Ion Beam Applications SA

Welcome to IBA's half-year 2022 results conference call. All participants are currently in a listen-only mode. A question-and-answer session will follow the formal presentation.

I will now hand over to Olivier Legrain, Chief Executive Professor of IBA. Thank you, Olivier, and good afternoon, and thank you for joining us today on this results call. I'm joined today by Soumya Chandra Mouli, our CFO, And before we start, I would like to draw your attention to the company disclaimer on forward-looking statements. Here is an overview of today's call. I will start with idea performance and progress of the first half with a detailed look at the different business units. Soumya will then provide commentary on the financials before I talk through the outlook and then open the line for questions. I'll kick off with an overview of the first half performance. Here is a snapshot of the key financials. There has been a modest uptick in revenues in the period related to solid other accelerators backlog conversion. Strong dosimetry sales and service revenue growth. However, there is a significant phasing of our proton therapy revenue recognition to the second half of 2023. Alongside investment made at the group level to future-proof the business, as well as prepare for the acceleration in the second half, proton therapy revenue recognition has impacted our rebate. The rate of growth has been relatively slower during this first half period. However, we are expecting a significant ramp-up in the second half. Rebit was impacted by three factors, reinvesting for growth for the expected increase in the activity in the second half, timing of several projects that are planned to start in H2, and some unrelated customer-specific installation delays. You'll recognize this slide from our full year results who remain committed to the key objectives laid out for each business unit. This is underpinned by a group-wide focus on digital developments as well as sustainability initiatives. Moving on to strategic progress on these objectives across the business units during the period, Dosimetry has had an excellent first half with excellent growth in order intake alongside product launches and upgrades. We'll discuss the impact of MODUS and SCANDIDOS in more details later. Within proton therapy, we have seen an encouraging increase in service revenues. Our commitment to proton therapy innovation continues, and we were pleased to start a new research partnership with Particle earlier in the year. Moving to radiopharma, we are pleased to have launched Accuracy, a cardiac imaging solution, and reached another milestone with our joint venture Pantera. Industrial has seen very strong revenue growth. Elsewhere, it has been pleasing to see the potential for our technology in a growing range of applications, including food irradiation. More than 100 participants are expected to join our food irradiation symposium in September. Finally, at the group level, IBA has been investing into digitalization, which includes, among others, the development of a business-wide platform predictive maintenance platform, and the launch of a customer-dedicated web portal for industrial business. During the period, we continue to make good progress on our four sustainability-related streams, and I'd like to highlight the B Corp recertification now in progress with a target for 2024, the risk mapping exercise started with EcoVadis on our supply chain, and the various ESG initiatives being taken at employee level. Let's take a look at the key figures for the first half. As noted, first half performance was strongly impacted by a number of proton therapy factors, including timing of backlog conversion and investment in the business that I will comment more in detail in the later. Elsewhere, other accelerator and dosimetry performed very well, with sales growth of 30% and 23% respectively, and a strong profitability. The rebate margin was affected by the combination of the low proton therapy backlog conversion already outlined alongside higher investments in sales and marketing and R&D in anticipation of ramp-up in the second half of the year and beyond. Left cash sits at a healthy €61.7 million as part of a scheduled renegotiation and unused €37 million syndicated credit facility. was refinanced in August, increasing to 40 million euros. Total unused credit line now stands at 44 million euros. Let's move on now to a deeper dive on the proton therapy business unit. Taking a look at the proton therapy market more broadly, so far this year, IBA remains a clear market leader with 60% market share in the proton therapy room sold. Addi has also maintained its leading position in number of rooms in operating and total market share. Proton Therapy order intake for the first half was 59 million euros, with three rooms sold globally. Revenue decreased by 6% in the period, while we expect a second half for 82 years. As has already been the case in the past few years, this effect was even more marked in 2023 due to three main factors. An anticipated sudden half-phasing of five major projects with no major start, shipment or completion of projects in H1. An unexpected shift of three projects from H1 into H2 for unrelated reasons. An order intake which came late at the end of the first half. In addition, there were inflation-related costs that were adjusted on project costs to completion. With a record backlog of more than 700 million, comprising 35 ongoing projects, there is continuing focus to accelerate conversion to revenue in H2 and beyond. As we have seen across the group, service on the other end continues to grow in proton therapy, up 10%, a backlog of 617 billion remains. Now, moving to other accelerator performance, Interest in IBS Rodotron machines remains high, particularly in sterilization settings, where it is meeting a significant gap in the market. Despite a slower order intake impacted by macroeconomic factors, revenue climbed over 72%. This was thanks to high order intake during 2022 and no increased footprint, meaning that service revenue is increasing. Demand for IBS radiopharma solutions remains strong, and the business remains the market leader for accelerator of radioisotope production. Accuracy, an integrated solution for cardiac PET imaging, was launched back in May. Elsewhere, we were pleased to successfully install a Cyclone 30 XP in Jülich, Germany, for the production of the radioisotope Astatine 211. We have continued to make progress with our joint venture Pantera, focused on increasing the global supply of Actinium-225. In the near term, this is enabling production for use in ongoing clinical trials. Longer term, it is hoped that the partnership will allow a large scale... Sorry, I skipped a line. I forgot to speak about the signed agreement with TerraPower. which will, in the near term, enable us to produce doses for ongoing clinical trials. But longer term, the Sphagnum chip, it is hoped, it will allow a large-scale supply of the isotope. Post-period, we made a €20.4 million contribution to the capital of Pantera. mostly in kind, with another 20.4 million equity, was also brought in by our partner in the joint venture, DSCKN. Post-period, we were also pleased to sell three further machines, including Cyclone Cube, Cyclotron in China. Alongside the Cyclotron, a strategic collaboration has been signed with the buyer for the production of radioisotherm for cancer diagnosis. Taking a closer look at the financials, I'm pleased to report a solid order intake of 29 million across eight systems. While this was weaker than last year, for the same period, we have already started to catch up, as mentioned earlier, with three additional machines sold post-period. Equipment revenues increased by more than 20%, 4.3 million euros, due to good backlog conversion. 10 installations started in the first half, with 21 installations expected to initiate by the full year. The service part of the business performed extremely well, growing by almost 50% due to an increase in stall base, several upgrades to existing machines and a strong replacement parts business. On the other accelerator slide, Rebit loss of 0.5 million euros includes impact from inflation, particularly in Belgium. Let's move on to dosimetry. It's been a strong first half of dosimetry, with order intake reaching an order record of 37 million. The 20% uptick is linked to demand for conventional radiation therapy and proton therapy quality assurance solutions, as well as 2022 modus acquisitions. Sales are up 23% to €33 million, with around €1.5 million attributable to Modus. Backlock also increased to a record high of €35.6 million, growing 47% from the end of 2022. This excellent level of sales contributed to dosimetry rate increasing more than 200% to €3.2 million. On the product side, DOSEX, a next-generation electrometer, was launched in April. At Estro, we were pleased to demonstrate a great patient QA software, MyQA Ion 2.0, as well as launching a radiation oncology risk management software called MyQA Proactive. During the period, we were pleased to build on the strategic alliance first agreed with Candidas last year, in August 2022. signing a distribution agreement enabling users to buy the combined MyQAion and Delta 4 Phantom Plus directly from IBM. I know we'll hand over to Soumya to take you through the financial statements.

Thank you, Olivier. Good afternoon, all. First, looking at the P&L, you will note that group sales grew by 6%. This is largely attributable to other accelerators' backflow conversion, excellent dosimetry sales, and services growth, but was impacted by PD backflow conversion and the comparator with 2022, which included certain weatherford-related impacts. While G&A expenses were strongly controlled and even beat inflation, rising by just around 1%, there was an increase in sales and marketing and R&D expenses with inflation, higher level of travel and marketing expenditure as we prepare for future growth and product development. I'd also like to highlight the impact of currency fluctuations in the period, which had an impact on our financial result, as well as the tax line that increased as we expand into new geographies, especially in Asia. The above impacts contributed to a net loss of €27 million for the period. Now moving on to cash flow. Operating cash flow of minus €43.7 million was impacted by a large inventory increase and an uptick in down payments to suppliers as the company geared up to deliver projects in H2 and beyond, in particular in the proton therapy and industrial businesses. As outlined previously, H1 has seen significant levels of investment across the business, including in digital costs. Cash flow here was also impacted by medical device regulation costs and by a minor acquisition in the radiopharmaceutical business. Finally, on the balance sheet, I won't go into much detail, but I would like to highlight the solid balance sheet with a high level of inventory in preparation of backlog conversion and a net cash position of €61.7 million. I now hand back to Olivier to take us to the outlook.