Ion Beam Apps Sa Act

Welcome to the IBA Half Year 2021 Resource Conference Call. At this time, all participants are in a listen-only mode. A live question and answer session will follow the formal presentation. Full instruction on how to take part will be provided at the end of the presentation. You can access a copy of the presentation as usual in the investor section on the IBA website. I would now like to turn the conference over to IBA's Chief Executive Officer, Olivier Legrand.

Thank you, Leco. Good afternoon and thank you for joining us on our half-year results call. I'm Olivier. I'm the CEO of IBA. And with me today is Soumya Chandramouli, our CFO. Before we begin, I would like to draw your attention to the company's disclaimer on forward-looking statements. First of all, I would like to start today by thanking the entire IBA team and our customers for their hard work and understanding in what has been a very challenging environment for all of us. While challenges from COVID-19 remain, we are pleased to see that hard work paying off and the strong resilience of our businesses. And I'm delighted to report on our positive progress over the first part of the year. As always, I will give an overview of our business and run through our outlook for the future. Soumya and I will then summarize our financial statements, and we will then be happy to take any questions. As you know, the group is founded on our world leading expertise in particle beam technology. which falls across four core business lines, proton therapy, radiopharma, industrial solutions, and dosimetry. Each of these business lines has seen good momentum over the period with increased activity and backlog conversion as compared to the previous year. Diving into the key statistics, you'll see our many years of experience reflected in the number of accelerators in operation, as well as our market leading position across our four business units. I draw your attention particularly to the increasing importance of radiopharma solution business, which includes nuclear medicine, a market that has grown almost 6% yearly over the last seven years. IBA is firmly committed to impactful environmental, social and governance goals. And our first major step towards a new sustainable stakeholder approach began this year with the company receiving the B Corp certification in June. We focus on being a force for good, reconciling profit with social purpose and contributing to a more sustainable and inclusive economy and society. I'll now run through the key operational highlights for 2021 so far. In terms of order intake, we've seen one five-room Proteus Plus deal agreed in China, with a Proteus One deal currently being negotiated in the United States. Elsewhere, 14 machines have been ordered with other accelerators in the period, with four Further post-period end, the latest toll today, almost as we speak. Dosimetry has also seen a solid order intake on par with H1 2020. A total of 14 installations began in the period, comprising one in proton therapy and the remainder with other accelerators. Backlog is high at €1.1 billion. While several projects have been delayed, we should see an increased rate of installation in the second half of the year. All of this is underpinned by a very strong balance sheet. Net cash at the end of H1 was 69 million euros and has since increased to more than 110 million euros. On the broader corporate side, we have been pleased to achieve a number of milestones. On the technology side, our high-energy cyclotron, the Cyclone ICON, was launched, which should open up options for theranostic applications. We have also been pleased to launch a number of collaborations, which include an expanded collaboration with Northstar to increase the availability of the diagnostic radioisotope technicium-99. More recently, IBA announced its participation in a European-wide proton therapy trial in oesophageal cancer, which includes six IBA centers. You see a snapshot here on the financial highlights. As announced this morning, a few points to pick up are there. Group revenue of 137 million represents an increase of 25%. on H1 2020, which is linked to increased activity across the business lines and better backlog conversion. We've already highlighted the record equipment and service backlog, but do also note the significant increase in proton therapy and other accelerator equipment revenue up 86%. Proton therapy services continue to perform well, with a total of 55 contracts now signed globally. I will now hand you over to Soumya, who will take you through the financial highlights.

Thank you, Olivier. The slide really highlights the strong financial progress that we made over the year. And as you can see, although we have continued to be affected by the pandemic, sales in the first half were still up 25% from the same period last year. And we ended the period with a rebate profit of 0.7 million, which is up 10.6 million from last year. And finally, our total group loss also decreased to 1.9 million, representing an improvement of more than 10 million euros on last year's loss. Furthermore, I'm pleased to say that our equipment and service backlog has stayed really high at 1.1 billion, thanks to an equipment backlog of 429 million and a service backlog of 687 million, both fed by the sales that we've made over the first half of 2021. Now, moving on to proton therapy and other accelerators. Sales were up 29.5% versus last year, which reflects the improvement in backlog conversion, despite persistent difficulties, as I mentioned earlier, with the pandemic, especially for travel. There was also one new sale in proton therapy and 14 others for other accelerators at end of the period, encouraging pipeline, ensuring that we are in a strong position for the remainder of the year and beyond. The strong improvements in Revit reflects this improved backlog conversion alongside the ongoing cost control. As mentioned, we were quite pleased to see that our equipment revenues went up so strongly versus 2020, 129% actually, with 21 projects currently either in production or under installation, including eight Proteus Plus and 13 Proteus One machines. Other accelerators were up 62%, reflecting the strong order intake. and backlog conversion and continued stability in services as all of our proton therapy centers remained open and treated patients. I now hand back to Olivier to take you through a more detailed business update.

Thank you, Souma. We have continued with steady progress in the U.S. and are negotiating a contract at the moment with one term she signed. In June this year, we highlighted our commitment to shaping the future of proton therapy and by initiating a global dynamic arc in collaboration with leading clinical centers to prepare to make dynamic arc therapy a clinical reality. We recently announced the launch of a significant proton therapy clinical trial, PROTECT trial, the research of which aims to extend the use of proton therapy and improve patient selection across cancer indications. A reminder of where we stand against our peers in the market. The first half of 2021 saw two systems sold, both in China, with Iberia securing a five-room system and Varian a three-room system. By room, Iberia maintains its leading market share with 143 rooms and 61 centers globally. This next slide highlights some of the key market trends that will support the long-term growth in proton therapy. Our passion, or should I say our obsession, is to improve the clinical performance of our current and future install base. Our clients have the potential to treat more indications better and faster. This will improve the quality of life of millions around the world, strengthened the resilience of proton therapy centers and the attractiveness of the modality. As this chart shows, there was more than a six-fold increase in the number of patients treated over a 10-year period as a proton therapy has increasingly become a widespread treatment modality. In 2020, there were more than 40,000 patients treated with proton therapy globally. IBA remains the largest player, with around 40% of the total patients having received proton therapy by an IBA machine. In the second chart here, you can see that proton therapy is increasingly being used in a widening range of indications. In addition to this, certain indications started being treated in proton therapy, for example, lymphoma in 2016. The third chart highlights how the increasing generation of data is driving reimbursement. It shows the ongoing clinical trials in proton therapy across several indications, and you can see the growth from 2016 to 2020. Finally, the innovation pipeline of new technologies such as motion management, dynamic arc, and conformal flash will drive further adoption of proton therapy and we'll now run through this in more detail in the next slide. Our progress with innovation continues and in terms of recent news flow, in June we announced the initiation of the dynamic arc consortium in collaboration with the leading clinical centers across the globe. with the ultimate goal of being able to offer dynamic art to new and existing customers as a more efficient and simple way to deliver proton therapy. IBA has also introduced conformal flash, a novel method to deliver flash therapy while keeping the benefit of proton black peak properties. IBA works with the key knowledge leaders who explore and demonstrate the science that will allow clinical adoption in the future. including spence robert roberts proton therapy center as mentioned earlier there has been a significant momentum in this division in other accelerator with 14 new sales globally at the end of the period representing an entry into several new geographies china remains a major market and there have also been sales in europe north and south america asia and africa In addition to the four post-period sales, the pipeline remains strong. As of today, we have sold 18 machines, which represent a three-fold increase on the same period last year. IBA has also recently launched its new high-energy and high-capacity cyclotron, the Cyclone Icon, offering the largest energy spectrum for PET and SPECT isotopes and enhanced availability of terranostic radiopharmaceuticals. The new generation of the Rodotron TT1000 enabled the production of X-ray to sterilize in much larger volume, in particular for medical devices. In addition to a new Rodotron TT300 high-energy electron beam is under installation at North Star in the United States. Now, let's move on to dosimetry. Dosimetry SE in a strong first half with sales up 9.2% to 26.4 million euros. Order intake was up at 27 million in line with the same period last year. Backlog grew 6% compared to the same period last year, reaching 16.4 million. Elsewhere, cost control maintained, allowing profitability to improve and rebate to more than double from last year to 2.8 million euros. Taking a deeper dive into order intake, we were pleased to have strong orders in China, a key growth market for us. In addition, conventional radiation therapy and medical imaging remain important sector for IBA's dosimetry business and have seen a good recovery. QA for conventional radiotherapy has also been increasingly important segment within dosimetry, and IBA has been gaining market share here. Innovation lies at the heart of Dosimetry and we were pleased to launch three new products during the period. Now over to Soumya to talk about the numbers in more details.

Thanks Olivier. Now as mentioned earlier, total group sales in the first half were up 25% versus the same period last year and this mainly reflects the increasing activity in backlog conversion following the strong order intake last year. We were also pleased to report a 1.1% basis point improvement in gross margin, thanks to product mix and stringent cost management. At the operating expenses line, the numbers were fairly stable, but beating inflation as the successful cost containment program continued to have an effect. As a result of the increase in group revenue and margin improvement, the recurring operating profit was line increased substantially to Euro 0.7 million from a loss of Euro 9.9 million last year. And IVA therefore reported a net loss of Euro 1.9 million compared with a loss of 12 million last year. Turning to the cash flow statement, I already mentioned that we had an extremely high cash position as of today. Operating cash flow in the first half was Euro 13.9 million, driven by closed management of working capital and continuing payments from customers as backlog conversion continued. There was also a sustained buildup of inventory of projects and the reduction in cash flow used in investing activities really reflects the lower CapEx investments to maintain ongoing projects versus last year. Alongside the release of a deferred payment following the final completion of the sale to Radiomed that was made end of 2019. We do expect CapEx to increase somewhat in the second half of the year as we continue to make investments in digital and infrastructure. The cash outflow from financing activities included mostly repayments on borrowings, repurchase of shares, and dividends paid on the 2020 results. And finally, on the balance sheet, there was a further strengthening of the balance sheet with the net cash position at H1 2021 of €68.5 million compared to €65.2 million at the end of 2020. As of today, IB has an unaudited net cash position of more than 110 million, ensuring that we are in a very strong position for future investment and growth.

Olivier? Thank you, Trumia. Let's now take a look ahead. We are very proud of the continued resilience across all our business lines. There has been an encouraging increase in activity in spite of the ongoing challenges associated with the global pandemic, and with a strong backlog condition. We have also been encouraged by the revival in activity in the US and key emerging markets. We have a strong pipeline with active tenders and discussion ongoing. Underpinning this, our exceptional strong balance sheet, which will enable us to continue to invest in the technologies of the future while seeking value-enhancing business development opportunities. We remain unable to reliably and specifically guide on our future performance, but we remain confident for global prospects in the second half of the year and beyond, underpinned by the high backlog and healthy pipeline. Finally, we are firmly committed to our stakeholder approach, remaining the leader in all of our markets to drive sustainable, profitable growths. Soumya and I will now be pleased to take your questions. Operator, back to you.

So we are now ready to receive live questions. Please raise your hand using the functions on Teams. We will then call your name and you can then unmute yourself. And for those who join by phone, raise your hand by pressing star five and unmute yourself by pressing star six when you hear your name or phone number. So we have a first question from Michiel de Klerk. Michiel de Klerk.

Yes. Hi. Thank you for taking my question. So, yeah, good, good results. Almost back to pre-COVID levels for most of the sectors and divisions. But just looking at the backlog conversion for the PT equipment, we do still see some impact. Looking a bit at the second half, should we already expect normalization towards pre-COVID levels or what are the main deadlocks, let's say? Where are the main issues here? Because previously you guided at the full year that the average backlog conversion was around four years for the PT equipment. Where are we today? And is the situation evolving better or worse than expected?

I'm going to speak to you. Yeah, indeed. So first of all, we did indeed say the backlog represents around four years of conversion, but it's not smooth, as you know, and it's not going to be the same amount every quarter or every semester. I think in 2021, despite the fact that we've been able to have a nice growth in sales, you saw around 25 percent sales. We are indeed below the levels of 2019 in terms of equipment backlog conversion. And that's really related to the fact that the pandemic continues in 2021. It's still not easy to travel to certain parts of the world, and it keeps fluctuating. We all know that cases keep going in and out of lockdown. Shipping is getting more complicated. For example, today it's more complex to ship equipment to China, and China, as you've seen, is a big chunk of our backlog today, with several sales over the past 18 months or so. It's also difficult to travel and send people across expatriates, experts into areas where they need to start installation. So we have continued to install and to advance on conversion despite all of this. But it's not as fast as it would be if all of the effects of the pandemic were not there anymore. I do expect that if things get better over H2, we will be able to accelerate. But again, I cannot give any guarantees on that because we are really extremely dependent on the way in which each country decides to enforce or not certain rules regarding the pandemic.

Great, great. But the main impact is still from Asia, I assume, yes?

Yes, the biggest impact is indeed Asia and in particular China, but even across the rest of the countries. I would like to point out, though, that we have, despite that, continued to install. We actually completed installation of the first room in Mumbai. And so the first room of the Mumbai project has actually been accepted by our customer and should start treating patients in the coming weeks or months. And that has been quite an achievement despite the pandemic. But indeed, elsewhere, it is much slower than expected.

Okay, clear. Just one more question on the margins. We see the growing importance and the strong momentum within the other accelerator business. Could you give me some rough indication or figures between the gross margin, the differences between the proton therapy and the other accelerators, and maybe also for the services, the differences between the two?

We don't usually give separate numbers on the margins between the different businesses. I would just say that there's quite a wide range of gross margins on contracts which can be dependent on various factors including the country, the competition that we have around that project. or other very project-specific factors, for example, options that have been chosen by the customer. So all I can say is that overall the project margins range between anything between 30% and 50%, depending on the situation of the project. I can't say anything specific about each business as such.

OK, I understand.

Thank you. In terms of service, we always mention that we have slightly higher margins, a few basis points above. But given the range that I just gave you, it's rather difficult to really give you a specific number on that. But it's also within the same range, basically, depending on.

OK, that's clear. Thank you. We have another question by the phone with a phone number ending by 1461. So please unmute yourself by pressing star six.

Yes. Hello. That would be me, I think. Can you hear me? Yes. Yes. Matthias Manert Kepler. Good afternoon. Congratulations with the results. And thanks for taking my questions. If you don't mind, I'm going to do it one by one. First question was actually on the contract in China that Varian won. Could you maybe elaborate a little bit, if you also were in the game, what has triggered the decision of them to opt for Varian? And was this one of the contracts that was excluded from the CGTN deal? That would be my first question.

You know, I think on that specific... First of all, it was not one of the deals that was excluded with CGN because for a while it's a contract we were in the game but was strongly biased towards Varian for some reason I don't fully understand. So I think we... Let's say we started with a poor... a relative competitive positioning mainly due to relationship let's put it that way so yeah and you know having 60 percent market share means that you will lose a deal every now and then okay fair enough

The second question is you don't give a quantitative outlook, but from a qualitative perspective, you note out that there is an increased level of activity. Could you maybe elaborate a little bit more on how many rooms you're probably tendering and what you think would be a reasonable estimate of contracts that are close to signing or to decisions?

You know, I think we... What can we say? It's multiple. It's more than one. But the key question is really the timing. I think the way we look at it is we see quite a high level of activity, especially in the U.S. I think in the U.S. I will be nice with you today. I think we can potentially see five deals very active in the U.S., Now, are they going to close in the second half of the year? I think it's impossible to say. Some will, some will not. But just to give you a flavor of the activity in the U.S., that's, you know, there's much more. But from a qualification side of the deal, that's what I would like to see. A deal that could close within 12 months is probably around 5%. And then you have the rest of the world. I think Europe is still pretty depressed, even though we have, you know, some activities going on. I think we see a slight pickup in the south of Europe, Spain, Italy. I could see potentially, you know. Two, three tender activity being active. Are they going to close in 2021? I think it's very difficult to say, but reasonably we can say within 12 to 18 months, providing the situation remains stable. And that's also valid for the U.S., by the way, because one of the reasons it's very difficult for us to guide is you have seen, like I did, that the number of cases in the U.S. is picking up again, where we were expecting U.S. to reopen. I see we are canceling events in the U.S. one after the other. So I want to remain careful a bit on the U.S., but Europe as well. So we see some activities in Europe and then especially in China. I think either IBA or direct or through our partner, CGN, we definitely see, let's say, a couple of very active deals going on in China. So that gives you a little bit of a flavor of... type of level of activities we see. So quite, not too bad for, you know, proton therapy market and the overall environment globally.

Okay, thank you. Understood. Maybe last question is on the fact you announced a large-scale multi-institutional randomized control trial and that you joined that trial. Can you maybe talk a little bit more about the project? How is this trial designed? What are the primary and secondary endpoints? Is this rather an efficacy trial, or is it rather working on the safety profile of proton therapy? And why in this indication? And could you potentially join more of those trials for other indications? Please.

You know, the overall... I'm not so familiar with the endpoint, and we could organize maybe a bit more of a clinical overview of it during our Capital Market Day, inviting some of our clinical partners. I think the overall idea which we pursue is to build the confidence into the NTCP model developed by the Dutch and specially applied in Groningen. where we have seen that, you know, providing we can select the right patient with a statistical approach, comparing conventional radiation therapy planning with what we can be achieved in proton therapy and statistically trying to forecast the complication, we really believe that's the way to go in order to open more indications to proton therapy. So I certainly know that the clinical trial is really about that. And they have decided to start with this indication, but more will come certainly in the future.

And there are a few points maybe on this trial. First of all, you know, the discussion around proton is always to show the comparative benefit of proton versus conventional radiotherapy. And that is something which will be studied much in detail in this trial. And the second thing is that it's not an industry-led trial, but it's an industry-supported trial with Varian and IBA, among others, participating, but with several leading institutions in there, of which six are actually IBA proton centers, which will also participate. give us additional information and data on what's happening in this area. And so what we hope is that once things have moved in one indication, they also have an influence on shifting the needle on other indications and improving there. But indeed, in terms of the endpoints and how and what the timing is, we can have a chat later on with one of our specialists on that point, if you're interested.

All right. Thank you. Maybe last small question. Did the cash build up post-closure of H1? many driven by advances of clients, or is that just receivables coming in?

It's both. Advances are also receivables. But no, no, it's actually both, but it's been quite a positive summer for us, let's say.

Okay, thank you.

One other question is from Carlos Moreno, so please unmute yourself.

Can you hear me? Exactly. Hi, Carlos. Yeah. No, I had two quick questions. Firstly, as we work through COVID, I suppose we're maybe nearer the end than the beginning. Plus, as the other businesses and the service backlog in proton therapy grow. Are we at the point now where over the next 12 months, over the next six months, you might be able to give some kind of medium term targets, both for the top line and the bottom line for IBA? Are we in a position now where IBA is a bit more predictable? That would be my rather than very short term targets. And then the second question, I'd love to hear if obviously Siemens Healthineers now is in charge of Varian. Have you observed anything different about Varian under its new ownership? Thank you.

Maybe I'll start with Siemens and Varian. I think not yet. From what we understand, they're very busy integrating. And in terms of market behavior or, you know, a change of posture or aggressiveness or something like that, we didn't see any. They are out there and pushing for proton therapy. We didn't see any change yet. And on the guidance, I don't know if you want to start.

Well, I would say on guidance, yes. I think given the fluctuating situation of the pandemic, it's really difficult for us to guide because it just feels like anything we say will be cancelled out by the opposite happening. So we don't want to have that situation, obviously. At the same time, I think we feel internally that excluding any of these impacts, we would potentially be able to give some guidance. But we really want to wait and see how the pandemic pans out over 2021 before we start to do that. But I would certainly say that we are starting to see a clear path on the type of top line growth and percentage margins that we could start to talk about. But it's just slightly too early. We would really hope we could have done it this year, but I don't think we're sufficiently out of the situation of the COVID-19 pandemic.

OK, that's loud and clear. I mean, I always think of guidance as being kind of six to 12 months. I'm not really interested in that, but I think all of us would find it very useful if you had like a three to five year plan, at least directionally where you think, you know, the journey that we're on, I think would be extremely kind of useful. But, yeah, I appreciate COVID is kind of dragging maybe more than we first hoped. Brilliant. Thank you.

Welcome. We have one more question from Laura Aruba.

Good afternoon. Thank you very much for the presentation. Three questions on my side. First one, could you share your view on how you see gross margin evolution going forward? Secondly, of the ongoing proton therapy projects in China, how many are ready to start installation? That's a bit linked to what would be the impact of potential reopening in China in H2 in terms of backlog conversion. And finally, we see recovery in EBIT. Can we expect this to last?

Thanks. OK, yeah, on the Chinese contract, I think, as you have seen, they're all Proteus+. So the building phase, let's say, is a bit longer than with the Proteus 1. So we see an installation wave, so to speak, in China more towards 2023. So that's how we look at it. So we basically have two plans regarding that. One is that we are back to business as usual and it's easy to travel to China and then we're basically ready to install. But we also want to be mindful that the situation might not be back under control yet by 2023. And we are, let's say, fortunate enough to have a strong local team and also a strong partner in China. So we're looking at beefing up as a plan B, our team in China, or to basically collaborate faster and deeper with our local partner, even on IBA contracts. So we can be, let's say, you know, more agile in case the COVID pandemic happens. prevent China to fully reopen even within, even, you know, after a year and a half. So we have two plans. We keep an eye on that. And once again, the wave of insulation in China will be more towards 2023 than 2022. I will let Soumya come back on the margin evolution.

So the other question you asked, indeed, Laura, was about margin. Again, I think we said we don't give guidance, so I can't really guide you on when we expect margins to grow or how we expect them to grow. All I can say is that we continue to maintain our cost control, and we have a strategy planned out in particular for our service strategy going forward. Olivier spoke earlier. during the presentation about the install base being really a tool to improving outcome, number of indications, and also, therefore, creating momentum in the PT market. It's certainly important that we continue to work on improving margins over there, not just for IBA, but also for our customers. But I can't give you a hard number on that as such. We just plan, of course, to improve it versus what we have today, which continues to be affected by the pandemic. And I'm sorry, I don't remember your third question.

So, yeah, many thanks for the answer for the two other ones. Very clear. And so my last question was about EBIT. So we're starting to see a recovery. Can we expect it to last?

I think I have the same answer on that one. I would certainly hope that it lasts. But again, it's going to be quite dependent on on how the pandemic affects people. our numbers over the second half of 2021. You've seen that a big chunk of the improved profit is coming really from gross margin, which has improved quite a bit versus last year. We've kept our costs stable, and I think we can expect that they will remain more or less stable into H2. But therefore, it would be primordial that we're able to convert more backlog into revenue over H2.

And for me, that's exactly that. I think we might sound a bit, you know, I don't know, conservative here or The backlog is there, and the margin in the backlog is there, and it's there to remain. As you have seen, we have our costs under control, and the cash situation is very good. Now, we're still dependent on, you know, for part of the backlog conversion, on the number of events that need to happen, and for them to happen, we need to be able to send equipment. We need to be able to travel to some countries. And this is the path we don't fully have under control. Should this not happen, it will just push the revenue recognition and the gross margin to the next year. So I think it's, you know, I don't want to sound like if COVID continues, it's a disaster. I think if COVID continues, it's, you know, it will slow down our backlog conversion. But the backlog conversion will eventually happen. And the backlog is sold with a fair margin that will help us to continue to improve on our company fundamentals, being the gross margin, being the EBIT. There is some slight uncertainty on a few events that need to happen in order for us to feel absolutely comfortable to confirm that within the next six months or even within the next 12 months, things will continue to improve. Everything is set up for things to continue to improve. We, like many other companies, are dependent on the development of the pandemic.

Very clear, thanks.

There is another question by the phone from the number ending by 8291. So star six to unmute.

I think that's me, Simo Vlaming from the group Petercam as well. Good afternoon, everyone. Just two quick questions from my side. We always, I mean, fantastic to see the... the deals that are being signed in the other accelerators and also the lively pipeline in proton therapy. But I was just wondering, you mentioned already before, we're basically at the crossroads for the industry to decide or to choose in sterilization for our technology, which is today about 10% of the equipment sales in that for sterilization. In the deals that you have signed, Is the deal that you are looking for or hunting for included or is that still pending?

A good question, Simon. I think we can certainly say that the biggest impact we have seen from the pandemic was on the medical device sterilization. It might sound a bit counterintuitive, but this business is really driven by the number of surgical procedures in the world that were basically done because of, you know, COVID taking all the attention of hospitals. Now, we know it's a temporary adjustment, and therefore, the deal you are referring to and, you know, the Let's say the move that we are all working on for so many years to see the penetration of eBIM X-ray really growing into the medical device sterilization has not happened yet, even though we have seen early sign of that, especially in 2019. We have seen a bit of a stop in 2020 and early 2021. The only thing I can say is that we have very high quality conversation with the biggest player in the field, and we don't see any reason why it should not happen quite the opposite. I think slowly but surely the industry recognize that, you know, of course, ethylene oxide and cobalt are there to stay, but not to grow anymore. I think it's going to be very difficult. And here I quote one of the market leader in the space saying, well, you know, we will continue to use our cobalt centers and we might be able to grow them a little bit in capacity. But it's going to be very difficult for anybody to get an operating license to build new one. So I think the industry is recognizing that. And the closest and better alternative to cobalt is eBIM X-ray. So we had a lot of very high quality conversation with the industry, but it did not convert into, you know, concrete order intake yet. But I'm very, let's say, optimistic that this should happen in the near future.

Very nice. Good to hear that and clear. And on also on the other accelerators part, I was was curious, the North Star partnership. I mean, we have seen several announcements on that of stuff that they have ordered already on with IBA. Just curious what the expectations are. Is there still a lot in the pipe for North Star? Can you give a little bit a little bit more color on that?

Yeah, I think, well, you know, we have an umbrella agreement with North Star for a number of systems. I think we have specifically disclosed that. It's eight systems. And we are currently implementing the first two sets. We have started installation. I was in the U.S. in April, I think. And it's going very well. So the two set, the two first, let's say, proof of concept are currently going under installation. And North Star has a very ambitious plan of expansion. And I think they are on target. So, yeah, there is more to come for the so-called Rodotron TT300 high energy system. that can be used to produce radioisotopes. Technicium-99 is one, but there is more potential, especially in the space of theranostics. And you might know that theranostics is a pretty hot topic globally. And we believe we have a nice technology solution to produce very efficiently, you know, very good terranostic radioisotope with our TT300 technology. So more to come with North Star based on the umbrella agreement and also some more potential for the Rodotron TT300 in the space of

And of those eight systems, two are already are now in execution on your side. The six others, are they already in the backlog or do they need to pay upfront before they get in the backlog?

Correct. They have a special condition to buy them, providing they meet milestone, but they did not exercise it yet. So it's not in the backlog.

Okay, very clear. And then just curious, last year you quantified a little bit the COVID impact. If I remember correctly, over the full year 2020, it was about 15 million direct cost and then some indirect costs, which was also amounting to close to 15 million. What was it so far this year? Is there any quantification that you can give on COVID-related costs?

Yeah, I think... I think we can say that we're probably close to between five and seven. It's between five and seven million, more or less, the impact that we've seen in H1 2021, which includes delays and therefore extended installation times, which includes additional equipment cost, shipment. And, of course, as you've seen, overall costs are also going up for materials and potentially some of that would also impact IBA. So, yeah, between five and seven probably.

It's a significant number. And on the rising cost that you mentioned, are you able to pass it on in your contract to clients or is it, in the big scheme of things, not that important?

I don't think it's all that important, but it really depends on the structure of our contracts.

You know, I think we can say that, you know, our goal is to pass it on. I think we have started a number of initiatives to make sure that indeed reflected pricing of our equipment.

Okay. Thank you for that. And good luck in chasing the new contract. I think everybody is quite positively surprised with what everything is happening in the pipeline for PT, I think. So thank you for that call.

Thank you very much. Thank you, Simon.

And I don't see other questions from the audience.

So if we don't have any any question, I would like to close the call and would like to thank you all for joining. And before we wrap up, I just want to highlight some of the upcoming events in our financial calendar. We are planning to present at Astro Conference in October. Now we say we are planning because, as I mentioned, we don't know exactly if it's going to be possible, but if it is, we would like to see you over there, and we will provide more details as we get closer to the date. And as normal, we will publish our quarter three business update in November, and our full year result will be reported in March next year. Many thanks again for your time today. Thank you, Soumya. And we look forward to updating you soon as we remain focused on delivering our strategy across our four business lines. Thank you and have a nice day.

Many thanks, everyone. Bye.