ICON Plc 2015 IFRS Annual Report
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25 Years Innovating Drug Development ICON plc and Subsidiaries Annual Report 2015 Registered number 145835 Directors’ Report and Consolidated Financial Statements Contents Directors and Other Information 2 Directors’ Report 3 Statement of Directors’ Responsibilities 10 Independent Auditor’s Report 11 Consolidated Income Statement 13 Consolidated Statement of Comprehensive Income 14 Consolidated Statement of Financial Position 15 Consolidated Statement of Changes in Equity 16 Consolidated Statement of Cash Flows 18 Notes to Consolidated Financial Statements 19 Company Statement of Financial Position 106 Company Statement of Changes in Equity 107 Company Statement of Cash Flows 109 Notes to Company Financial Statements 110 Reconciliation between IFRS and US Accounting Principles 119 Appendix A: Risk Factors 123 ICON plc and Subsidiaries Annual Report 2015 1 Directors’ and Other Information Directors Declan McKeon (Irish – Acting Chairman of the Board) (1) (3) (4) Ciaran Murray (Irish – Chief Executive Officer) (4) Dr. Steve Cutler (Australian – Chief Operating Officer) Dr. John Climax (Irish – Non-Executive) (5) Dr. Ronan Lambe (Irish – Non-Executive) (5) Prof. Dermot Kelleher (Irish – Non-Executive) (1) (5) Thomas Lynch (British – Non Executive) (1) (2) (3) Prof. William Hall (Irish – Non-Executive) (1) (2) (3) (5) Mary Pendergast (American – Non-Executive) (2) (5) Prof. Hugh Brady (Irish – Non-Executive) (1) Member of Audit Committee (2) Member of Compensation and Organisation Committee (3) Member of Nominating and Governance Committee (4) Member of Execution Committee (5) Member of Quality Committee Company secretary Diarmaid Cunningham Registered office South County Business Park Leopardstown Dublin 18 Auditors KPMG Chartered Accountants 1 Stokes Place St. Stephen’s Green Dublin 2 Solicitors A & L Goodbody International Financial Services Centre North Wall Quay Dublin 1 Cahill Gordon Reindel LLP 80 Pine Street NY10005 USA Registrars Computershare Investor Services (Ireland) Limited Herron House Corrig Road Sandyford Industrial Estate Dublin 18 Bankers Citibank Canada Square Canary Warf London E14 5LB United Kingdom JP Morgan Chase Bank N.A. 4 New York Plaza New York NY 10004 USA 2 ICON plc and Subsidiaries Annual Report 2015 Directors’ Report The Directors present their report and audited Consolidated and Company financial statements of ICON p.l.c. (“the Company” or “ICON”), a public limited company incorporated in the Republic of Ireland, and its subsidiary undertakings (“the Subsidiaries”, with the Company and the Subsidiaries being together “the Group”) for the year ended 31 December 2015. The Company’s ordinary shares are traded on the NASDAQ market. The Company is considered a foreign private issuer in the US and accordingly it is not subject to the same ongoing regulatory requirements as a US registered company with a primary listing on the NASDAQ market. These Consolidated and Company financial statements (together “the financial statements”) for the year ended 31 December 2015 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 119 to 122 of this annual report. Principal activities, business review and future developments The Group is a contract research organisation (“CRO”), providing outsourced development services on a global basis to the pharmaceutical, biotechnology and medical device industries. The Group specialises in the strategic development, management and analysis of programmes that support all stages of the clinical development process - from compound selection to Phase I-IV clinical studies. The Group’s mission is to accelerate the development of drugs and devices that save lives and improve the quality of life. Our vision is to be the Global CRO partner of choice for the Biopharma industry by delivering best in class information, solutions and performance in clinical and outcomes research. The Group believes that it is one of a select number of CRO’s 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 2015, the Group had approximately 11,900 employees, in 90 locations in 37 countries. During the year ended 31 December 2015, the Group derived approximately 41.3%, 48.3% and 10.4% of its net revenue in the United States, Europe and Rest of World, respectively. To meet the evolving needs of our clients we continue to enhance our capabilities through both organic service development and targeted acquisitions. During 2015 we established a dedicated global group focused on development services in the growing medical device market. We also continued to enhance our scientific and therapeutic expertise to support our customers in the overall formation of their development strategies for new products. Some examples of the enhancements made during 2015 include the development of CNS Rating Scale Analytics leveraging our ICONIK platform. This is enabling a data-driven approach to rating surveillance that increases the consistency of both Clinicial and Patient Reported Outcomes in CNS studies. We have also grown our global network of investigative sites that have the capabilities and expertise to conduct biosimilar trials and we further strengthened our relationships with specialised Oncology sites whilst also extending our internal oncology expertise within our consulting and project management groups. We will also continue to build our positions in emerging markets and have expanded our presence in regions such as Asia- Pacific, in particular in China and Japan, as is evident from our acquisition of Niphix, the Japanese subsidiary of Aptiv Solutions, in 2014 and BeijingWits Medical Limited, a leading Chinese CRO, in 2012. In 2015, we also added scale and capabilities to our commercialisation and outcomes service offering in the US through the acquisition of Medimedia Pharma Solutions on 27 February 2015 and PMG on 4 December 2015. Headquartered in Dublin, Ireland, the Group began operations in 1990 and has expanded the business predominately through internal growth, together with a number of strategic acquisitions to enhance its capabilities and expertise in certain areas of the clinical development process. Its principal executive office is located at: South County Business Park, Leopardstown, Dublin 18, Republic of Ireland. The contact telephone number of this office is 353 (1) 291 2000. ICON plc and Subsidiaries Annual Report 2015 3 Directors’ Report (continued) Acquisition activity On 4 December 2015, Inclinix-PMG Holdings, Inc (‘PMG’) was acquired by ICON Clinical Research LLC a subsidiary of the Company, resulting in net cash outflows of $63.5 million. PMG is an integrated network of clinical research sites operating from 14 metropolitan areas throughout the US. PMG conducts clinical trials in all major therapeutic areas with particular experience in cardiology, dermatology, endocrinology, gastroenterology, men’s health, neurology, pulmonology, rheumatology, vaccine, and women’s health trials. In addition to a proprietary research database of clinical trial participants, PMG also has access to over 2 million active patient lives via electronic health records through their unique partnerships with healthcare systems and community physician practices. On 27 February 2015, a subsidiary of the Company; ICON Holdings acquired 100% of the securities of MMMM/CHC Holding, LLC (‘MediMedia Pharma Solutions’) from MediMedia USA, Inc which resulted in net cash outflows of $116.0 million. Headquartered in Yardley, Pennsylvania, MediMedia includes MediMedia Managed Markets and Complete Healthcare Communications. MediMedia Managed Markets is a leading provider of strategic payer-validated market access solutions. Complete Healthcare Communications is one of the leading medical and scientific communication agencies working with medical affairs, commercial and brand development teams within life science companies. On 7 May 2014, the Company acquired 100% of the common stock of Aptiv Solutions (“Aptiv”), resulting in net cash outflows of $121.1 million. Aptiv is a global biopharmaceutical and medical device development services company and leader in adaptive clinical trials. Aptiv offers full-service clinical trial consulting and regulatory support for drugs, medical devices and diagnostics with a specific focus on strategy to increase product development efficiency and productivity. It is a market leader in the integrated design and execution of adaptive clinical trials for exploratory and late phase development as well as being an industry leader in medical device and diagnostic development in key medical technology segments. Share repurchase programme On 1 May 2015, the Company commenced a buyback programme of up to $60 million under which the Company could acquire its outstanding