ICON, the Irish clinical trials group, has recorded a drop in profit before tax from $1.79 million (€1.68 million) to $1.33 million (€1.25 million), in the last three months of its financial year to May 31st, 1999. However, the full year profits are up from $5.99 million to $9.06 million.

The results are better than expected which should lead to an upgrading of brokers' predictions. Following the announcement, the shares rose 3.9 per cent to $20 on Nasdaq. The stock closed at $20.75 up $1.50.

Despite the warnings that it was adversely affected by the scale-back of a large project - that sent the shares reeling from $26.75 to $10 in April - revenue actually rose from $19.8 million to $24.1 million in the last quarter. In addition, the chairman, Dr Ronan Lambe, exudes confidence about the future.

"I am very encouraged by the new business activity we generated in the fourth quarter," he said. "As a result, with over 80 per cent of the expected revenues of our current financial year already awarded, we recommenced our recruitment efforts in the US sooner than expected, and committed to opening a new office in Irvine, California, to facilitate the expansion of our data management and clinical project management teams in the US."

He noted that ICON had employed people for its new offices in Israel and Singapore, both of which are expected to commence operations within the next three months. "These steps demonstrate our confidence in our global strategy and in the strength of our business." ICON had warned that the loss of a $5 million contract from its backlog of contracts would directly affect earnings in the final quarter of 1998/9 and the first two quarters of 1999/2000. ICON also cautioned that earnings growth would be more than 30 per cent rather than in excess of 40 per cent as predicted by analysts. Diluted earnings per share rose by 39 per cent to 68 cents, basic earnings per share grew by 34 per cent to 75 cents.

The company had also said that earnings for this year would be similar to that generated in 1998/ 1999 due to decline in the first and second quarter offset by the resumption of strong growth in the third and fourth quarters. Finance director Mr Peter Gray said the first quarter had started strongly. While no forecasts are being made, earnings growth this year is likely.

The latest results show a rise in subcontractor costs from $22 million to $38.7 million in the full year. Interest income rose from $0.2 million to $2.6 million and this was one of the main reasons for the growth in pre-tax profit. ICON also had the benefit of a drop in tax from $2.1 million to $1.55 million.

The group remains in a strong financial position with cash, or near cash, of $44.84 million, down from $53.26 million. The decline was mainly due to capital expenditure of $10.7 million which went on new headquarters in the US, a major extension of its Irish headquarters, and investment in new information technology systems.