Ion Beam Apps Sa Act

Ladies and gentlemen, welcome to the ABA web conference. I am pleased to present Mr. Olivier Legrain, CEO, and Madame Tourmia 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 Q&A session. If you wish to ask a question, please press 01 on your telephone keypad. You will find the details on the investor relations page of the IBA website. For participants connected through VOIP, please make sure to activate your speaker on Adobe Connect. For participants connected through the phone, please make sure to deactivate your speaker in Adobe Connect. I would now like to give the floor to Mr. Olivier Legrand. Sir, please go ahead.

Thank you. Thank you very much. Good afternoon, everybody, and thank you for joining us on our full-year RISL call. I am Olivier, the CEO of IBA, and with me today is Soumya, our CFO.

Good afternoon.

Good afternoon. Before we begin, as always, I would like to draw your attention to the company disclaimer on forward-looking statements. I'll start today by thanking the entire IBA team, our customers, and loyal shareholders for your continued support. in what has been quite a challenging year for all of us and everyone. Today, I will give an overview of our business and run through our long-term strategy for sustainable and profitable growth. Soumya and I will then summarize the group's performance for the year, and then I'll talk about the outlook and dividend. Soumya and I will then be happy to take your questions. So firstly, I would like to touch on how our group is structured and talk more about our growth strategy. Core to the IBA business is our pioneering world leading expertise in particle beam technology, which has enabled the development and sustained growth for our four robust business lines. radiopharma solution, industrial solution, dosimetry, and proton therapy. Each of these four businesses has huge potential for sustainable and profitable growth in the coming years. IDA's long-term strategies focus on three core areas to drive profitable and sustainable growth and development. We will capitalize on and develop our market-leading position across all of our businesses. We will invest in new technologies and products to ensure the group retains its edge in deploying the leading solutions in the markets that are tailored to our customer needs. Finally, we will ensure excellent operation execution across all of our businesses to demonstrate improving margins and ensure that we continue to increase our recurring revenue streams, which are increasingly forming a strong foundation for the group. Underpinning our long-term growth objectives is our commitment to environment, social, and governance goals as we deliver the best offering and services to our customers while being a responsible corporate citizen. We at IDA very much believe in companies being a force for good. As part of this, we aim to be carbon neutral by 2030 while investing 10% per year in research and development. We remain a key player in the diagnosis and treatment of cancer and other serious conditions while being committed to providing the optimal work environment for our employees. All of this is driven by a strong culture focused on transparency for all our stakeholders as we remain independent and committed to delivering sustainable, profitable growth. I'll now run you through the key operational highlights for 2020 and 2021 so far. In 2020, there was a resilient performance across business lines of IBA. We saw a particularly strong performance in Asia. As you will be aware, we signed a strategic partnership with the Chinese partner, CGNNT, around Proteus Plus in a deal worth a minimum of 100 million euros, of which 63.5 million revenues were recognized in 2020. This deal has further strengthened our access to the growing market in China. Also in China, we signed a four-room contract for a Protease Plus proton therapy solution in Chengdu, Sichuan Province. It was noting that we delivered a strong phase in this region across all our business units. Other accelerators had another good year with 17 systems sold, of which 12 were in the second half. Our dosing industry business also showed a resilient performance with an order intake up 10% from 2019 and sales up slightly versus last year on a like-for-like basis in spite of the pandemic. Alongside this, we maintained strong cost control, partially offsetting the impact of COVID-19, while also maintaining strategic R&D investments. Importantly, our balance sheet is stronger than ever with a cash position that has significantly improved in the course of the year, providing us with a robust position for future growth. We were pleased to also strengthen our boards in the year with the appointment of Christine Dubuis and Richard Haussmann as non-executive directors. As we focus on long-term profitable growth, we remain committed to returning cash to shareholders And the board is proposing a dividend of 0.2 euro per share in line with the new dividend policy that I will elaborate on later. The strong progress has continued into 2021. In January, we were selected for a multi-room Proteus Plus solution in China, highlighting continued progress in this strategically important region. Then in February, we received a surpayment from CGNNT, taking the total cash received to date for this contract to 70 million euros. Finally, in March, we received a down payment on a Proteus 1 contract with National Cancer Center Korea, a contract that we did sign in December. It was highlighting that National Cancer Center Korea is already an IBA customer, having previously purchased a three-room Proteus Plus solution, and this ongoing relationship highlights how IBA is able to capitalize on its existing agreement. I will now hand you over to Soumya to take you through the financial highlights.

Thank you, Olivier. Thank you. So on the slide, you'll see that we highlight strong financial progress that we made in 2020, which we had already started basically in 2019. Group revenues were up 10% versus 2019, largely driven, of course, by the licensing revenues from the Fijian deal, but also by the large proportion of recurring finance revenues that continued to grow over 2020. Our profitability was also strong, with Revit of €40.4 million and net profit of €31.9 million. Backlog continues to remain at an all-time high of 1.1 billion euros. And 2020, as I mentioned, was another good year for our service business, with 53 new overall PT contracts and overall service growth of 4%. We also had a record equipment order intake at 112 million, with five PT rooms and 17 other accelerators sold. This order intake does not include the 100 million coming in from the CGN deal. Finally, as Olivier said... Our balance sheet is really stronger than ever, and we reported a year-end net cash position of 65 million euros, which was an improvement of more than 86 million euros from last year. On this slide, you will see that we illustrate the key numbers in the movements versus prior year. I've already touched upon these, but just to pull out the large increase in PT sales as a result of the CGN deal. Also worth flagging is but there was a slight drop in dosimetry as a result of the 2019 numbers, including the radiomed business, which was sold at the end of 2019. On a life-for-life basis, dosimetry sales actually grew 1%. The full year rebate, of course, reflects the CJN deal, which offset some of the weakness that we've had on equipment due to the effects of COVID. As we mentioned, our balance sheet is really strong, and we are pleased to report a gross cash position of €151.3 million at year-end, net cash being €65 million. We also have €37 million in undrawn short-term credit lines still available and have complied with all of our bank governments. This robust financial position stands us in good stead for the future. Now moving on to proton therapy and other accelerators. Overall sales were up 14.1%. reflecting the deal mentioned earlier in China, but also strong continued growth of the service business, an important source of recurring revenue stream, as well as the high order intake in the other accelerator business, mostly generated over the second half of 2020. In PT and other accelerators, when you look at the split between equipment and service, you'll see that the significant deal with CGM helped to offset weakness in the PT equipment line as a result of the pandemic, as well as some delays with new prospects causing delays in backlog conversion. Other accelerators were also resilient with equipment sales up 6% reflecting high order intake, and looking at services, we saw a 4% revenue growth, enabling a positive impact on recurring revenues. PD services on their own were up for the third consecutive year, with revenue increasing by 7.2%, as all treatment centers remained fully operational. This offset slight weakness in the other accelerators, which include upgrade installations that were slightly delayed due to the pandemic. In terms of order intake, as I mentioned, it was strong despite the pandemic after we saw a really all-time record in 2019. We are back to the levels of 2018, basically, and Asia in particular was very strong this year with two PTE solutions and 11 out of the 17 other accelerators sold in that region. This order intake of 112 million, as I mentioned, does not include the 100 million intake from the CGN deal, which includes licensing, equipment, and service components. We also noted a significant second half waiting for the other accelerators, as I mentioned, with 12 of the machines second half, and this market recovery has continued into 2021, with four machines sold during the first month. Moving on to backlog. Our equipment backlog remains at an on-time high, with €282 million at year-end. Within this, for case one represents around 35%, and as you can see, other accelerators also start to represent 36%, largely thanks to the sales in the second half of 2020. The pie on the right shows you the split between PT and other accelerators. PT and other accelerators' service revenue continued to grow and stood at €113 million, up more than 4%, from 2019, despite COVID creating payment difficulties from some customers and the slowdown on installations and, therefore, the subsequent start of service contracts. Within this, our PT service backlog remains high, with €666 million at year-end. The chart on the top left highlights how this has developed over time. Our dosimetry business performed extremely well with a like-for-like growth of 1%, And if you exclude exchange rate fluctuations, then practically 2%. The drop in revenue reflects the fact that last year RadioMed was included in the numbers, while there was a very strong intake in 2020 of €54.1 million, up 10%. I now hand back to Olivier to provide an update on the four business units.

Thank you very much, Soumya. During 2020, IBA maintained its global leadership position in proton therapy, And as you may remember, we were pleased to mark the milestone of 100,000 patients treated by IDA customers. We continue to have a strong focus on Asia, which is a market we previously identified as being strategically very important. In addition to the strategic license deal in China with CGNNT, we sold four homes in Chengdu, China and post-period and one room in Korea to an existing IDA customer as we continue to capitalize on existing relationships. IDA has also been selected in 2021 for the supply of a multi-room Proteus Plus solution in China with negotiation ongoing. In the U.S., we have taken steps to reinforce our presence and have added further resources to help us to take market share. Recent extension of proton therapy indication in the National Comprehensive Cancer Network guideline in the U.S. is also very encouraging. Looking at installations, we started two new projects in 2020 in India and Taiwan in spite of the pandemic. As of quarter four, we achieved 97% system availability with similar performances for both Proteus 1 and Proteus+. We continue to work closely with all of our partners and we're particularly pleased to recently strengthen our long-term relationship with ELEKTA with its latest proton therapy solution. And we also continue our close collaboration with RACEsearch, who have recently deployed both their RACEcare and RACEstation in UZ Leuven in Belgium, one of the leading international research hospitals. This slide highlights IDA leading market share in proton therapy. In 2020, we took 62.5% of the market share, which compares favorably to variant 37.5. You can see the split between Protease 1 and Protease Plus contract during the year. Looking to total proton therapy market share, IDA continued to maintain the largest share with 129 rooms representing 42%. You can also see the total number of patients treated across the industry, with IBA representing 100,000 of them, as per the previous slide. This slide highlights the technologies that are critical to the future of proton therapy. We are already offering motion management as a way to treat more mobile tumors with increased confidence. Arc therapy offers a continuous radiation dose and is a more efficient and simpler way to deliver proton therapy. The short-term focus for us is on offering AHRQ to new and existing customers. Long-term, we remain committed to partnering with key knowledge leaders around FLASH therapy. Preclinical research of FLASH on IBA systems internationally is already underway, and future clinical adoption is a key discussion point for IBA's next clinical advisory board. Looking now at Radiopharma, IBA is a market leader in radioisotope production accelerators, helping nuclear medicine departments to design, build, and operate positron emission tomography centers for the production of radiopharmaceutical use for the detection of cancer. Our new generation cyclone cube, cyclotron, offers the highest production capacity currently available, enabling increased diagnostic capabilities while producing the widest range of radioisotopes. We have seen strong demand for our high-energy machine, including the cyclone ICON, which is a more compact offering. Finally, just a word on our Sinterra radiochemistry modules, where we completed remote installation at two sites. As you will be aware, IBA industrials provide leading industrial solutions to the ion beam sterilization industry. Our Rodotron solution continues to create strong interest in the global market, and the new generation brings new opportunities. These newer systems allow a unique alternative to cobalt and ethylene oxide for sterilization and provide potential for growth. The TT300 high-energy system is undergoing testing in Louvain-la-Neuve. We also know the recent installation of the Rodotron TT1000 in the Netherlands. On dosimetry, as you heard earlier, the business has continued to perform strongly. And IBA Dosimetry remains a world-leading provider of innovative high-tech quality inference solutions and imaging markers for radiation diagnostic therapy. We continue to take market share in QA and conventional radiation therapy in 2020. We continue to invest in patient QA radiotherapy and market-leading dosimetry tools for proton therapy with further product plans such as MyQA-SRS, which is planned this year. Continuous innovation is a key priority for us, and we also noted regulatory progress with MyQA-ION, a unique patient QA software solution for proton therapy, receiving FDA approval in July. Now back to Soumya to talk about the numbers in more detail.

Thanks, Olivier. Now, looking quickly at the group P&L, we already spoke about the increase driven in part by CG&NT, but also by the resilient performance of the service business on revenues. At the expense level, while there was a strong decrease in selling and marketing costs, naturally due to the lower level of travel and marketing expenditure due to the pandemic, there was an uptick in R&D as we intentionally and meaningfully invested in the future growth of the business. General and administrative costs increased due to write-downs on some customers facing difficulties due to COVID-19, with an overall increase in operating expenses of 2.8%. As a result of the strong top line, we reported a net profit of €31.9 million compared to €7.6 million in 2019. Now, turning to cash flow, you'll see that we had a strong improvement over the year. Operating cash flow during 2020 was more than 100 million, up from around 48 million in 2019. This was driven by the increase in profit, of course, but also reflects a positive movement in working capital. Cash flow used in investing was Euro 5.6 million, mostly for maintenance, capex, and investments related to dosimetry software developments, compared with an inflow of Euro 1.8 million last year, where the sale of radiometrics contributed. Finally, cash flow generated from financing was Euro 13.4 million, mostly as a result of a drawdown on a term loan at the beginning of 2020 for Euro 21 million. Finally, on the balance sheets, just to reiterate what I said earlier, this was significantly strengthened with a year-end net cash position of Euro 65.7 million compared with a net debt position of Euro 21 million in the previous year. I'll go back to Ulydre to discuss outlook now.

Just to give you an update now on the situation with the COVID-19. Firstly, at the manufacturing and supply chain level, we saw no significant impact and know that all suppliers are open in all geographies. As a global business, the restrictions did impact the signing and installation of new contracts and looking at the 20 proton therapy projects under construction or installation, we have rescheduled several project timelines as a result of this. On the service side, all proton therapy centers remained operational, with IBA providing full support both on and off-site. As a result of this element, the overall direct impact on Revit was close to 15 million euros. This does not include the significant indirect part on the financials, which is hard to quantify and mostly stems from sales which did not materialize in 2020. I would now like to give an update on our dividend policy. The board believes that the dividend policy should allow IBA to deliver consistent value to its shareholders while protecting its resources in adverse operating conditions such as COVID-19 and maintaining its capacity to invest strategically to capture further potential. The move to a more progressive dividend policy will enable us to pay out stable and yet a growing amount each year that takes into account the fluctuation of our financial results but reflect the performance of the company over the long term. We're grateful for the continuing support of our loyal shareholders And for 2020, the board is recommending a gross dividend of 0.2 euro per share. To wrap things up, I will now talk about the company outlook. Although 2020 was clearly a challenging year, IBA showed considerable resilience across all our business lines, and we were particularly pleased by the improvement of the performance in the second half. The situation remains complex in 2021 with regard to the installations of projects and IBA continues to closely monitor the situation. Other accelerators and dosimetry continue to have a healthy order intake and in proton therapy, new contracts are on the horizon in key strategic regions. We remain committed to progressing new tenders internationally and the overall pipeline is quite encouraging. Recurring revenues are clearly important to the business, and we are therefore encouraged by the stable growth in services. All of this is underpinned by our robust financial position. Looking ahead, research and development investment will form a core part of our plan for longer-term growth. As you will appreciate, the ongoing uncertainty with the pandemic means that we are unable to provide reliable projected 2021 performance at this time. The group continues to focus on delivering value to its stakeholders and is committed to remaining the leader in all of its markets while driving efficiency across the board. Before we move to Q&A, I would like to highlight the financial calendar for the remainder of this year. We will provide our quarter one business update on May the 20th. Our general meeting will be held on the 9th of June. Then in August, we will report our out-year results as normal. I'd like also to mention ASTRO in October, as we hope to hold a capital market day alongside this, although this will be dependent on the COVID restrictions at the time. Thank you very much. Soumya and I will now be pleased to take your questions.

Thank you very much. Ladies and gentlemen, we are now ready to take questions for the participants connected through the phone. Please press 01 on your telephone keypad and you will enter a queue. We have a first question from David Wegman from ENG. Sir, please go ahead.

Yes, good afternoon, everyone. Thanks for taking my question. So first question about the working capital development. So you've achieved very nice inflow in 2019 and 2020, so 40 and 50 million euros. How should we be thinking about the development of working capital in the coming years? So 2021, but also beyond, having in mind that you need to execute your contract, you need to manufacture and you need to install them. And then secondly, on the U.S. proton therapy market. So I'm quite curious about comments you made in the press release published this morning. So you say you have taken steps to reinforce your presence in view to capture more market share and that you're seeing an uptick in sales. So maybe you can comment on that, please. And lastly, also if you can elaborate on the recent extension of PT indication in the U.S., so by the National Cancer Network. Thank you.

Okay, thanks, David. I will take the first one, and then I think Olivier and I will share the rest. So on working capital requirements, well, as you've seen, indeed, we've had a drastic improvement over 2020, which comes from several impacts. The first one is that... Indeed, we've been consistently going into cash collection, and it's been quite successful because we've been able to get our cash on time from most of our customers. You did see that we mentioned a few write-downs that we had to take on some customers who have difficulties. But even for those customers, we are working constructively with them to try and get the the best solution possible, basically. So that is number one. Number two, indeed, we have managed our inventory very prudently by making sure that we order our equipment when it's required for delivery, which of course means that with some of the delays that we have in installation, the equipment that is already there is there. And of course, we can't cancel our commitments to our suppliers. But to the extent possible, we have pushed some things across to 2021. So I would say that overall, I would expect that working capital should deteriorate very slightly, but overall will remain stable over 2021 and also over 2022. Now, it's very difficult to predict because it's very much dependent also on the overall level of order intake. So I would say in normal circumstances, it will remain stable, just slightly deteriorating. If things fluctuate more, then, of course, it will depend on those fluctuations.

Hello, David. On the USPT market, I think for competitive reasons, I don't want to be too specific on the different initiatives we have taken. We're quite pleased to see that, of course, the US has been quite impacted by the pandemic in 2020, but it's coming back quite strong with a lot of prospects on the horizon, as we have said, and thanks to a First of all, we strengthened our team over there. We also established a number of strong partnerships with a number of people in the U.S. Once again, I don't want to be specific on that, but the pipeline looks quite strong and revitalized, and I believe U.S., thanks to vaccination, is slowly coming out of the crisis. And we expect to see more activities coming out of the U.S. in probably the second half of 2021. And thanks to this relationship, I think we're very well positioned in terms of having the lead on the different prospect

uh for uh for idea to win these uh those deals um and maybe just to work olivier on the the reimburse market because we had had quite a volatile environment with uh let's say the affordable care act and then the from obama and then trump pushing back you know you have the biden administration any word you could say on that you you know do you think the biden administration is supportive What is your first impression?

Actually, I've seen a movie. I think yesterday Biden did some speech and spoke about proton therapy in Ohio. So I didn't speak to Biden myself, but it sounds like, you know, a good supporter indeed. You're right. I think the volatility and the back and forth – didn't help for sure I think what I can see is that the financing is available in the US and you know I think with the plan that they've put together in order to regrow the economy and so on and so forth could be accessible, part of it could be accessible for financing of proton therapy systems And I think many people will take this window to actually start to invest into potentially to proton therapy. So I think a bit more stability, how do they call it, the package for the economy. Yes, so we'll bring, I believe, financing capabilities in the U.S. with some appetite for investment. And indeed, in an environment where we have seen, as we have mentioned, small improvement on reimbursement, you know, ecosystem with a number of indications that are now approved, such as, you know, bone metastasis, head and neck, even lung we've seen. So there's a bit of a slightly more favorable environment for proton therapy with financing and a little bit more possibilities on reimbursement.

We can share more details with you, David, and anyone else if you like on that specifically.

Okay, thank you. Thank you very much.

Thank you. Next question from Kit Lee from Jeffreys.

I'm not taking my questions. I have three, please. My first question is just on CGNNT. Can you just talk about the rabbit, the contribution to the EBIT line for year 20 from the licensing deal? And then my second question is just on your older backlog for proton therapy systems. Can you just confirm how many proton, systems are in the order backlog today, and you also talked about the 20 full-term projects. How do you think about the timeline for those installations to be done by for the 20 projects? And then my third question is just on your write-down of receivables. For the customers who did face some payment difficulties, was that a region-specific issue or other customers, you know, from different regions, if you can share more color of that, please. Thank you.

Okay. So on CGNNT, Kit, first of all, on CGNNT, just like for other contracts, we don't disclose specific margin. But I'll say that it's a high level of margin because, of course, the contract has three components. There's a licensing component, which is a high margin component, and then there are service and equipment components, which are normal margin components. So the mix is reasonably high. In terms of order backlog, indeed, there are 20 systems right now in the Proton backlog. Those are the 20 that need to be installed. And the estimated timeline for installation is over the next three years or so, depending on when the contracts were sold. Now, the exact timeline will really be very much dependent on what happens in 2021, also with COVID. You did see that we mentioned in the press release that we started to installation despite the pandemic in India and in Taiwan. And hopefully we'll be able to start more as, you know, the world gets more used to working online. with COVID-19, but it's still quite an uncertain world out there. So it will probably take a little more time for us.

Very specifically, this is the uncertainty providing us to give guidance. Unfortunately, we don't have a crystal ball or it doesn't work. And that's the uncertainty remaining on the thing going forward. The reality is that we have a huge backlog So the day we can start to execute on it, we know it will look good for IDA. On the write-down, maybe, before I would like to comment as well on the pro forma without CGN, but maybe on the write-down, Soumine.

Yeah, on the write-down, well, let's say that we've had customers, a few customers, across the board who've had issues. It's mostly been those who were dependent to some extent on patients coming in from outside the country. In this case, the write-down is mostly in the U.S., but the reasons are a bit specific. One of the centers has entered a Chapter 11 position. It's a very old center, and the other one has some temporary issues. Of course, from an IFRS standpoint, we have to take a write-down based on our accounting rules, but we really hope that we will be able to find solutions that allow us to continue to operate these two centers with our customers over the coming year.

Most of it being a refinancing issue and not an operational issue or not even so much of a recruitment issue, patient recruitment issue. On CGNNT contribution, I think let's be – Let's be blunt about it. I think everybody's obsessed with a pro forma PNL of IDEA without CGNNT. I think, you know, there's always plus minus. Overall, what I can share with you is that without CGNNT, the group would have been, you know, breakeven to slightly positive. And then as we have disclosed in our press release, including the 15 million euros of direct impact of COVID. And you can estimate that more or less the same indirect impact of COVID. So overall, I think the pro forma of IDA without CGNNT and without COVID would have been a profitable outlook, you know, for 2020 pro forma, let's say. And this is really thanks to, let's say, all the action we have taken over the years to actually be less dependent on big proton therapy orders and also built on recurring revenues PT Service is one of them, and you have seen that it's growing quite nicely. I was looking at the number. I think the CAGR over the last four years for our service has been more than 10%. So we've been very strong and growing recurring revenue base for IBA, which is helping us with the profitability, making us less dependent on big proton therapy orders. And the success of our other business unit as well, radiopharma solution, industrial and dosimetry, is really helping us to build a strong and profitable business. And, yes, you will get here where proton therapy will be extremely successful and we will be very, well, let's say more profitable and some years where we will see less proton therapy orders and a slower backlog condition where the group will be slightly less profitable, but going forward, that's how we should look at it. The reason why we cannot give guidance at this stage is, once again, because nobody knows where we're going with this pandemic, even though we see light at the end of the tunnel with the vaccination campaign. But Tell me when we will get out of it and how the world will look like after that. I will tell you what the profitability profile of IBA will be. But since we don't know, and I didn't hear any convincing, let's say, narrative about what will be the world after COVID, I can, unfortunately, not give guidance at this stage.

That's great. Can I just follow up on the backlog? So is the entire proton therapy equivalent backlog made up of the 20 projects? And so there is no other contract of, sorry, there is no other order where you haven't started the construction or any installation work yet. Is that how we should understand the backlog today?

So backlog includes any contract on which we have received down payment and the signed contract. whatever the stage of construction or installation of that contract. Some contracts are at the very beginning. For example, if you take the Korea deal that was signed end of 2020 and for which we got the down payment early 2021, well, I would say probably nearly all of the revenue from that contract is currently in the backlog. Whereas if you take an earlier contract for maybe one sign in 2018 or 19, then there we probably have maybe 30 or 40% of the revenue still in backlog. So it really depends on the timing of the contract. The backlog that you see, the 382 million, includes PT, but it also includes the other accelerator and upgrade backlog.

Yeah, so if I just look at the PT backlog, which is around 260 million euros, how many systems that you've taken as order are not in construction phase today? I'm just trying to understand on top of the 20 projects, how many more do you have in the backlog today?

On top of the 20, I don't have anything else in the backlog because the backlog is both equipment and installation.

Okay, so that's the 20 projects are the entire equipment backlog for the 30. Okay, that's great.

Any equipment which has not yet been recognized on equipment is in the backlog.

Okay, that's very helpful. Thank you.

Thank you. Next question from Mathias Manut from Kepler-Chevreux. So please go ahead.

Hi. Good afternoon. A couple of questions on my end. Hello? Hello?

We can hear you, Mathias.

Go ahead. Yeah, okay. So good afternoon. A couple of questions from my end. Maybe starting in terms of OPEX evolution for next year. I understand that there's limited visibility on the revenue lines, but I guess in terms of costs and definitely R&D and general administrative costs, you could give us some guidance. That would be much appreciated. And also in terms of cost inflation, We have seen a lot around shipping rates. Is that something of an impact for you and is that sizable impact? A little bit more color on that would be much appreciated. Then a second question maybe on the competitive environment. Your largest competitor is in the process of being acquired. Does that have had any impact? Do you see them less? Are they less aggressive? Are they I would say less concentrated given the merger process. That would also be much appreciated, any call on that. And then maybe a third question is on flash therapy. Can you just situate a little bit where we are today? What is still required to bring this to the mass market? Who will be the key driver of this technology and what is the progress? Thank you.

Okay, maybe I can start with the question on OPEX. So indeed, I think you're right in saying that we can give you some level of view on the OPEX. Now, you've seen that we've had a slight increase in OPEX in 2020, but most of that increase is actually from the write-downs that we took on some customers, as I mentioned earlier, in 2020. So in 2021, excluding effects like that, which of course cannot be foreseen ahead of time. We will probably see a slight increase of OPEX, but it should be very gradual because you may remember that we have also had the impact of less travel and less expenditure on marketing in 2020. And we should come back to something more normal in 2021. I would say you should be between one and 3% increase in 2021 in line with inflation, basically. which basically means that we will absorb a big chunk of the inflation in 2021, but at the same time, we potentially hope at least that there will be more increased activity in travel and marketing.

On the inflation... Shipping rates? Yeah, exactly. I think shipping rates and there's a little bit of pressure on steel and copper, for instance. Steel and copper in the mix is not that big. It's something we manage with some inventory. On the shipping thing, there's one thing you have to know is that we're never so much in a hurry, so to speak. So far, we've been able to find some spots without a significant increase of our personnel. We have to see how long it will take to take the ship out of the Suez Canal. You know, but so far we've been able, and we don't anticipate a major increase of our cost due to that. On the variance immense deal, I would say up to now it's quite neutral. We don't see them more. We don't see them less. I guess they're also very busy merging, but so far I would say it has been... No effect for us, you know, no more activity, no less activities. On the flash, I think I see it really as a three-step process. First of all, and that's the one currently going on, is to really understand the biological effect of it and being able to reproduce it. Then we will go together with our customers to animal trials before we can start some human trials in the future. The driver for it, we believe we see IBA as a technology enabler and our clinical partners to be in the driving seat from a clinical development standpoint. So that's what we can see. I think it's It's more a kind of at least five years process than something for next year, really. Now it has certainly some, let's say, make proton therapy a bit more attractive for the flash believer, and as this is today the only way to get access to flash. So I think overall it's positive for proton therapy. Before it becomes a clinical reality, it will take some time. And once again, biological effect understanding, then animal trials, then human trials before it becomes, let's say, you know, the standard practice in the field of radiation therapy.

Yeah. Okay. Thank you. May I have just one follow-up on Varian? I saw they signed this Chinese contract, the China Medical University Hospital. Was that a contract in which you were also for the running? Does it make part of one of the five projects that was kept out of the CG&T deal? And maybe just following up on that, on those five projects, is there like a timeline in which you need to sign those contracts or is this just indefinite exclusivity?

So on the China Medical, actually the China Medical University Hospital is in Taiwan. And as you may have read, the contract we signed with CGN is for my mainland China only. So this one is not part of that deal. Secondly, in terms of the timing that CGN has, well, there's no specific timing as such for us to be able to realize those deals because as part of our deal with them, those contracts are ones for which we were already in discussion with our customer, and so they are not – included in the deal through CGN and I'm sorry, I don't know what your other question was.

Can we expect those contracts at short notice or what is actually the... Well, it's always the same thing with proton contracts.

I wish I could, as Olivier said, have a crystal ball and tell you when those contracts materialize. We're working on them right now, but... I can't give any when it will happen. Of course, we hope it will happen sooner rather than later.

And once again, here, I mean, COVID has an impact. As you guys know, there's some countries where we can travel. There's some countries where it's not possible to travel, China being one of them. So it doesn't stop the process, but certainly makes the process very difficult.

Okay. Thank you.

Thank you, Mathias. Thank you. Next question from Thomas Guillaume from the group Petacom. Sir, please go ahead.

Good afternoon, and thank you for taking my question. Just one question regarding the services, revenues, and its dynamics, notably for the accelerators. You had a strong year in selling other accelerator instruments. Still, the growth for services is declining. Just would like to understand the correlation between your instruments' revenue growth and the decrease in the services revenue, and how actually does that work on a business basis, and what is your forward looking on the services revenues for other accelerators? Thank you.

Okay, thank you very much. I think we, first of all, order intake of the year doesn't really mean service for the year because we have to deliver and install the system before we can provide services. One thing that we did mention on the other accelerator services for 2020, clearly there you have a COVID impact. Contrary to the proton therapy service where we have people on site, Other accelerator services usually are basically made of three main items. One is spare parts, and this one we could continue to operate because we can ship spare parts to customers. And then the rest is upgrades that customers are buying and services we do provide. And these services are usually preventive maintenance that they buy from us. And for both upgrade and preventive maintenance, the fact that we could not travel did have an impact on our revenue for services. So I think we'll see this other accelerator business service continue to grow in the future thanks to the growth of the install base. It will fluctuate a bit based on, you know, potentially having big upgrade orders in a specific year. But overall, the service component as well as the spare part components will continue to grow with the install base. And the upgrade somehow as well, but is less, let's say, predictable or less linear than going forward. So you should not look at 2020 as the new trend, so to speak. This has been heavily impacted by COVID.

Okay, that's clear.

Thank you very much, Olivier.

Thank you. We have no more questions for the moment. Ladies and gentlemen, I remind you that if you wish to ask a question, please press 01 on your telephone keypad.

next question from simon vlaming from the group betacam surface go ahead mr vlaming your microphone yes yes i was still on mute sorry about that hello sumia good afternoon um On the question of Thomas, if I may, on the other accelerators, so you sold already four systems this year, if I understood correctly. You were hinting that we were getting close to a potential inflection point on that front. Are you still in touch with the big potential buyers that were flagged last year? Just getting, want to get a little bit more sense on how we should expect a rollout of that division going forward.

Yeah, I think that's a, hello, Simon, first of all, a long time OC. Good to hear from you. And yes, so you're right, and specifically in the field, there's two big opportunities for the Rodotron. Here we speak specifically about Rodotron. One is medical device sterilization. And we have really started to see a shift away from ethylene oxide and cobalt in 2019. And this has been slowed down by the COVID crisis, actually. I think we have seen much less deal in the field of medical device in 2020. And not that we lost them to competition or that they've been canceled, but the overall medical device industry has obviously been shaped by the COVID crisis, and actually, counter-intuitively, the volume has decreased because the medical device sterilization business is really driven by the surgery, the number of surgery going on, and because of COVID, the surgery has decreased, and therefore, the demand for sterilization a slightly decrease in 2020 because of COVID. But we expect to see it coming back quite strongly post-pandemic. And from our understanding at this stage, the pipeline that was very strong end of 2019 did not disappear. And we see actually a lot of activity going on right now in the field of medical device sterilization. And we're pretty optimistic about about it once again, depending on when the world will go out of this pandemic. But that's really something we focus on. We're quite bullish on it. And let's stay tuned. And I believe it's a very good opportunity for us at IBA. And the second application is around terranostics and radioisotopes. You know, We are selling a higher energy Rodotron. We have sold one to a customer in the U.S. called Northstar. They intend to produce technetium-99 with it. They're progressing very well. Actually, we have shipped the first machine, or we're about to ship the first machine in the next few days. And this has some potential as well. You might remember that Northstar did sign a blanket agreement for eight TT300 high energy, two of them are in the backlog and currently going through production and installation. If they activate the rest of the contract, it's also a potential accelerator drive for us. So for Rodotron, both in the field of medical device sterilization and radioisotope production, I think we're in good shape and in the right place to to be able to review the potential as soon as the pandemic is gone.

Interesting. Thank you. And then on the proton therapy, on the 20 projects that are now ongoing, I mean, obviously COVID is impacting a lot, but you also clearly already see the new flow coming out of the U.S., so that market seems to be stabilizing. You're hinting that it's quite promising. Going forward, if we have to rank these 20 or put them in the different regions, because I would think U.S. normalizing Asia, normalizing Europe, pretty difficult. Can you maybe rank these 20 in those brackets and maybe give a comment also on Europe, how the current momentum or situation is on the PT market?

Okay, so the 20 are in the backlog. They are not prospect. Actually, on the 20, I believe there is one in the U.S., and we just started installation of the one in the U.S. last week, I believe. So, indeed, we resume. The rest, most of it being in Asia, most of it in China, actually. China, India, Korea, Taiwan. We have a lot of activity going on in this jurisdiction, Singapore, where it's normalizing, yes, but no. So very difficult to travel in all jurisdictions. In China, to my knowledge at this stage, it's even impossible to travel. So it's still very difficult and brings a lot of uncertainty on our backlog conversion in the next few months For the market prospects, you rightfully say that indeed the U.S. is normalizing, and we see a lot of activity in the U.S. China with just what I just mentioned, difficulty to travel, but also quite a number of prospects. And in Europe, very, very slow activity. As you know, we've been selected by Uniconcer in France. But since then, I think France is badly impacted by COVID, so there is not much activity going on. And there's a few, very few prospects in Europe. It's still possible in 2021 to see maybe one or two deals emerging for Europe, but I think our focus and our, let's say, expectation for new orders in 2021 comes more from the U.S., and Asia, and mainly China and Asia.

Okay, and then on the US, you mentioned new collaborations or partnerships without really mentioning the name. Do we have to think about partnerships of the like of Procure back in the days, or what kind of partnerships are those?

Once again, for competitive reason, I prefer to be, okay, yes. Okay. Thank you. You're welcome. Thank you.

Thank you. We have a new question from from . So please go ahead.

Yes. Thank you. One question actually remaining on the symmetry business. The order intake was up 10% for the full year. That does seem to imply, if I'm not wrong, a bit of a slowing in the second half. Could you just maybe elaborate a little bit on what has driven that and then more broadly in terms of the investments you're doing. Can you talk a little bit about the investments you're doing and what is the potential for this business? Thank you.

Okay, I can take the first part and a little bit of a second and then add on if you like. So on order intake, no, there was no slowing down as such. It's really related to the fact that sometimes you have larger orders in which the actual execution of the order takes a bit more time. So potentially, for example, you can have a big order intake in 2020, but for which the delivery is staggered over six months or nine months, and so it will happen over 2021 more than 2020. And that's what really explains the gap between the revenue and the order intake. Also, just as a reminder, as I had said earlier on, the 2019 numbers included RadioMed, and which was sold at the end of 2019. But if you look at it on a very constant scope, actually sales did increase nearly 2%. So most of the gap really comes from the fact that a big chunk of the order intake taken in 2020 and taken in the second half of 2020, by the way, will be delivered in 2021. On your other question in terms of investment, well, there's been quite – I mean, you know that – Once we decided that we were going out of the strategic review of dosimetry and we were maintaining the complete scope of dosimetry in the company, I think I had already mentioned that the idea was that if we remain in the company, we continue to make investments to grow the business. And so quite some investment has been made really in developing certain products. In particular, I think Olivier mentioned it earlier, The patient QA is an area of focus for us because that's where we see quite some development happening in the market and in growth. And in the past, IB was not as present in that area. And so we are reinforcing and coming back strongly in that area by investing in it with some product launches related to that patient QA, which will happen over 2021 also.

Yes, indeed. It's about reinvesting and repositioning the product portfolio and mainly in patient QA. And I think we start to see the result of this as we, as you have seen, our order intake has grown 10%, which is much better. We have beat the market. Therefore, I believe we will start to see the effect of the repositioning of our product portfolio, gaining market shares. And we expect to see more product release in 2021. So investment is about R&D and with a clear focus on patient QA.

And maybe also, I think we've mentioned in the past that we also have a very strong collaboration between the dosimetry business and the proton therapy business, where dosimetry is a strong enabler of proton. And our idea of dosimetry is, of course, the leader by far in proton for dosimetry for proton. And there also we continue to invest in improving the tools that we have.

Okay, thank you.

Thank you. We have no more questions by phone. Maybe just a reminder, if you wish to ask a question, please press 01 on your telephone keypad. Thank you.

If there is no more questions, I would like to then conclude the call. Once again, I would like to Thank you all for joining, and looking forward to see you or speak to you in the course of 2021, and certainly for the call on our half-year results. End of August, and hopefully for Capital Market Day during Astro in October. Thank you very much again, and I wish you all a very nice day. Thank you.

Bye everyone. Thank you ladies and gentlemen. This concludes the conference call. Thank you all for your participation. You may now disconnect.