Our financial results may be adversely impacted if we underprice our contracts, overrun our cost estimates or fail
to receive approval for, or experience delays in, documenting change orders.
Many of our contracts are long-term fixed price or fixed unit price contracts for services. As a result, variations in
the timing and progress of large contracts may materially adversely affect our results of operations. Revenue recognized on
these service contracts are based on an assessment of progress towards completion being the cost of time and other third
party costs as a percentage of total estimated time and other third party costs to deliver our services. As a result, variations
in the timing and progress of large contracts may materially adversely affect our results of operations. Estimating time and
costs to complete requires judgment and includes consideration of the complexity of the study, the number of geographical
sites where trials are to be conducted and the number of patients to be recruited at each site. We regularly review the
estimated hours on each contract to determine if the budget accurately reflects the agreed tasks to be performed, taking into
account the state of progress at the time of review.
We bear the risk of cost overruns unless the scope of activity is revised from the contract specifications and we are
able to negotiate a contract modification. We endeavor to ensure that any changes in scope are appropriately monitored
and change orders or contract modifications are promptly negotiated and documented for changes in scope. If we fail to
successfully negotiate change orders for changes in the resources required or the scope of the work to be performed, and
154
Appendix A: Risk Factors (continued)
the costs of performance of these contracts exceeded their fixed fees, it could materially adversely affect our operations and
financial results.
If we are unable to successfully develop and market new services or enter new markets, our growth, results of
operations or financial condition could be adversely affected.
A key element of our growth strategy is the successful development and marketing of new services or entering new
markets that complement or expand our existing business. As we develop new services or enter new markets, we may not
have or be able to adequately build the competencies necessary to perform such services satisfactorily, may not receive
market acceptance for such services or may face increased competition. If we are unable to succeed in developing new
services, entering new markets or attracting a client base for our new services or in new markets, we will be unable to
implement this element of our growth strategy, and our future business, reputation, results of operations could be adversely
impacted.
If we fail to attract or retain key personnel, our performance may suffer.
Our business, future success and ability to continue to expand operations depends upon our ability to attract, hire,
train and retain qualified professional, scientific and technical operating people. We compete for qualified professionals with
other Clinical Research organisations (“CROs”), temporary staffing agencies and the in-house departments of
pharmaceutical, biotechnology and medical device companies. An inability to attract and retain a sufficient number of high
caliber clinical research professionals (in particular, key personnel and executives) at an acceptable cost would impact our
ability to provide our services, our future performance and results of operations.
We may face challenges retaining employees which could cause disruption to our integration plans and day-to-day
activities, which may result in additional costs to the business.
The attraction, development and retention of our talent is critical to the success of the Company, and we are
working to strengthen processes around these areas to minimize retention risk and support a successful integration. The
Company, led by the Chief Human Resource Officer, is taking meaningful action to retain employees. Through our annual
Talent Review process we have identified opportunities for improvement as it relates to employee retention. Our People
Plans have set specific goals for each functional area in terms of three critical areas: talent attraction, development and
retention. However, we can provide no assurances that our efforts in this respect will be successful.
Our leadership and talent programs contribute to the enhanced retention of our employees, better project
deliverables for our customers and the enhanced financial performance of the business. We aim to be an industry leader: a
company where talented people come to do important work, a place where our employees can shape the future of
healthcare, grow their careers, and reach their full potential. We have long held a deep commitment to cultivating strong
people practices. This includes competitive total rewards packages along with a focus on continuous learning. Our success
depends on the knowledge, capabilities, and quality of our people.
Our ability to perform clinical trials is dependent upon the ability to recruit suitable willing patients.
The successful completion of clinical trials is dependent upon the ability to recruit suitable and willing patients on
which to test the drug under study. The availability of suitable patients for enrollment in studies is dependent upon many
factors including, amongst others, the size of the patient population, the design of the study protocol, eligibility criteria, the
referral practices of physicians, the perceived risks and benefits of the drug under study and the availability of alternative
medication, including medication undergoing separate clinical trials. Insufficient or inappropriate patient enrollment may
result in the termination or delay of a study which could have a material adverse impact on our results of operations.
The Company is focused on continuing to develop its expertise in patient recruitment with the establishment in
2020 of Accellacare, a global clinical research network, offering patients easier and faster access to innovative treatments
and offering customers the option to deploy decentralized trials. The focus is on making it easier for the site and the patient
to actively participate in a trial to ensure increased predictability, enrollment and retention. Our site and patient solutions
group includes upfront planning of site and patient management including identification, enrollment and engagement.
Improved site selection is achieved through:
•
•
•
leading technology to identify where the patients are that match the protocol;
assessment of the qualification of sites based on real data;
partnerships with leading technology vendors and developing the capability to enable EMR interrogation into
clinical insights such as sub-populations and larger pre-screened pool where the technology and regulations are
enabled.
155
Appendix A: Risk Factors (continued)
The burden on the site, in ensuring patient enrollment and engagement, is achieved through integrated site
networks. ICON has a number of site alliance partners. During 2018, we enhanced our site and patient recruitment
capabilities with an expansion of the PMG Research network through a partnership with the DuPage Medical Group. During
2019, we further enhanced our site and patient recruitment abilities through the strategic acquisitions of MeDiNova and
CRN. In 2020, ICON announced the launch of Accellacare, a global clinical research network offering patients easier and
faster access to innovative treatments and offering customers the option to deploy decentralized trials. The site network
includes previously acquired PMG Research, MeDiNova and CRN. Also in 2020, we entered into an agreement to jointly
establish a new company, Oncacare Limited ("Oncacare"), with a third party. Oncacare operates as a specialized oncology
site network in the US and EMEA regions. The new site network is focused on implementing a range of commercial models
with specialist oncology healthcare providers in the US and EMEA, to accelerate the recruitment and retention of patients
into oncology trials. The oncology site network operates as a joint venture between the Company and a third party company
which has extensive experience in developing and running a site network. We also use digital solutions to drive site
performance, including pre-screening, eConsent, learning management, document tracking and management with key
applications.
Our ability to perform clinical trials is dependent upon our ability to recruit suitable willing investigators.
We contract with physicians located in hospitals, clinics or other similar sites, who serve as investigators in
conducting clinical trials to test new drugs on their patients. Investigators supervise administration of the study drug to
patients during the course of the clinical trial. The successful conduct of a clinical trial is dependent upon the integrity,
experience and capabilities of the investigators conducting the trial. Insufficient investigator recruitment, which in turn may
lead to insufficient or inappropriate patient enrollment, may result in the termination or delay of a study which could have a
material adverse impact on our results of operations.
Climate change, extreme weather events, earthquakes and other natural disasters could adversely affect our
business.
In recent years, extreme weather events and changing weather patterns such as storms, flooding, droughts and
temperature changes have become more common. As a result, we are potentially exposed to varying natural disaster or
extreme weather risks such as hurricanes, tornadoes, droughts or floods, or other events that may result from the impact of
climate change on the environment, such as sea level rise. As a result, we could experience increased costs, business
interruptions, destruction of facilities, and loss of life, all of which could have a material adverse effect on our business,
financial condition, or results of operations. The potential impacts of climate change may also include increased operating
costs associated with additional regulatory requirements and investments in reducing energy, water use and greenhouse
gas emissions.
A disease outbreak, epidemic or pandemic such as COVID-19, could adversely affect our business performance.
A disease outbreak, such as influenza or coronavirus, could negatively impact our operations. We could experience
restrictions on our ability to travel, or the ability of patients or other service providers to travel, to monitor our clinical trials
and to ensure laboratory samples are collected and analyzed on time as a result of an outbreak. The potential impact of an
epidemic or pandemic may also result in increased operating costs and result in a requirement to increase investment in
impact prevention. COVID-19 has affected, and may continue to affect, our business performance and could adversely
affect the economies and financial markets worldwide, resulting in an economic downturn that could impact our business,
financial condition and results of operations. We may be required, or choose, to take temporary measures intended to help
minimize the risk of infection from the virus for our employees, which could negatively affect our business and cannot
presently be predicted with confidence.
156
Appendix A: Risk Factors (continued)
Our business depends on the continued effectiveness and availability of our information systems, including the
information systems we use to provide our services to our clients, and any system failures of, security breaches of
or cyber attacks to these systems may materially limit our operations or have a material adverse effect on our
results of operations.
Due to the global nature of our business and our reliance on information systems to provide our services, we use
web-enabled and other integrated information systems in delivering our services. We will continue to increase the use of
these systems and such systems will either be developed internally or provided in conjunction with third parties. We also
provide access to similar information systems to certain clients in connection with the services we provide them. As the use,
scope and complexity of our information systems continue to grow, we are exposed to, and will increasingly be exposed to,
the risks inherent in the development, integration and ongoing operation of evolving information systems, including:
•
•
•
•
disruption or failure of data centers, telecommunications facilities or other key infrastructure platforms;
security breaches, cyber attacks or other failures or malfunctions in our application or information systems or their
associated hardware or other systems that we have access to, or that we rely upon, or that have access to our
systems;
security breaches, cyber attacks or malfunctions with key suppliers or partners who we rely on to provide services
to customers; and
excessive costs, excessive delays or other deficiencies in, or problems with, systems development and
deployment.
The materialization of any of these risks may impede our ability to provide services, the processing of data, the
delivery of databases and services and the day-to-day management of our business and could result in the corruption, loss
or unauthorized disclosure of proprietary, confidential or other data, as well as reputational harm.
While we have cybersecurity controls and disaster recovery plans in place, they might not adequately protect us in
the event of a system failure, security breach or cyber attack. To date, no cyber attacks have had a material impact on
operations or financial reporting. Additionally, despite any precautions we take, damage from fire, floods, hurricanes, power
loss, telecommunications failures, computer viruses, information system security breaches, cyber attacks and similar events
that impact our various computer facilities could result in interruptions in the flow of data to our servers and from our servers
to our clients. Corruption or loss of data may result in the need to repeat a trial at no cost to the client, but at significant cost
to us, or result in the termination of one or more contracts, legal proceedings or claims against us or damage to our
reputation. Additionally, significant delays in system enhancements or inadequate performance of new or upgraded systems
once completed could damage our reputation and harm our business. Long-term disruptions in the infrastructure caused by
events such as security breaches, cyber attacks, natural disasters, the outbreak of war, the escalation of hostilities and acts
of terrorism, particularly involving cities in which we have offices, could adversely affect our business.
Unauthorized disclosure of sensitive or confidential data, whether through system failure or employee negligence,
fraud or misappropriation, could damage our reputation and cause us to lose clients. Similarly, despite investing in
information and cybersecurity controls, there is a risk that unauthorized access to our information systems or those we
develop for our clients, whether by our employees or third parties, including a cyber attack by computer programmers and
hackers who may attack ICON systems, develop and deploy viruses, worms, ransomware or other malicious software
programs, could result in negative publicity, significant remediation costs, legal liability, loss of customers and damage to our
reputation and could have a material adverse effect on our results of operations and financial results. In addition, our liability
insurance might not be sufficient in type, the cover provided or amount to adequately cover us against claims related to
security breaches, cyber attacks and other related breaches.
Our information systems, and those of third parties which we utilize, may face increased cybersecurity risks due to
the COVID-19 pandemic, including from the significant number of employees that are working remotely or otherwise
impacted by stay-at-home orders. Additional remote access points provide new potential vulnerabilities to cybercriminals.
Employees of ICON and third parties may be more susceptible to social engineering efforts, and to phishing attempts which
can disguise malware as a legitimate effort to circulate important information relating to COVID-19.
Additionally, ICON completed the Merger with PRA on July 1, 2021 and, as a result, the IT landscape and physical
footprint of the Company has increased significantly. As the organisation invests in the consolidation of offices, data centers,
IT systems and business services a significant amount of due diligence has been completed to understand the IT landscape
and increased attack surface. While the organisation continues with substantial integration efforts, a failure to effectively
manage these activities in a timely and cost-effective manner may result in disruption to our business and negatively affect
our operations.
157
Appendix A: Risk Factors (continued)
Upgrading the information systems that support our operating processes and evolving the technology platform for
our services pose risks to our business.
Continued efficient operation of our business requires that we implement standardized global business processes
and evolve our information systems to enable this implementation. We have continued to undertake significant programs to
optimize business processes with respect to our services. A failure to effectively manage the implementation and adapt to
new processes designed into these new or upgraded systems in a timely and cost-effective manner may result in disruption
to our business and negatively affect our operations.
We have entered into agreements with certain vendors to provide systems development and integration services
that develop or license to us the IT platform for programs to optimize our business processes. If such vendors fail to perform
as required or if there are substantial delays in developing, implementing and updating the IT platform, our customer
delivery may be impaired and we may have to make substantial further investments, internally or with third parties, to
achieve our objectives. Additionally, our progress may be limited by parties with existing or claimed patents who seek to
prevent us from using preferred technology or seek license payments from us.
Meeting our objectives is dependent on a number of factors which may not take place as we anticipate, including
obtaining adequate technology-enabled services, creating IT-enabled services that our customers will find desirable and
implementing our business model with respect to these services. We are continuing to develop opportunities for automation
across ICON using state of the art automation tools including Robotic Process Automation (RPA), the development of new
applications and capabilities, and enabling deeper integration across our digital ecosystem. To remain competitive within our
industry and keep pace with the rapid evolution of the technological landscape, it is critical that we continue to innovate and
expand the capabilities of our current technologies. This applies in particular to our ICONIK, Firecrest, ADDPLAN, Integrated
Dataverse (IDV®) and One Search services. Also, increased requirements for investment in information technology may
negatively impact our financial condition, including profitability.
Failure to meet productivity objectives under our business improvement objectives could adversely impact our
competitiveness and therefore our operating results.
We continue to pursue business transformation initiatives to embed technology and innovation and deliver
operational efficiencies. As part of these initiatives, we seek to improve our productivity, flexibility, quality, functionality and
cost savings by our on-going investment in global technologies, continuous improvement of our business processes and
functions to deliver economies of scale. These initiatives may not deliver their intended gains or be completed in a timely
manner which may adversely impact our competitiveness and our ability to meet our growth objectives and therefore, could
adversely affect our business and operating results, including profitability.
We rely on our interactive response technologies to provide accurate information regarding the randomization of
patients and the dosage required for patients enrolled in the trials.
We develop and maintain computer run and web based interactive response technologies to automatically manage
the randomization of patients in trials, assign the study drug and adjust the dosage when required for patients enrolled in
trials we support. An error in the design, programming or validation of these systems could lead to inappropriate assignment
or dosing of patients, which could give rise to patient safety issues and invalidation of the trial and/or liability claims against
the Company, amongst other things, any of which could have a material effect on our financial condition and operations.
A failure to identify and successfully close and integrate strategic acquisition targets could adversely impact our
ongoing business and financial results.
We have made a number of acquisitions, including the Merger, and continue to review new acquisition
opportunities. If we are unable to identify suitable acquisition targets, complete an acquisition or successfully integrate an
acquired company or business, our business may be disrupted. The success of an acquisition will depend upon, among
other things, our ability to:
effectively and quickly assimilate the operations and services or products of the acquired company or business;
integrate acquired personnel;
retain and motivate key employees;
retain customers; and
•
•
•
•
• minimize the diversion of management's attention from other business concerns.
In the event that the operations of an acquired company or business do not meet our performance expectations,
we may have to restructure the acquired company or business or write-off the value of some, or all, of the assets of the
acquired company or business.
158
Appendix A: Risk Factors (continued)
We may be unable to realize anticipated cost and tax synergies and expect to incur substantial expenses related to
the Merger.
We expect to generate run rate cost synergies of approximately $150 million and tax savings from the combined
target effective tax rate; both to be realized within approximately four years after completion of the Merger. Since completion
of the Merger, we have progressed many of our key integration plans including rationalization of our office footprint, targeted
headcount reductions to improve efficiency and key system integrations. The actions completed to date are ahead of our
original plan such that we now anticipate realizing our run rate cost synergies by the end of 2023. Our ability to achieve such
cost and tax synergies in the timeframe described, is subject to various assumptions by management, which may or may
not prove to be accurate, as well as the incurrence of costs in our operations that offset all or a portion of such cost
synergies. As a consequence, we may not be able to realize all of these cost and tax synergies within the timeframe
expected. Failure to achieve the expected cost and tax synergies could significantly reduce the expected benefits
associated with the Merger.
We expect to continue to incur non-recurring costs associated with the combination of the two companies and
achieving the desired cost synergies. These fees and costs have been, and will continue to be, substantial. Such costs, as
well as other unanticipated costs and expenses, could have a material adverse effect on our financial condition and
operating results.
Improper performance of our services could adversely impact our reputation and our financial results.
The performance of clinical development services is complex and time-consuming. We may make mistakes in
conducting a clinical trial that could negatively impact or damage the usefulness of the clinical trial or cause the results to be
reported improperly. If the clinical trial results are compromised, we could be subject to significant costs or liability, which
could have an adverse impact on our ability to perform our services. Large clinical trials are costly, and while we endeavor to
contractually limit our exposure to such risks, improper performance of our services could have an adverse effect on our
financial condition, damage our reputation and result in the cancellation of current contracts or failure to obtain new
contracts from affected or other clients.
Our relationships with existing or potential customers who are in competition with each other may adversely
impact the degree to which other customers or potential customers use our services, which may adversely affect
our results of operations.
The biopharmaceutical industry is highly competitive, with biopharmaceutical companies each seeking to persuade
payers, providers and patients that their drug therapies are better and more cost-effective than competing therapies
marketed or being developed by competing companies. In addition to the adverse competitive interests that
biopharmaceutical companies have with each other, biopharmaceutical companies also have adverse interests with respect
to drug selection and reimbursement with other participants in the healthcare industry, including payers and providers.
Biopharmaceutical companies also compete to be first to market with new drug therapies. We regularly provide services to
biopharmaceutical companies who compete with each other and we sometimes provide services to such customers
regarding competing drugs in development. Our existing or future relationships with our biopharmaceutical customers may
therefore deter other biopharmaceutical customers from using our services or may result in our customers seeking to place
limits on our ability to serve other biopharmaceutical industry participants. In addition, our further expansion into the broader
healthcare market may adversely impact our relationships with biopharmaceutical customers and such customers may elect
not to use our services, reduce the scope of services that we provide to them or seek to place restrictions on our ability to
serve customers in the broader healthcare market with interests that are adverse to theirs. Any loss of customers or
reductions in the level of revenues from a customer could have a material adverse effect on our results of operations,
business and prospects.
159
Appendix A: Risk Factors (continued)
We have only a limited ability to protect our intellectual property rights and these rights are important to our
success.
Our success depends, in part, upon our ability to develop, use and protect our proprietary methodologies,
analytics, systems, technologies and other intellectual property. Existing laws of the various countries in which we provide
services or solutions offer only limited protection of our intellectual property rights, and the protection in some countries may
be very limited. We rely upon a combination of trade secrets, confidentiality policies, non-disclosure, invention assignment
and other contractual arrangements and patent, copyright and trademark laws, to protect our intellectual property rights.
These laws are subject to change at any time and certain agreements may not be fully enforceable, which could further
restrict our ability to protect our innovations. Intellectual property rights may not prevent competitors from independently
developing services similar to, or duplicative of, ours. Further, the steps we take in this regard might not be adequate to
prevent or deter infringement or other misappropriation of our intellectual property by competitors, former employees or
other third parties and we might not be able to detect unauthorized use of, or take appropriate and timely steps to enforce
our intellectual property rights. Enforcing our rights might also require considerable time, money and oversight and we may
not be successful in enforcing our rights.
The biopharmaceutical industry has a history of patent and other intellectual property litigation and we might be
involved in costly intellectual property lawsuits.
The biopharmaceutical industry has a history of intellectual property litigation, and these lawsuits will likely continue
in the future. Accordingly, we may face patent infringement legal proceedings by companies that have patents for similar
business processes or other legal proceedings alleging infringement of their intellectual property rights. Legal proceedings
relating to intellectual property could be expensive, take significant time and divert management’s attention from other
business concerns, regardless of the outcome of the litigation. If we do not prevail in an infringement lawsuit brought against
us, we might have to pay substantial damages and we could be required to stop the infringing activity or obtain a license to
use technology on unfavorable terms. Any infringement or other legal processing related to intellectual property could have
a material adverse effect on our operations and financial condition.
We act as authorized representative or legal representative for some clients pursuant to certain jurisdictional
requirements for sponsors of clinical trials to appoint an authorized representative or legal representative with a
local presence within the relevant jurisdiction.
We act as authorized representative pursuant to Medical Devices Directive 93/42/EEC (“MDD”), Medical Devices
Regulation 2017/745 (“MDR”) and Active Implantable Medical Devices Directive 90/385/EEC (“AIMD”) for certain clients who
are located outside of the European Union. As authorized representative, we act on behalf of medical device manufacturers
in relation to specified tasks with regard to their obligations under MDR.
We also act as legal representative pursuant to European Clinical Trials Directive (2021/20/EC) (“CTD”), EU
Clinical Trials Regulation (No.536/2014) (“CTR”), MDD, MDR and AIMD, for certain clients who are located outside of the
European Union with respect to clinical trials being carried out by those clients in the European Union. We also perform
similar legal representative services for certain clients in other non-EU jurisdictions where client is located outside the
relevant local jurisdiction, ICON has an established local legal entity and analogous local regulations have a similar
requirement for a local legal representative for clinical trials being carried out in those jurisdictions. As legal representative,
we are responsible for ensuring compliance with the client’s obligations pursuant to CTD, CTR and MDR or analogous local
legislation and we are the addressee for all communications with the client provided for under CTD, CTR and MDR or
analogous local legislation.
We provide these services subject to certain terms and conditions which are contained in our agreements with
clients pertaining to these services. We aim to reduce any potential liability associated with these activities by seeking
contractual indemnification from our clients and by maintaining an appropriate level of insurance cover. However, there is no
guarantee that the specific insurance will be available or that a client will fulfill its obligations in relation to their indemnity.
We rely on third parties to provide certain data and other information to us. Our suppliers or providers might
increase our cost to obtain, restrict our use of or refuse to license data, which could lead to our inability to access
certain data or provide certain services and, as a result, materially and adversely affect our operating results and
financial condition.
Our services are derived from, or include, the use of data we collect from third parties. We have several data
suppliers that provide us with a broad and diverse scope of information that we collect, use in our business and sell.
We generally enter into long-term contractual arrangements with many of our data suppliers. At the time we enter
into a new data supply contract or renew an existing contract, suppliers may increase our cost to obtain and use the data
provided by such supplier, increase restrictions on our ability to use or sell such data, or altogether refuse to license the data
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Appendix A: Risk Factors (continued)
to us. Also, our data suppliers may fail to meet or adhere to our quality control standards or fail to deliver the data to us.
Although no single supplier is material to our business, if suppliers that collectively provide a significant amount of the data
we receive or use were to increase our costs to obtain or use such data, further restrict our access to or use of such data,
fail to meet or adhere to our quality control standards, refuse to provide or fail to deliver data to us, our ability to provide
data-dependent services to our clients may be adversely impacted, which could have a material adverse effect on our
business, results of operations, financial condition or cash flow.
We rely on third parties for important products, services and licenses to certain technology and intellectual
property rights. If there was failure in delivery by these parties, we might not be able to continue to obtain such
products, services and licenses.
We depend on certain third parties to provide us with products and services critical to our business. Such services
include, among others, suppliers of drugs for patients participating in trials, suppliers of kits for use in our laboratories,
suppliers of reagents for use in our testing equipment and providers of maintenance services for our equipment. The failure
of any of these third parties to adequately provide the required products or services, or to do so in compliance with
applicable regulatory requirements, could have a material adverse effect on our business.
Some of our services rely on intellectual property, technology and other similar property owned and/or controlled by
third parties. Our licenses to this property and technology could terminate or expire and we might not be able to replace
these licenses in a timely manner. Also, we might not be able to renew these licenses on similar terms and conditions.
Failure to renew these licenses, or renewals of these licenses on less advantageous terms, could have a material adverse
effect on our business, results of operations, financial condition or cash flow.
Risk Related to Our Industry
Outsourcing trends in the pharmaceutical, biotechnology and medical device industries and changes in spending
on research and development could adversely affect our operating results and growth rates.
We are dependent upon the ability and willingness of the pharmaceutical, biotechnology and medical device
companies to continue to spend on research and development and to outsource the services that we provide. We are
therefore subject to risks, uncertainties and trends that affect companies in these industries that we do not control. We have
benefited to date from the tendency of pharmaceutical, biotechnology and medical device companies to outsource clinical
research projects. Any downturn in these industries or reduction in spending or outsourcing could materially adversely affect
our business. The following could each result in such a downturn:
•
•
•
if pharmaceutical, biotechnology or medical device companies expanded upon their in-house clinical or
development capabilities, they would be less likely to utilize our services;
if governmental regulations were changed, it could affect the ability of our clients to operate profitably, which may
lead to a decrease in research spending and therefore this could have a material adverse effect on our business;
and
if unfavorable economic conditions or disruptions in the credit and capital markets negatively impacted our clients.
Large pharmaceutical companies are increasingly consolidating their vendor base and entering strategic
partnership arrangements with a limited number of outsource providers.
Large pharmaceutical companies are continually seeking to drive efficiencies in their development processes to
both reduce costs associated with the development of new drug candidates and accelerate time to market. As a result, large
pharmaceutical companies, in particular, are increasingly looking to consolidate the number of outsource providers with
which they engage, with many entering strategic partnership arrangements with a limited number of outsource
providers. The failure to enter strategic partnership arrangements with customers or the loss of existing customers as a
result of them entering strategic partnership arrangements with our competitors could have a material adverse impact on our
results of operations.
Increased collaboration amongst pharmaceutical companies in research and development activities may lead to
fewer research opportunities.
Certain pharmaceutical companies have begun to collaborate in seeking to develop new drug candidates.
Increased collaboration amongst pharmaceutical companies may lead to fewer research opportunities, which in turn may
lead to fewer outsource opportunities for companies within the CRO industry. A reduction in outsource opportunities as a
result of this increased collaboration could have a material adverse impact on our results of operations.
We operate in a highly competitive and dynamic market.
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Appendix A: Risk Factors (continued)
The CRO industry is highly competitive. In particular, we compete with other large global CROs for strategic
relationships with large pharmaceutical companies. If we are unable to retain and renew existing strategic relationships and
win new strategic relationships, there could be a material adverse impact on our results. Similarly, we compete with other
CROs for work which comes outside of these strategic relationships and being unable to win work outside of these strategic
relationships would have a material adverse impact on our results.
The type and depth of services provided by CROs has changed in recent years. Failure to develop and market new
services or expand existing service offerings could adversely affect our business and operations.
New entrants may also enter the market which would further increase competition and could adversely affect our
business and operations.
We may be adversely affected by industry, customer or therapeutic concentration.
We provide services to biopharmaceutical, biotechnology, medical device and government organisations and our
revenue is dependent on expenditures by these customers. Our business could therefore be adversely impacted by
mergers, consolidation, business failures, distress in financial markets or other factors resulting in a decrease in the number
of potential customers or therapeutic products being developed through the drug development progress. There has been
consolidation in the biopharmaceutical market in recent years. If the number of our potential customers were to decline in
the future, they may be able to negotiate price discounts or other terms for services that are less favorable to us than they
have been historically.
Risk Related to Our Financial Results and Financial Position
Our quarterly results are dependent upon a number of factors and can fluctuate from quarter to quarter. They may
fall short of prior periods, our projections or the expectations of securities analysts or investors, which may
adversely affect the market price of our stock.
Our results of operations in any quarter can fluctuate or differ from expected or forecast results depending upon or
due to, among other things, the number and scope of ongoing client projects, the commencement, postponement,
variation, cancellation or termination of projects in a quarter, the mix of activity, cost overruns, employee hiring, employee
attrition and other factors. Our revenue in any period is directly related to the number of employees who were working on
billable projects together with investigator activity during that period. We may be unable to compensate for periods of under-
utilization during one part of a fiscal period by earning revenue during another part of that period. We believe that operating
results for any particular quarter are not necessarily a meaningful indicator of future results.
Also, if in future quarters, we are unable to continue to deliver operational efficiencies and our expenses grow
faster than our revenues, our operating margins, profitability and overall financial condition may be materially adversely
impacted.
Our exposure to exchange rate fluctuations could adversely affect our future results of operations.
Our contracts with clients are sometimes denominated in currencies other than the currency in which we incur
expenses related to such contracts. Where expenses are incurred in currencies other than those in which contracts are
priced, fluctuations in the relative value of those currencies could have a material adverse effect on our results of
operations.
In addition, we are also subject to translation exposures as our consolidated financial results are presented in U.S.
dollars, while the local results of a certain number of our subsidiaries are prepared in currencies other than U.S. dollars,
including, amongst others, the pound sterling and the euro. Accordingly, changes in exchange rates between the U.S. dollar
and those other currencies will affect the translation of subsidiary companies' financial results into U.S. dollars in reporting
our consolidated financial results.
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Appendix A: Risk Factors (continued)
Inflation and rising labor costs could adversely affect our future results of operations.
Inflation and rising labor costs may result in significant increases to the cost of our services, which we may not be
able to recover from our customers. Our contracts with clients are often fixed price or fixed price-per-unit contracts. If
macroeconomic forces, such as inflation, cause the cost of inputs required to deliver these contracts to increase
significantly, we may be unable to pass along these cost to our customers. A sustained increase in these costs may require
us to increase the price of future service offerings. These actions could adversely affect our future revenue, gross margin, or
both.
Our effective tax rate may fluctuate from quarter-to-quarter, which may adversely affect our results of operations.
Our quarterly effective tax rate has depended and will continue to depend on the geographic distribution of our
taxable earnings amongst the multiple tax jurisdictions (such as Ireland, United States and United Kingdom) in which we
operate and the tax law in those jurisdictions. Changes in the geographic mix of our results of operations amongst these
jurisdictions may have a significant impact on our effective tax rate from quarter-to-quarter. Changes in tax law in one or
more jurisdictions could also have a significant impact on our tax rate and results. In addition, as we operate in multiple tax
jurisdictions, we may be subject to audits in certain jurisdictions. These audits may involve complex issues which could
require an extended time period before being resolved. The resolution of audit issues may lead to additional taxes, interest
as well as fines and/or penalties being imposed which could have a material adverse impact on our effective tax rate and
our consolidated financial results.
Our unsatisfied performance obligation may not convert to revenue and the rate of conversion may slow.
Our unsatisfied performance obligation is the amount of awards that has not yet converted to revenue. This value
is not necessarily a meaningful predictor of future results due to the potential for the cancellation or delay of projects
included in the unsatisfied performance obligation. No assurances can be given that we will be able to realize this
unsatisfied performance obligation in full as revenue. A failure to realize these awards could have a material adverse impact
on our results of operations. In addition, as the length and complexity of projects increases, the rate at which awards convert
to revenue may be slower than in the past. A significant reduction in the rate of conversion could have a material impact on
our results of operations.
The Company is exposed to various risks in relation to our cash and cash equivalents and short term investments.
The Company’s treasury function manages our available cash resources and invests significant cash balances in
various financial institutions to try to ensure optimum returns for our surplus cash balances. These balances are classified
as cash and cash equivalents or short term investments depending on the maturity of the related investment. Cash and
cash equivalents comprise cash and highly liquid investments with maturities of three months or less. Short term
investments comprise highly liquid investments with maturities of greater than three months and minimum “A-” rated fixed
and floating rate securities.
Given the global nature of our business, we are exposed to various risks in relation to these balances including
liquidity risk, credit risk associated with the counterparties with whom we invest, interest rate risk on floating rate securities,
sovereign risk (our principle sovereign risk relates to investments in U.S. Treasury funds) and other factors.
Although we have not recognized any significant losses to date on our cash and cash equivalents or short term
investments, any significant declines in their market values could have a material adverse effect on our financial position
and operating results.
Changes in accounting standards may adversely affect our financial statements.
We prepare our financial statements in accordance with generally accepted accounting principles in the United
States of America ("US GAAP") which are revised on an on-going basis by the authoritative bodies. It is possible that future
accounting standard updates may require changes to the accounting treatment that we apply in preparation of our financial
statements. These changes may also require significant changes to our reporting systems. These updates may result in
unexpected variability in the timing of recognition of revenue or expenses and therefore in our operating results.
Risk Related to Our Indebtedness
We have incurred substantial additional indebtedness in connection with the Merger, which could impair our
flexibility and access to capital and could adversely affect the combined Company’s business, financial condition
or results of operations.
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Appendix A: Risk Factors (continued)
Following completion of the Merger and the other transactions contemplated by the Merger Agreement, the Company has a
substantial amount of debt. ICON borrowed approximately $6,015 million in order to pay PRA stockholders the cash
consideration due to them as merger consideration under the Merger Agreement, pay related fees and transaction costs in
connection with the transactions, and refinance existing indebtedness. The total remaining transaction related debt balance
at 31 December 2022 was $4,701 million. This level of borrowings could adversely affect the Company in a number of ways,
including, but not limited to, by placing us at a competitive disadvantage compared to our competitors that have less debt,
causing us to incur substantial fees from time to time in connection with debt amendments or refinancing, making it more
difficult for the Company to satisfy its obligations with respect to its debt or to its trade or other creditors, requiring a
substantial portion of the Company’s cash flows from operations for the payment of interest on the Company’s debt,
reducing the Company’s flexibility to respond to changing business and economic conditions, and reducing funds available
for the Company’s investments in research and development, capital expenditures and other activities. If ICON cannot
service its debt, it may have to take actions such as selling assets, seeking additional debt or equity, or reducing or delaying
capital expenditures, strategic acquisitions, investments and alliances.
In addition, ICON’s increased level of indebtedness could adversely affect ICON’s credit rating, which could result in
increased borrowing costs for the Company in the future. No assurances can be made that ICON will be able to refinance
any indebtedness incurred in connection with the Merger on terms acceptable to it or at all.
Covenants in our credit agreement and the indenture governing the Senior Secured Notes may restrict our
business and operations. Our financial condition and results of operations could be adversely affected if we do not
comply with those covenants.
The Senior Secured Credit Facilities and the indenture include certain customary covenants that limit our ability to, amongst
other things, subject to certain exceptions:
• make dividends, investments and other restricted payments;
•
•
•
•
•
enter into sale and leaseback transactions;
engage in share buybacks;
incur or assume liens or additional debt;
engage in mergers or reorganisations; or
enter into certain types of transactions with affiliates.
The revolving credit facility also includes a financial covenant that requires us to comply with a maximum consolidated
leverage ratio. Our ability to comply with this financial covenant may be affected by events beyond our control.
Interest rate fluctuations may materially adversely affect our results of operations and financial conditions due to
the variable interest rate on our senior secured term loan facility, our revolving credit facility or in respect of any
future issuances of debt.
Borrowings under the senior secured term loan facility amortise in equal quarterly installments in an amount equal to 1.00%
per annum of the original principal amount, with the remaining balance due at final maturity. The interest rate margin
applicable to borrowings under the senior secured term loan facility is USD Term SOFR and a Term SOFR Adjustment
depending on the interest period chosen plus an applicable margin of 2.25%. The senior secured term loan facility is subject
to a floor of 0.50%.
The interest rate margin applicable to borrowings under the revolving loan facility will be, at the option of the borrower, either
(i) the applicable base rate plus an applicable margin of 1.00%, 0.60% or 0.25% based on ICON’s current corporate family
rating assigned by S&P of BB- (or lower), BB or BB+ (or higher), respectively, or (ii) Term SOFR plus a Term SOFR
Adjustment on the interest period chosen plus an applicable margin of 2.00%, 1.60% or 1.25% based on ICON’s current
corporate family rating assigned by S&P of BB- (or lower), BB or BB+ (or higher), respectively. In addition, lenders under the
revolving loan facility are entitled to commitment fees as a percentage of the applicable margin at the time of drawing and
utilization fees dependent on the proportion of the facility drawn. At 31 December 2022, no amounts were outstanding under
the revolving loan facility with the exception of $4.5 million letters of credit given to landlords to guarantee lease
arrangements.
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Appendix A: Risk Factors (continued)
Because the Company has variable rate debt, fluctuations in interest rates affect our business. We attempt to minimize
interest rate risk and lower our overall borrowing costs through the utilization of interest rate cap and interest rate swap
derivative financial instruments. We have entered into certain interest rate cap and interest rate swap agreements with
three financial institutions with respect to a portion of our outstanding debt. Accordingly, any change in market value
associated with these agreements is offset by the opposite market impact on the portion of the debt covered by such
agreements. See Note 14 - Derivatives.
Borrowings under our Senior Secured Credit Facilities bear interest at a variable rate that is based on the Secured
Overnight Financing Rate (“SOFR”), which may have consequences for us that cannot be reasonably predicted and
may adversely affect our liquidity, financial condition, and results of operations.
On July 27, 2017, the U.K. Financial Conduct Authority (the “FCA”) announced that it intended to end the use of LIBOR
effective after December 31, 2021 as the benchmark rate that many banks and issuers use to set interest rates for loans,
securities, derivative contracts and other financial instruments. Recognizing the need to replace LIBOR, authorities in the
United States convened the Alternative Reference Rates Committee (“ARRC”) in 2014 to identify a replacement for LIBOR
with respect to indebtedness denominated in U.S. Dollars. In 2017, the ARRC identified SOFR, and in April 2018, the
Federal Reserve Bank of New York began publishing SOFR.
SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on
directly observable U.S. Treasury-backed repurchase transactions. Although the U.S. Treasury-backed overnight repo
market is highly liquid, there is currently no robust market for determining forward-looking SOFR term rates. Because SOFR
is an overnight risk-free rate, whereas LIBOR has various terms and an embedded credit charge, the transition from LIBOR
to SOFR will require adjustments, which may continue to vary for certain forms of indebtedness and financial instruments as
the relevant markets adapt to SOFR’s implementation. Similar alternative benchmark replacements will be required to be
implemented in respect of indebtedness and other financial instruments that are currently based on LIBOR quotes for
currencies other than the U.S. Dollar.
The credit agreement governing the Senior Secured Credit Facilities provides that borrowings denominated in U.S. Dollars
will bear interest based on LIBOR or other base rate (as elected by the borrower), plus an applicable margin. The credit
agreement also provides that LIBOR may be replaced by a SOFR-based rate for borrowings in U.S. Dollars upon (i) the
FCA ceasing to provide LIBOR for U.S. Dollars or announcing that LIBOR is no longer representative or (ii) an early election
by the Company and the administrative agent under our credit agreement to transition from LIBOR. On November 29,
2022, the Company agreed with its lenders to the adoption of SOFR as the benchmark rate within the Credit Agreement.
The possible volatility of and uncertainty around SOFR as a LIBOR replacement rate and the applicable credit adjustment
could result in higher borrowing costs for us, which would adversely affect our liquidity, financial condition, and results of
operations.
Risk Related to Political, Legal or Regulatory Environment
We may lose business opportunities as a result of healthcare reform and the expansion of managed care
organisations.
Numerous governments, including the U.S. government, have undertaken efforts to control growing healthcare
costs through legislation, regulation and voluntary agreements with medical care providers and drug companies. If these
efforts are successful, pharmaceutical, biotechnology and medical device companies may react by spending less on
research and development and therefore this could have a material adverse effect on our business.
In addition to healthcare reform proposals, the expansion of managed care organisations in the health care market
may result in reduced spending on research and development. Managed care organisations' efforts to cut costs by limiting
expenditures on pharmaceuticals and medical devices could result in pharmaceutical, biotechnology and medical device
companies spending less on research and development. If this were to occur, we would have fewer business opportunities
and our revenues could decrease, possibly materially.
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Appendix A: Risk Factors (continued)
Healthcare reform legislation, other changes in the healthcare industry and in healthcare spending could adversely
affect our business model, financial condition or results of operations.
Our results of operations and financial conditions could be affected by changes in healthcare spending and policy.
The healthcare industry is subject to changing political, regulatory and other influences. It is possible that legislation will be
introduced and passed in the United States repealing, modifying or invalidating the current healthcare reform legislation, in
whole or in part, and signed into law. Because of the continued uncertainty about the implementation of the current
healthcare reform legislation, including the potential for further legal challenges or repeal of that legislation, we cannot
quantify or predict with any certainty the likely impact of the current healthcare reform legislation or its repeal on the
healthcare sector, on our customers and ultimately on our financial condition or results of operations.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022, which, among other things,
implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases
and several tax incentives to promote clean energy, which will go into effect in 2023. The Company is continuing to assess
the potential impact of these changes.
The conflict in Ukraine could adversely affect our future results of operations.
The current conflict in Ukraine has led to, among other things, hardship and the imposition of international
economic sanctions aimed at the region. While the situation is subject to change, there remains the possibility of additional
and harsher sanctions if the conflict intensifies. If that were to happen, our operations in the region may be severely
curtailed or eliminated, which could adversely affect our results of operations. In addition, if the current unrest broadens or
further escalates, our operations may be severely curtailed, which could adversely affect our results of operations.
We may lose business as a result of changes in the regulatory environment.
Various regulatory bodies throughout the world may enact legislation, rules and guidance which could introduce
changes to the regulatory environment for drug development and research. The adoption and implementation of such
legislation, rules and guidance is difficult to predict and therefore could have a material adverse effect on our business.
Failure to comply with the regulations and requirements of the U.S. Food and Drug Administration and other
regulatory authorities could result in substantial penalties and/or loss of business.
The U.S. Food and Drug Administration, ("FDA"), and other regulatory and government authorities and agencies
inspect and audit us from time to time to ensure that we comply with their regulations and guidelines, including
environmental, health and safety matters, and other requirements imposed in connection with the performance of
government contracts. We must comply with the applicable regulatory requirements governing the conduct of clinical trials
and contracting with the government in all countries in which we operate.
If we fail to comply with any of these requirements we could suffer some or all of:
•
•
•
•
•
•
•
•
termination of or delay in any research;
disqualification of data;
denial of the right to conduct business;
criminal penalties;
financial penalties;
other enforcement actions including debarment from government contracts;
loss of clients and/or business; and
litigation from clients and/or patients and/or regulatory authorities and/or other affected third parties, and
resulting material penalties, damages and costs.
We are subject to political, regulatory, operational and legal risks associated with our international operations.
We are one of a small group of organisations with the capability and expertise to conduct clinical trials on a global
basis. We believe that this capability to provide our services globally in most major and developing pharmaceutical markets
enhances our ability to compete for new business from large multinational pharmaceutical, biotechnology and medical
device companies. We have expanded geographically in the past and intend to continue expanding in regions that have the
potential to increase our client base or increase our investigator and patient populations. We expect that revenues earned in
emerging markets will continue to account for an increasing portion of our total revenues. However, emerging market
operations may present several risks, including civil disturbances, health concerns, cultural differences such as employment,
regulatory and business practices, compliance with economic sanctions, laws and regulations, volatility in gross domestic
product, economic and governmental instability, the potential for nationalization of private assets and the imposition of
exchange controls. In addition, operating globally means the Company faces the challenges associated with coordinating its
services across different countries, time zones and cultures.
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Appendix A: Risk Factors (continued)
Changes in the political and regulatory environment in the international markets in which we operate such as price
or exchange controls could impact our revenue and profitability and could lead to penalties, sanctions and reputational
damages if we are not compliant with those regulations. Political uncertainty and a lack of institutional continuity in some of
the emerging, developing or other countries in which we operate could affect the orderly operation of markets in these
economies. In addition, in countries with a large and complicated structure of government and administration, national,
regional, local and other governmental bodies may issue inconsistent decisions and opinions that could increase our cost of
regulatory compliance and/or have a material adverse effect on our business. The ongoing conflict in Ukraine has resulted in
an increasingly complex economic sanctions and export controls environment applicable to our business operations in the
region (including Russia and Belarus) as a result of additional trade compliance measures enacted by the United States,
United Kingdom and European Union member states. These economic sanctions and export controls restrict our ability to
do business with sanctioned entities, require additional compliance resources, and could have a material adverse effect on
the results of our operations.
Uncertainty of the legal environment in some emerging countries could also limit our ability to enforce our rights. In
certain emerging and developing countries we enjoy less comprehensive protection for some of our rights, including
intellectual property rights, which could undermine our competitive position. Proceedings to enforce our future patent rights,
if any, in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our
business.
If any of the above risks or similar risks associated with our international operations were to materialize, our results
of operations and financial condition could be materially adversely affected.
We operate in many different jurisdictions and we could be adversely affected by violations of anti-corruption laws,
including the United States Foreign Corrupt Practices Act of 1977 ("FCPA"), UK Bribery Act of 2010 ("Bribery Act")
and similar anti-corruption laws in other jurisdictions as well as laws and regulations relating to trade compliance
and economic sanctions.
The FCPA, UK Bribery Act of 2010 and similar anti-corruption laws in other jurisdictions prohibit us and our officers,
directors, employees and third parties acting on our behalf, including agents, from corruptly offering, promising, authorizing,
or providing anything of value to a "foreign official" for the purposes of influencing official decisions or obtaining or retaining
business or otherwise obtaining favorable treatment. In addition, the FCPA imposes certain books, records and accounting
control obligations on public companies and other issuers. The UK Bribery Act also prohibits "commercial" bribery and
accepting bribes.
Our global business operations also must be conducted in compliance with applicable export controls and
economic sanctions laws and regulations, including those administered by the U.S. Department of the Treasury’s (the “U.S.
Treasury”) Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United
Nations Security Council, the European Union, His Majesty’s Treasury and other relevant trade compliance authorities.
Our internal policies mandate compliance with these anti-corruption and trade compliance laws and regulations.
We also operate in many jurisdictions in which bribery or corruption can be common and compliance with anti-bribery laws
may conflict with local customs and practices. Despite our training and compliance program safeguards, we cannot assure
that our internal control policies, procedures and safeguards will protect us from acts in violation of anti-corruption and trade
compliance laws and regulations committed by employees or other third parties associated with us and our continued
expansion, including in developing countries, could increase such risk in the future. Violations of anti-corruption, economic
sanctions and trade control laws and regulations, or even allegations of such violations, could disrupt our business and
result in a material adverse effect on our financial condition, results of operations, cash flows and reputation. For example,
violations of anti-corruption and trade compliance laws can result in restatements of, or irregularities in, our financial
statements, disgorgement of profits, related stockholder lawsuits as well as severe criminal or civil sanctions. In some
cases, companies that violate anti-corruption and trade compliance laws might be debarred by the U.S. government and/or
lose their U.S. export privileges. In addition, the U.S. government or other governments may seek to hold us liable based on
successor liability for violations of anti-corruption and trade compliance laws committed by companies that we acquire or in
which we invest. Changes in anti-corruption and trade compliance laws or enforcement priorities could also result in
increased compliance requirements and related costs which could materially adversely affect our business, financial
condition, results of operations and cash flows. The recent increase in economic sanctions and trade controls, particularly
relating to our ongoing operations in Russia, Ukraine and Belarus, has increased the amount of resources necessary to
ensure compliance in this area.
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Appendix A: Risk Factors (continued)
Current and proposed laws and regulations regarding the protection of personal data could result in increased
risks of liability or increased costs to us or could limit our service offerings.
ICON has a strong privacy posture, driven by the implementation of a core privacy governance strategy and the
adoption of policies and procedures designed to help ensure that ICON, including our employees and contractors, can
comply with applicable data protection laws (including, but not limited to, the General Data Protection Regulation (“GDPR”)
(EU) 2016/679). Notwithstanding these measures, failure to comply with applicable data protection laws may occur and
could result in increased risk of liability or increased costs to us or could limit our service offerings.
Administrative fines. The GDPR introduced a new regime of administrative fines for data protection infringements
and provided for a tiered penalty structure based on the nature of the infringement. The EU supervisory authorities for the
GDPR can directly impose fines on organisations found to be in breach of the GDPR. Lower tier administrative fines allow
for fines of up to 2% of worldwide turnover of the group in the preceding financial year. Higher tier administrative fines allow
for fines of up to 4% of worldwide turnover of the group in the preceding financial year. Higher tier administrative fines are
more likely to be levied for major infringements of the GDPR and core data protection principles (e.g. transparency, data
retention, accountability).
Penalties. The GDPR also permits Member States to implement rules on other penalties applicable to
infringements of the GDPR, in particular, for infringements which are not subject to administrative fines under the GDPR
itself. Therefore, Member States may legislate for further fines or penalties that may be criminal in nature.
Any fines levied under the GDPR must be effective, proportionate, and dissuasive. Supervisory authorities have
been strengthening enforcement activities across the EU in recent years in respect of breaches of GDPR. The risk of fines
and penalties under the GDPR carries increased risk of liability to ICON and can result in increased costs and disruption to
the delivery of our services.
Right to compensation of data subjects. In addition to the risk of administrative and criminal penalties, the GDPR
also provides that any person who has suffered material or non-material damage as a result of an infringement of the GDPR
shall have the right to receive compensation for the damage suffered, from the controller or processor responsible for the
infringement. The level of award of damages is set by the competent court in the applicable EU Member State. This carries
increased risk of liability for ICON.
Corrective Powers of the supervisory authorities. Each supervisory authority across the Member States of the EU
also has corrective powers. Supervisory authorities have the power to order ICON to bring processing operations into
compliance with the provisions of the GDPR in a specified manner within a specified time period, or to impose a temporary
or definitive limitation including a ban on processing, and to order the suspension of data flows to a recipient in a third
country or to an international organisation. Supervisory authorities also have powers to conduct audits and investigations of
ICON and instruct ICON to take certain actions. The exercise of these powers by supervisory authorities has the potential to
increase costs for ICON and cause disruption to the business and delivery of our services.
From a US perspective, the confidentiality, collection, use and disclosure of personal data, including clinical trial
patient-specific information, is subject to governmental regulation generally in the country that the personal data was
collected or used. For example, United States federal regulations under the Health Insurance Portability and Accountability
Act of 1996, or ("HIPAA"), and as amended in 2014 by the Health Information Technology for Economic and Clinical Health
(“HITECH”) Act, require individuals’ written authorization, in addition to any required informed consent, before Protected
Health Information may be used for research. HIPAA specifies standards for de-identifications and for limited data sets. We
are both directly and indirectly affected by the privacy provisions surrounding individual authorizations because many
investigators and organisations with whom we are involved in clinical trials and in our services are directly subject to them
as a HIPAA “covered entity” and because we obtain identifiable health information from third parties that are subject to such
regulations. As there are some instances where we are a HIPAA “business associate” of a “covered entity”, we can also be
directly liable to the covered entity contractually for mishandling protected health information and, under HIPAA’s
enforcement scheme, we can be subject to up to $1.9 million per year in civil money penalties for identical HIPAA violations.
The per violation penalties and calendar year cap on penalties are adjusted annually for inflation under the Federal Civil
Penalties Inflation Adjustment Act.
The foundational principles of the GDPR have helped shape the development of many other privacy laws globally.
Internationally, data protection laws continue to be introduced at a rapid rate, with greater protections afforded to personal
data than ever before, and greater risk of liability to organisations processing that personal data. As a global organisation,
ICON must ensure that our privacy posture continues to adapt to these new laws and regulations.
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Appendix A: Risk Factors (continued)
Additional legislation or regulation of this type might, among other things, require us to implement new security
measures and processes which may require substantial expenditures or limit our ability to offer some of our services.
Additionally, if we violate applicable laws, regulations or duties relating to the use, processing or security of personal data,
we could be subject to civil liability or criminal prosecution, be forced to alter our business practices or suffer reputational
harm.
Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory
standards and requirements, which could have a material adverse effect on our business.
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include
intentional failures to comply with governmental regulations, comply with federal and state healthcare fraud and abuse laws
and regulations, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales,
marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to
prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a
wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other
business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of
clinical studies or data or documentation fraud or manipulation, which could result in regulatory sanctions and serious harm
to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect
and prevent misconduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from
governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or
regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our
rights, those actions could have a significant impact on our business and results of operations, including the imposition of
significant fines or other sanctions.
The failure to comply with our government contracts or applicable laws and regulations could result in, among
other things, fines or other liabilities, and changes in procurement regulations could adversely impact our
business, results of operations or cash flows.
Revenues from our government customers are derived from sales to federal, state and local governmental
departments and agencies through various contracts. Sales to public segment customers are highly regulated.
Noncompliance with contract provisions, government procurement regulations or other applicable laws or regulations
(including but not limited to the False Claims Act) could result in civil, criminal and administrative liability, including
substantial monetary fines or damages, termination of government contracts or other public segment customer contracts,
and suspension, debarment or ineligibility from doing business with the government and other customers in the public
segment. In addition, generally contracts in the public segment are terminable at any time for convenience of the contracting
agency or upon default. The effect of any of these possible actions by any governmental department or agency could
adversely affect our business, results of operations or cash flows. In addition, the adoption of new or modified procurement
regulations and other requirements may increase our compliance costs and reduce our gross margins, which could have a
negative effect on our business, results of operations or cash flows.
Liability claims brought against us could result in payment of substantial damages, costs and liabilities and
decrease our profitability.
We may face legal claims involving stockholders, consumers, clinical trial subjects, competitors, regulators and
other parties. See 'Legal Proceedings' in Part A, Item 8 of this Form 20-F. Litigation and other legal proceedings are
inherently uncertain, and adverse rulings could occur, including monetary damages, or an injunction stopping us from
engaging in business practices, or requiring other remedies, including, but not limited to, compulsory licensing of patents. In
addition, the combined Company may be exposed to increased litigation from stockholders, customers, suppliers,
consumers and other third parties due to the combination of ICON’s business and PRA’s business following the Merger.
Customer Claims
If we breach the terms of an agreement with a customer (for example if we fail to comply with the agreement, all
applicable regulations or Good Clinical Practice) this could result in claims against us for substantial damages which could
have a material adverse effect on our business. As we provide staff to deliver our services, there is a risk that our
management, quality and control structures fail to quickly detect a failure by one or more employees or contractors to
comply with all applicable regulations and Good Clinical Practice and our internal requirements and standard operating
procedures thereby exposing us to the risk of claims by customers.
Claims relating to Investigators
We contract with physicians who serve as investigators in conducting clinical trials to test new drugs on their
patients. These patients will generally have underlying health conditions and this testing creates the risk of liability for
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Appendix A: Risk Factors (continued)
personal injury to the patient or the risk of a serious adverse event occurring. Although investigators are generally required
by law to maintain their own liability insurance, we could be named in lawsuits and incur expenses arising from any
professional malpractice or other actions brought against the investigators with whom we contract.
Indemnification from Customers
Indemnifications provided by our customers against the risk of liability for personal injury to or death of the patients
arising from a study drug vary from customer to customer and from trial to trial and may not be sufficient in scope or amount,
or our customer may not have the financial ability to fulfill their indemnification obligations. Furthermore, we would be liable
for our own negligence and negligence of our employees which could lead to litigation from customers or action or
enforcement by regulatory authorities.
Insurance
We maintain what we believe is an appropriate level of worldwide Professional Liability/Error and Omissions
Insurance. In the future we may be unable to maintain or continue our current insurance coverage on the same or similar
terms. If we are liable for a claim or settlement that is beyond the level of insurance coverage, we may be responsible for
paying all or part of any award or settlement amount. Also, the insurance policies contain exclusions which mean that the
policy will not respond or provide cover in certain circumstances.
Claims to Date
To date, we have not been subject to any liability claims that are expected to have a material effect on our
business; however, there can be no assurance that we will not become subject to such claims in the future or that such
claims will not have a material effect on our business.
Environmental, social and governance matters may impact our business and reputation.
Increasingly, in addition to the importance of their financial performance, companies are being judged by their
performance on a variety of environmental, social and governance ('ESG') matters, which are considered to contribute to the
long-term sustainability of companies’ performance. A variety of organisations measure the performance of companies on
such ESG topics, and the results of these assessments are widely publicized. Customers may have specific ESG related
requirements or targets and if we fail to meet these targets we may lose business. In addition, investment in funds that
specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors
have publicly emphasized the importance of such ESG measures to their investment decisions. Topics taken into account in
such assessments include, among others, the Company’s efforts and impacts on climate change and human rights, ethics
and compliance with law, and the role of the Company’s board of directors in supervising various sustainability issues. We
actively manage a broad range of such ESG matters, taking into consideration their expected impact on the sustainability of
our business over time, and the potential impact of our business on society and the environment. However, in light of
investors’ increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that
we will successfully meet society’s perceived expectations as to our proper role. Any failure or perceived failure by us in this
regard could have a material adverse effect on our reputation and on our business, share price, financial condition, or
results of operations, including the sustainability of our business over time.
Risk Related to Our Common Stock
Volatility in the market price of our common stock could lead to losses by investors.
The market price of our common stock has experienced volatility in the past and may experience volatility in the future which
could lead to losses for investors. Factors impacting volatility in the market price of our common stock include, amongst
others:
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general market and economic conditions;
our results of operations;
issuance of new or changed securities analysts’ reports or recommendations;
developments impacting the industry or our competitors;
declines in the market prices of stocks generally;
strategic actions by us or our competitors;
announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing
relationships, joint ventures, other strategic relationships or capital commitments;
the public's reaction to press releases, other public announcements by us or third parties, including our filings with
the SEC;
guidance, if any, that we provide to the public, any changes in this guidance or failure to meet this guidance;
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Appendix A: Risk Factors (continued)
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changes in the credit rating of our debt;
sale, or anticipated sale, of large blocks of our stock;
additions or departures of key personnel;
regulatory or political developments;
our performance on ESG matters
litigation and governmental investigations;
changing economic conditions;
exchange rate fluctuations;
changes in accounting principles; and
other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to those
events.
In addition, stock markets have from time to time experienced significant price and volume fluctuations unrelated to the
operating performance of particular companies. Future fluctuations in stock markets may lead to volatility in the market price
of our common stock which could lead to losses by investors.
Investment returns may be reduced if we lose our foreign private issuer status.
We are a “foreign private issuer,” as such term is defined in Rule 405 under the U.S. Securities Act 1933, and, therefore, we
are not required to file quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC. In addition, the proxy
rules and Section 16 reporting and short-swing profit recapture rules are not applicable to us. If we lose our status as a
foreign private issuer by our election or otherwise and we become subject to the full reporting regime of the United States
securities laws, we will be subject to additional reporting obligations and proxy solicitation obligations under the Exchange
Act and our officers, directors and 10% shareholders would become subject to the short-swing profit rules. The imposition of
these reporting rules would increase our costs and the obligations of those affected by the short-swing rules.
We do not expect to pay any cash dividends for the foreseeable future.
We currently do not expect to declare dividends on our common stock and have not done so in the past. We continue to
anticipate that our earnings will be used to provide working capital, to support operations, to make debt repayments and to
finance the growth and development of our business. They may also be used to continue our share repurchase program.
Any determination to declare or pay dividends in the future will be at the discretion of our board of directors, subject to
relevant laws and dependent on a number of factors, including our earnings, capital requirements and overall financial
condition. Therefore, the only opportunity for stockholders to achieve a return on their investment may be if the market price
of our common stock appreciates and shares are sold at a profit. The market price for our common stock may not
appreciate and may fall below the price stockholders paid for such common stock.
A future transfer of ICON ordinary shares, other than one effected by means of the transfer of book entry interests
in the Depositary Trust Company ("DTC"), may be subject to Irish stamp duty.
Transfers of ICON ordinary shares effected by means of the transfer of book entry interests in the Depositary Trust
Company ("DTC") should not be subject to Irish stamp duty where ICON ordinary shares are traded through DTC, either
directly or through brokers that hold such shares on behalf of customers through DTC. However, if ICON ordinary shares
are held as of record rather than beneficially through DTC, any transfer of ICON ordinary shares could be subject to Irish
stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the shares acquired). Payment
of Irish stamp duty is generally a legal obligation of the transferee. The potential for Irish stamp duty to arise could adversely
affect the price of ICON ordinary shares.
Forward-looking statements
To the extent any statements made in this annual report deal with information that is not historical, these statements are
necessarily forward-looking. Because forward-looking statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Group’s
control. Any forward-looking statement made by the Group is based only on information currently available as at the time of
publication of this report. Forward-looking statements are subject to the occurrence of many events outside of the Group’s
control and are subject to various risk factors that would cause our results to differ materially from those expressed in any
forward-looking statement. These risk factors described in Appendix A include, without limitation, the inherent risk of
dependence on pharmaceutical and biotechnology industries and certain clients, termination or delay of large contracts, risk
of cost overruns, the risk of clinical outcomes, regulatory risks and market competition.
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ICON plc Corporate Headquarters
South County Business Park
Leopardstown, Dublin 18
Ireland
T: (IRL) +353 1 291 2000
T: (US) +1 215 616 3000
F: +353 1 247 6260
ICONplc.com/contact
About ICON
ICON plc is a world-leading healthcare intelligence and clinical research organisation. From molecule to medicine,
we advance clinical research providing outsourced services to pharmaceutical, biotechnology, medical device and
government and public health organisations. We develop new innovations, drive emerging therapies forward and
improve patient lives. With headquarters in Dublin, Ireland, ICON employed approximately 41,150 employees in
109 locations in 53 countries as at March 31, 2023. For further information about ICON, visit: www.iconplc.com
© 2023 ICON plc. All rights reserved.