Ion Beam Applications SA

Ladies and gentlemen, welcome to the EBA Web Conference Call. I am pleased to present Mr. Olivier Legrand, CEO, and Madame Soumaïa Chandra Mouli, CFO. For the first part of this call, let me remind you that all participants will be on a listen-only mode, and afterwards, there will be a question-and-answer session. If you wish to ask a question, please dial 01 on your telephone keypad. You will find the details on the Investor Relations page of EBA Website. For the participants connected through BioIP, please make sure to activate your speaker in Adobe Connect. For participants connected through the phone, please make sure to deactivate your speaker in Adobe Connect. I will now turn the call over to Mr. Olivier Legrain. Sir, please go ahead.

Thank you very much, and good afternoon. Thank you for joining us on our half-year results. I'm Olivier Legrain, CEO of IDA, and with me today is Soumya Chandramouli, Chief Financial Officer Before we begin, as always, I would like to draw your attention to the company's disclaimer and forward-looking statements. As usual, I will summarize the group's performance for the first half of the year and remind you of our business strategy. Soumya will then take you through the company financials before I close with an update on the proton therapy market, our other accelerators business, and the dosimetry business. and, of course, our outlook for 2020 financial year. Soumya and I will then be happy to take your questions. A core to the business is our world-leading expertise, in particular acceleration, which has enabled the development and sustained growth of four robust business lines, proton therapy, radiopharma, and industrial solutions, and dosimetry. Coupled with this expertise is our ability to execute, and to date we have sold 58 proton therapy solutions, 285 cyclotrons, and 250 industrial accelerators to over 10,000 customers worldwide. Moving on, we have progressed in 2020 with a streamlined focus based around three core drivers, know-how, execution, and innovation. Over the last 30 years, IBA has established itself as a pioneer in particle accelerators. We now have over 550 accelerators in operation for the sterilization of medical devices and the production of radiopharmaceuticals and have treated close to 100,000 proton therapy patients across our 37 operating proton therapy sites. In addition, we have a further 20 proton therapy projects under development. We pride ourselves on delivering the most efficient service for all of our international customers, which helps drive demand for our technology. To continue to execute and lead the market in which IDA operates, it is crucial that we continue to innovate in the space. IDA currently employs 200 engineers and experts in research and development, working to increase the affordability, proven clinical benefits, and ease of use for our customers. IBA can also count on more than 500 patents, half of which are protecting IBA proton therapy technology. This innovation can be seen across all four of our business units and include technologies such as motion management, arc therapy, and flash irradiation. information on which was given in our most recent webinar on the evolution of proton therapy. First of all, I'd like to take you through the deal that we have signed and announced today. China today has more than three million cancer patients annually, demonstrating the growing need for cutting edge cancer treatment. Proton therapy in particular has significant potential And this deal today, alongside the increase in proton therapy licenses from 10 to 16 this year, demonstrate that China is putting its way behind adoption of proton therapy for precision treatment of cancer. Further, we see this as a strong signal of strengthening global adoption of the modality. The partnership between IVA and CGNNT will bring together the world's leading proton therapy technology provider and strong production capacities in China, further supporting our leading position in this proton therapy market. As you know, we were delighted to announce this morning this strategic licensing deal in China worth a minimum of 100 million euro with CGN-Heng. IDA will grant exclusive rights for the use of its Proteus Plus technology to CGN-MT and CGN Da Sheng slowly in the public republic of China. The deal includes a licensing fee, support and training by IBA and the sale of component of Proteus Plus. In addition, over and above the 100 million, the deal comprises an important stream of royalties based on sales made by CGN Da Sheng. In addition, a minimum amount of royalty need to be paid to retain exclusivity on the Proteus Plus technology. We are due to receive the first payment of 20 million euros in the coming days, another 50 million euros within the next six months, and the last 30 millions at the latest within 48 months. The deal brings together the world-leading proton therapy technology of IBA with a strong production and market capabilities of CGN Dashing. In addition, our pipeline of further new opportunities is robust, and we are in the final stages of negotiating a significant Forum Proteus Plus contract in China. Looking now at the overview of the first half of 2020 and the post-period highlights. Highlighting other progress in China, as I just mentioned, we can announce that we have also been selected for a four-room proton therapy contract in the region. Prototon therapy is set to expand significantly in China over the next few years, with the Chinese government recently announcing that they are expanding the number of licensing from 10 to 16. We also have a robust pipeline of new opportunities across Asia, the U.S., and Europe, and despite the challenges presented by the COVID-19 crisis, that have resulted in some inevitable delays for our four business and no new order intake in proton therapy for the first half of the year, we are seeing encouraging signs that the proton therapy market is gaining momentum. In addition, we have seen healthy order intake in our other business with dosimetry order intake surpassing expectations. As announced yesterday, the board has been strengthened with the addition of Dr. Richard Haussmann, and Ms. Christine Dubus as non-executive director who both bring valuable business and financial expertise to ABA. Looking at H1, our other accelerator business has performed well with a strong order intake of fixed system confirming our position as the clear market leader in the space. Our equipment and service backlog remain at all-time high of 1.1 billion euros comprising of a solid equipment backlog for proton therapy and other accelerator of €362 million at the 30th of June and proton therapy services backlog of €706 million. However, conversion of the backlog has been heavily impacted by COVID-19 with several project delays, although these have been partially mitigated by tight cost control and flat gross margin. Services continue to grow with a double-digit growth for the third consecutive year and positive impact on recurring revenue as centers remain fully operational and two new centers starting to generate revenues. In addition, we saw another resilient performance by dosimetry despite COVID-19 with exceptional order intake up to 17% from last year and sales increased dropping slightly, but only due to no more RadioMed sales in 2020, following the sale of this activity at the end of 2019. And finally, I'm pleased to say that we have continued to maintain a healthy balance sheet with 95.9 million euros gross cash and a net cash position of plus 3.8 million euros. I will now hand you over to Soumya, who will take you through our financials in more detail.

Thank you. Right, so let's take a look at some of the headline numbers for the first half. Group revenues were down 14.3% versus last year. The decrease mainly reflecting the weakness in the PTA equipment revenue line as a result of several material delays associated with the ongoing pandemic, which of course also resulted in a wider revenue loss of Euro 9.9 million. partially mitigated though by tight cost controls and flat gross margins. As Olivier already mentioned, the dosimetry business has been far less affected with really excellent order intake, close to 20% above last year. As a result, total group loss for the first half increased to 12 million euros. I would like to stress the fact that despite the COVID-19 crisis, our operations have continued smoothly and efficiently. We've maintained a high level of cash and a record high quality backlog. However, our ability to convert ongoing production and backlog into revenues has been hindered by the COVID-19 crisis, thus leading to a really strong balance sheet, but a far weaker P&L. As mentioned, our equipment and service backlog remains extremely high at Euro 1.1 billion. And as you can see, this comprises an equipment backlog for proton therapy and other accelerators of Euro 362 million, with our compact single room PT solution, the Proteus One, representing around 41% of equipment backlog today, and the Proteus Plus around 25%. In addition, our service backlog is also very high, remaining above the 700 million mark, with double digit growth in both PT and other accelerators. Now let's take a look at the PT and other accelerators business. Total net sales for PT and other accelerators were down nearly 17% for the same period last year due to Euro 85.5 million, reflecting delays in PT backlog conversion, mostly due to COVID-19 restrictions. This was partly mitigated by other accelerators, which continue to maintain revenues in line with 2019. The slower backlog conversion and lack of PT sales also impacted Revit. However, Five new sales were recorded in other accelerators at the end of the period, and we are positive about our pipeline of proton therapy tenders, particularly in light of today's announcements on China that Olivier spoke about earlier. Now, looking more closely at the equipment and service portions, we can see that the strong performance by service helped to mitigate the impact of COVID-19 on PT equipment revenues that were down quite sharply with no new orders and delayed conversion of backlogs. Other accelerators equipment was up 1.2%, reflecting continual order intake while services saw double digit growth for the third consecutive year and positive impact on recurring revenue as centers remained fully operational across the world. Two new centers also started to generate revenues over the period. And in fact, we are quite proud that despite the COVID-19 crisis, we actually managed to complete handover of one center in the United States and started to treat patients right in the middle of the crisis. I now hand back to Olivier to take you through the proton therapy market update.