Clinical trials group Icon has suffered another setback with the cancellation of two contracts within the past fortnight. The news took the gloss off fourth-quarter and full-year figures announced yesterday and initially knocked the group's stock price back 28.5 per cent

The results showed a solid recovery continuing in the second half of Icon's fiscal year, which ended on May 31st last.

Net sales rose 18 per cent in the three months to the end of May, or 13 per cent when the impact of acquisitions is stripped out. The bulk of the gain came from non-US operations. For the full year, net revenue rose 32 per cent, or 21 per cent organically.

Profits after tax were 40.8 per cent up on the year at $25.74 million. They were 36.4 per cent ahead of the fourth quarter last year on $7.2 million (€6 million).

"2004 has been another excellent year for Icon. Organic revenue growth was 21 per cent, earnings per share increased by 25 per cent, operating margins expanded and we had strong cashflows," chairman, Dr John Climax, said:

However, shares in the group, which employs more than 2,500 people in 21 countries, tanked following confirmation from chief executive Mr Peter Gray that two contracts worth $25 million had been cancelled by clients after the Food & Drugs Administration queried the clients' plans.

The shares shed 28.4 per cent in the US on the news but recovered somewhat as the session progressed. They closed on $35.73, down $8.61 or 19.42 per cent.

Mr Gray said the cancellations would hit net new business in the first half of the current year and lower annual revenue growth to about 10 per cent this year, half the company's long-term target.

However, he said the company would recover momentum in the second half of the current year.