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Hello and welcome to IBA's half-year 2024 results conference call. All participants are currently in listening only mode. The question and answer session will follow the formal presentation. I will now hand over to Olivier Legrand, Chief Executive Officer of IBA.

Good afternoon and thank you for joining us on today's call where we're going to talk about the H1 results. I'm joined today by Henri, our Deputy CEO, and Soumya Chandramouli, CFO. Before we start, I would like to draw, as usual, your attention to the company disclaimer on a forward-looking statement. Here is an overview of our call today. I will start with a summary of IDA's performance and progress in the first half of 2024. as well as the performance of the proton therapy and dosimetry businesses. Henri will then share an update on other accelerators, including Pantera. Soumya will then provide commentary on the financials. Before finally, I will talk you through the outlook and then open the line for questions. It is snapshot of our three financials. I'm pleased to report that the group revenue increased by about 22% to €216.5 million, driven by accelerated backlog conversion and growth in services. The group EBIT was €0.04 million, which is a strong improvement on the same period last year. Group order intake was strong at €113.9 million, with a particularly strong first half for other accelerators. Despite the acceleration in converting the backlog, overall group equipment and service backlog remains quite high at 1.4 billion euros. Our balance sheet continues to be healthy with 60.2 million gross cash and 21.7 million net cash, position at the period ends, providing us with stability and the flexibility we need to operate. This slide will be familiar and show you the key statistic. To pull out here is the completion of our B Corp recertification, which has seen our score increase to 114 points, placing us in the top tier globally. of these four sustainability streams and will provide updates on significant milestones as they arise. I now hand over to Soumya who will give you some context on top line financial from the first half. Soumya.

Thank you Olivier. Hello everyone. So the next few slides outline some important figures for the half-year 2024 results. We'll start with revenue, and as you can see, we achieved double-digit revenue growth for the second time in a row, driven by accelerated backlog conversion. Other accelerators on their side had an exited first half with a 70% increase in revenue. Proton therapy also saw growth, while dosimetry had a slightly more challenging H1 that we'll discuss a little bit later. Next, let's take a look at order intake. Order intake for the first half is quite encouraging, albeit a slight decrease on last year. It's worth noting that Dysimetry had had an all-time record in terms of order intake in H1 2023, while this year it was other accelerators that is a top performer. And finally, Proton did show a modest first half, but post-period we announced a deal for two Proteus One solutions with UPenn, bringing us to a total of three rooms sold to date. Now, moving on to backlog, the overall group backlog remains high, as Olivier said, at Euro 1.4 billion. And you can see here the breakdown across the business and how it compares to previous years. We have been pleased at the rate of conversion in H1, particularly in proton therapy and other accelerators. And we continue to remain committed to keeping up this good pace of backlog conversion over the second half and beyond. And let's take a look at the key figures for H1. I'll pick out just a few things here. Rebit reached break-even, reflecting improved gross margin, and that was really thanks to strong backlog conversion, but also continued growth in our service revenues. We're also reporting a net loss now of €10.3 million, which represents an improvement from last year. Quite a strong one, actually. And along with the positive net cash position, we maintain Euro 60 million in a broad short-term credit lines as of the period end. And I'll hand back to Olivier as we look into each of the business areas.

Thank you very much, Soumya. Let's move on now to a deeper dive of the proton therapy business unit. Proton therapy currently has 35 projects under construction or installation, including good progress. on a major Spanish and Chinese project. Equipment revenues increased by 20% with particular progress on shipments and installations. Under intake of 35 million euros is mainly comprised of contract for a Proteus One system with Yale New Haven Health and Hartford Health Care with activity continuing post-period as we secure the memorandum of understanding with our long-standing partner, the University of Pennsylvania, for two side-by-side protease reproducing. During the period, we were also pleased to attend the inauguration of the CGN state-of-the-art factory in China for the production of Protease Plus equipment to support further inroads into that geography. On the research front, the results of a multicentric phase 3 proton therapy trial in head and neck were presented by Dr. Frank of MD Anderson at ASCO. The results showed evidence of reduced side effects with proton therapy compared to standard of care. Elsewhere, IDA continues to progress research on dynamic arc and conformal flash in conjunction with collaborators including Corwell Health and Penn Medicine. which are paving the way for future innovations and maintaining our competitive edge. Our proton therapy equipment backlog stands at 473 million with a global pipeline of projects as outlined on this map. IDA continues to lead the proton therapy market, securing 50% of new proton therapy sales in H1, which actually goes to 75% market share if we include the sales announced this week. We know all the 43% share of proton therapy home currently in operation globally and a 42% overall market share. Proton therapy order intake in H1 was €35 million, boosted by the sale of two proteins, one post-period, as we have discussed. increased by 13.3% during the period, driven by strong backlog conversion, cost improvement, and growth in service. The almost 20% growth in equipment revenue was reported by the successful shipment of four units to customers in the U.S. and the EU. In particular, good progress was made on the construction of equipment for the 10th Spanish Proton therapy machine and on the project under installation in China. Two new installations also began during the period. Service revenues grew by 8.8%, boosted by the three sites that began operation in 2023 and several microcontract renewals. Favorable foreign exchange rate impact also contributed to this growth. Revit improved to minus 10 million euros, benefiting from a better project mix, accelerated backlog conversion, and growth in service, reflecting the stabilization of project costs and better margin management. Moving on to dosimetry, we continue to make good progress against our objectives. In particular, the completion of the RadCal Corporation marks a significant expansion of the team's medical imaging quality assurance portfolio, as well as its U.S. presence. Taking a more detailed look into dosimetry performance, I was pleased to secure $31.5 million in order intake. Backlog remains high, with a slower start to the first half. Conversion is expected to accelerate in the second half. Wider macro factors continue to impact dosimetry, leading to the decrease in revenues in the first half. China's anti-corruption program has led to slower decisions from potential customers. In addition, IVA has not been immune to the wider MR-Linac market volatility. Dosimetry has seen an associated decrease in rebate, further exacerbated by inflation in Germany. I will now hand over to Henry to provide an overview of other accelerator performance during the first half of the year. Henry, to you. Thanks, Olivier, and greetings, everyone.

We are pleased to have sold 14 machines in the first half, up from eight machines in the same period last year. Radio Pharma sold a cyclone icon and a cyclone key during the period, continuing to demonstrate the successful market adoption of these novel machines. I'll go into more depth on Pantera progress shortly. The industrial business has seen a particularly strong period with revenues up 200% as the backlog converted, and we continue to develop or software capabilities with initiatives such as the in or digital portal that will pave the way for more predictive maintenance of our systems.

On to the next slide.

We thought it would be helpful to outline more on the Pantera initiative, a joint venture between IBA and STK-CRM. With recent sector deals outlined in the top right of this slide, the radiopharmaceutical market is growing in prominence across media and the market. You will see here a powerful infographic based on the data from the Financial Times on the potential size of this market by 2032. Pantera is specifically focused on the supply of Actinium-225, an isotope with tremendous potential in oncology therapies, yet with a critically limited supply. Pantera is making progress on its ambition to become the leading global supplier of Actinium to date Four agreements have been signed for early supply, including with Bayer. Pantera partnership with TerraPower is progressing well, with the first shipment of thorium-225 completed, which will in turn support the production of early supply levels of actinium. The next key milestone will be the start of this early supply actinium, followed by the start in 2025 of the construction of a large-scale commercial supply facility. Looking now at the financial performance of Odor Accelerator in more detail, we are pleased to see revenue growing by almost 70%, with equipment revenues more than doubling, and an uptick in services, both strongly influenced by the growing industrial business. The strong rebate is particularly related to the conversion of high-value backlog as well as growth in services. I now hand over back to Soumya to take you through the financial statements.

Thank you, Henri. Now, first let me know the P&L. We've had a pretty good first half. Group sales grew by almost 22%, driven by accelerated backlog conversion, infusion therapy, and other accelerators, alongside services growth across the board in all businesses. Growth margin increased to 33.8%, an improvement of more than 7%. as the proportion of other accelerator revenues increased, and PT project costs stabilized with a few minor one-offs, a few positive minor one-offs. Overall, OPEX increased in line with expectations, with a planned increase in selling and marketing, and R&D expenses, as the group continues to invest heavily in future growth. The G&A expense line was limited to inflation, while R&D rose to around 13% of top line. Other openings were also impacted by some internal reshaping expenses and the cost of deployment of some major software streets that cannot be capitalized anymore under IFRS. The continued hyperinflation in Argentina drove FX losses and strongly impacted the financial expense line. It's worth noting that the share of loss of equity accounted entities included Pantera for 1.1 million. From a tax perspective, the tax level dropped to more normal levels after some one-off items in 2023. As a result of all this, IB reported a net loss of €10.3 million compared to a net loss of €27.3 million in 2023. Moving on now to cash flow. Operating cash flow of euro minus 60.7 million was driven by an increase in inventory and down payments to suppliers as a result of the acceleration of backlog conversion we already discussed. It also included a large receivable that was paid out just after period by the customer. Including this payment, operating cash flow would actually have been more than 20 million euros better than reported at period end. Cash flow used in investment activities increased to €10.8 million, driven by the acquisition of Radcal Corporation and a convertible loan to Pantera, partly offset by a decrease in normal CapEx for around €4.4 million. Cash flow used in financing activities reflects the dividend paid on 2023 results and prepayments on debt. It also includes cash received through a credit insurance claim that was repaid to the insurance company immediately after period end, following repayment by the customer of the related overdue receivable that I just mentioned above. Finally, on the balance sheet, well, IB's balance sheet remains solid at the end of the first half with 60 million gross cash and 21 million net cash. The reduction in our cash position is really in line with our expectations and a result of the temporary increase in working capital as we continue to procure inventory for our ongoing contracts. In particular, some large projects such as the Spanish 10-room Proteus One project and several industrial projects. It's worth noting that IBA also had 60 million euros of undrawn short-term credit lines still available and all bank governments have been complied with. I'll now hand over to Olivier to speak about guidance and outlook.

All right, turning now to Outlook. Indeed, looking ahead, we remain confident about performance for the remainder of the year and beyond. We expect continuous strong revenue growth and margin improvement alongside a highly active pipeline across all businesses. We are reiterating our midterm guidance today as laid out at the full year, and note that we are making strong progress toward meeting this midterm guidance. The strong revenue growth in the first half reflects IBA's commitment to the acceleration of backlog conversion. The improvement in REBIT compared to the same period last year highlights this revenue growth and also the margin improvement. Looking at our aim to approach 10% REBIT margin by 2026, I would like to touch upon how we plan to achieve this. In Proton Therapy, our high backlog and accelerated conversion will be reinforced by the market momentum helping to grow our top line. Number two, at the gross margin level, this will be supported by growing our client base and service profitability. Number three, while we will continue to see an increase in OPEX as we grow, we expect to be able to leverage the scale at a fast-growing activity. Number four, its dosimetry, we expect to continue to see a very active market alongside a more diverse mix of our portfolio to positively contribute to the group credit margin. Number five, I think, in other accelerators, we expect a continuous strong growth with profitability levels maintained. And finally, the company remains on track with capex guidance with 4.4 million of capex spent in the first half of 2024. As a result of this, we reiterate our outlook at this time. Finally, here is a look at the key dates on our financial calendar for the rest of the year. We're looking forward to attending Astro and EINM in September and October. We are also planning a capital market day in the second quarter of 2025, and we'll share more detail in due course. Also, a quick heads up that Sumia will be taking a well-earned break for a few months, but we'll be back and running ahead of full year results from January 2025. During this period, for any investor relation needs, you can, of course, reach out to Thomas Pévenage, who has been supporting investor relations. For anything else, you can, of course, always contact him. I would now like to open the floor for questions. Please raise your hand to ask a question, and we will call on you by your name.

hello if i look at just since the question raised is the first question matters to you that's yes you can hello hello hello good afternoon you can hear me yeah okay thank you um thank you for taking my questions i actually have three i will go buy them one by one if that's okay So, first and foremost, the gross margin, which increased to 700 plus basis points to 33.8%. It was driven, or you mentioned, driven by an increase in the proportion of other accelerators, revenue, improvement of project costs, estimates, and a better mix in PT. um could you maybe elaborate on the importance of those different elements and what should we expect on the front for h2 also buckling down on your um your outlook statement in which you say you anticipate a similar improvement in h2 so should we anticipate that gross margin in h2 also to improve markedly or is that not necessarily the case that would be my first question thank you

Okay, yeah, I can take that. So, first of all, if you look at the overall improvement margin, I can explain the few factors that have contributed. Indeed, firstly, we've had practically a doubling of revenue in the industrial business, and that is at good margins, higher than the average margins of the group, and that has contributed positively to a growth of the gross margins. Secondly, also because the volume itself has led to operational leverage on the costs that can be allocated to that business. Secondly, in the Proton business, what we've seen is that after a couple of years of inflation and supply chain issues where we had integrated a few buffers into our cost estimates on projects, we are seeing them coming back to normal. And so we have adjusted our overall project costs downwards maintaining a few buffers still. And that has led to, on the one hand, a small catch-up effect from the past where we actually now readjusted the project margins. And on the other hand, we will continue going forward to recognize our revenue at higher margins. And then there are a couple of smaller one-offs which may have – which have affected the first half, which could potentially also add a few – a million of extra margin i would say so overall if you look at these three impacts these are really what have contributed to the increase from last year to this year and we expect that the overall margin levels that we have now will be maintained maybe slightly less because we had a few one-offs but we should remain in this area going forward thank you you can go on with your second question

Yeah, thank you. Maybe just buckling on the book to build, because the book to build and equipment sales, it came in below one. I also saw order intake is like a little bit on a cyclical low. Should we hence anticipate that the growth going forward for next year will peter out and how should I tally that with your midterm guidance and also could you maybe give us a little bit of a view of what's happening in the market for proton therapy I think if you were to take a picture now the situation will look very different after the order we just got from Penn which

then the much better ratio and what's a cycle in important therapy you know six months i don't think it's a cycle uh 12 months is more relevant in my opinion uh and i think the the latest order uh which is a memorandum of understanding but with a significant non-refundable uh down payment um is showing that the market is very active. So, going back to your question on the dynamism of the proton market, I think the pipeline looks pretty good. Our competitive positioning has improved over the years, and certainly since Varian left the market. And so we're very well positioned to continue to build you know, a book to build that will fuel the future growth. And once again, if you were to calculate it today, after the order in 10, it will be very different.

Okay, so you anticipate to be able to announce more deals in the second half? Yes. Okay, thank you. Now maybe last question is on the working capital requirements, gone up quite substantially. You mentioned supplier down payments and inventory build-up. Could you maybe elaborate on how much of this inventory build-up is actually tied to execution of the present order book? And how much of that inventory build-up is actually tied to future contracts that you still anticipate to sign? And then maybe specifically on the Spanish contract, where do we sit in terms of working capital requirements and when do you think actually overall that you can translate the better profitability in free cash flow generation from an operational perspective?

Yeah, so I think that, so Matthias, I think you remember we had said when we had spoken last that the Spanish contract has quite a big impact on our overall working capital because On most contracts, we receive around 20% to 30% down payment. On this one, it was only 10%. So on a $200 million contract, you can imagine, you can make a quick calculation, 20%. That's more than $40 million of cash which was not received up front. Secondly, there was also a second payment that is usually made a little bit before shipment, and in this case, it is upon shipment. So that also leads to an additional down payment. cash flow gap, let's say. So overall, we're probably trailing behind by more than 70 million in terms of cash generation versus what we have in a normal cycle. Indeed, as you also mentioned, we have quite some order intake happening both in proton therapy and in other accelerators, and so we have been financing that so that we can make sure that we have sufficient inventory to allocate to our contracts. But I would say that that amount is much lower. We're probably speaking around 20 to 30 million euros per of inventory related to that over the past 12 to 18 months, I would say. So what we do expect is that we will continue to use up cash as we build up inventory and procure equipment for the systems I just spoke about earlier. We should go into a net debt position probably by year end or early next year. And then it will take 2025 where we will actually start to deliver these machines and start installation, get the cash from our customers to come back into a positive situation.

Okay, thank you. Very clear.

Thank you very much. Next in line is Laura. Laura, you can unmute. Good afternoon.

Good afternoon. Thank you for taking my question and congratulations on the results. A few from my side as well. First of all, how do you look at backlog conversion for H2? Because in the press release, you mentioned 19 systems to be installed and other accelerators still, but I was wondering, what about proton therapy? What does the backlog look like there? And then a bit related to that, you said that you still expect this year to be H2 weighted. Last year, H1 was a miss. So I was wondering to what extent we can assume a similar kind of catch-up in H2 versus what we have seen last year. And then a last question on... and the order intake there. Did I understand correctly that order intake in H1 was mainly radiopharma systems? And so I was wondering what we should expect in H2, given that you expect a catch-up of industrial solution, but then what about radiopharma? Do you still expect to see the same level of order intake as we have seen in H1? Thank you.

So on the backlog conversion in photon therapy, we are gearing up indeed. So we will continue to see an increase of the backlog conversion every six months. So we don't really specifically guide, but indeed we see a higher backlog conversion in H2 this year versus H1. and we can expect to see even more next year in 2025 to reach our altitude as I call it now in 2026. Maybe Soumya on the second question?

Yeah, sorry, Mara, could you just repeat it?

It was about the fact that you gave it again for the year to be H2 weighted, and last year H1 was a miss, so we had a huge catch-up in H2, and I was wondering to what extent we can expect a similar kind of catch-up, or if it would be lower this year.

Well, you know, last year was minus 20, plus 20, but if it's zero... No, but jokes apart, I think we do expect H2 to be better than H1. We mentioned there should be more backlog conversion in proton therapy, or he will comment just after this on the industrial evolution. But I do think that if we maintain OPEX levels in control, as they have been very much so in the first half, and have continued backlog conversion and top-line growth in H2, then we should be able to do better than the zero we did in H1.

Okay.

Since we don't give any specific guidance on 2024, I can't tell you much more than that, but I guess that's a signal.

Thanks. Laura, on a full year basis, we see strong commercial momentum in order to accelerate up. It's a fair observation to say that in the first half, we've converted more of that potential in radiopharma than we have in industrial. What we expect for the rest of the year is continued strong momentum in radiopharma and acceleration in industrial because we knew starting the year that our pipeline was harder than we can load it in industrial.

Okay, thank you very much.

Thank you. Thank you. Thank you. Next in line is we kill the click.

The floor is yours. Good afternoon.

So a couple of questions from my end. I will maybe do them one by one. The first one is a bit of a technical one. Just on the net cash position that you reported, so around 21 million, I think if I use the historic formula, I derive a bit of a different number, and I think this has something to do with the change in short-term borrowings and those insurance payments. So I'm just trying to figure out, because if I do the calculation, I come at a roughly flat net debt level.

I'm not sure what you mean but we can try to get offline but just so to clarify on the insurance claim which was mentioned indeed it didn't have any impact on the H1 numbers because we received the cash from our insurance company in H1 and then just after period closed we were paid by our customer and so we reimbursed the insurance claim and maintained the cash from the customer so it was completely neutral but if you want to go into it a bit more detail we can do it offline

Yeah, okay, and it's just, if I deduct from the cash the short and long-term debt and the lease liabilities, which is your definition as well. Yeah, okay, I see what you mean.

Yeah. Okay, we can just shake it. Maybe there were some exceptions we had to adjust for. If I just can look at that with you separately.

Okay, no, clear. Secondly, on the gross margin, so you mentioned that the level of H1 is expected to remain broadly stable going forward. However, how I would look at it is maybe that in the second half, your proportion of proton therapy will increase. So I'm just wondering how that will... how that will play out, how the lower margin in proton therapy, for example, could then be offset by something else just to understand this a bit better.

So, as I mentioned, I think you may have read, I mentioned there were a couple of one-offs in the first half. But maybe one thing was also I forgot to mention was that we also had a slightly lower margin contribution from the dosimetry business. in the first half because of the lower revenues. So what we should see is that one should compensate the other in H2. I'm not sure what you meant by the lower proton therapy margin because as such, going forward now, we should continue to recognize revenue on the reviewed projects at the higher gross margin that we've had in H1. So overall, indeed, I think all of these should contribute to maintaining margins slightly at more or less the same level as H1 or maybe just slightly below.

Okay.

Yeah, no, it's clear. I think a final question that I have is on the Pantera JV. In the press release you still reiterated that you expect to start the groundbreaking of the of the large production facility in 2025. If I'm not mistaken, you mentioned that the project cost of this would be somewhere around 100 million and that you were looking to maybe attract a partner for that, given that we're already getting closer to the year end. I was just wondering if there's no partner by let's say early 2025, how would you finance the operation then? Would you do some cash injections in the GV yourself or would you maybe prefer to delay the project altogether given that you're also a bit constrained with your working capital at the moment?

Okay. No, so first of all, I think Pantera is really very much on track from all angles. You've seen that we've had quite some commercial inroads, so we've signed several contracts with pharma, several of them large pharma. We've also brought in the first shipments of thorium into Belgium to produce the early supply, and the construction of the early supply unit in Mull is well on its way, orderly completed. And indeed, the construction of the large-scale facility will cost more. I don't remember having mentioned that amount specifically, but certainly it's a large amount. On the other hand, right now we're really evaluating various options for Pantera, and we will inform you when we know exactly where we are and which option really provides the biggest value for Pantera. So for now, no issues and no delay on the plans that we just announced.

Okay. Maybe just a small follow-up on that. I'm just wondering on the TerraPower... deal that you currently have. I understood correctly that no actinium has been delivered from your end and you already received it from TerraPower. But is this in the period 25 till 2029 then when your small scale production facility is up and running? Will this be a positive contributor to the equity FNC line, or will it be a drag, and is it more in, let's say, preparation and getting your foot in the door, or should it be negligible?

Well, it's a bit of everything. So certainly getting our foot in the door is an important portion. Obviously, you may want to comment in addition. But just from a financial standpoint, we expect that Pantera will quite fast start to generate some positive impact for IBA. I mean, at least from a purely Pantera P&L standpoint. Now, certainly the amount of that positive impact will depend on the amount of sales that will be generated by Pantera on its early supply, but we are well on our way to getting there certainly for now. But you're right, the actual really major impact from a P&S standpoint will come once the commercial supply will be on its way from 2029.

Okay, thanks. Looking forward to this. I don't know if you want to add something.

Thank you. David, you are next in line. You can unmute. Good afternoon.

Good afternoon and thank you for taking my questions from First, if you can come back, please, on the growth margin and the improvement of the project, in particular the improvement of the project cost estimate. Can you very roughly quantify the impact of this backward revision? And also remind us if you had the opposite impact last year. So basically that we have, let's say, yeah, you had a negative impact last year from a backward revision and this year a positive impact. That's my first question.

Okay. So, I mean, I don't want to give any specifics on it, but indeed last year we had two impacts. Firstly, indeed, we were recognizing revenue on a lower percentage basis on these contracts. And you remember last year we had a very large inflationary impact in Belgium where half of our employees are based and we had more than 11% inflation on salaries. So that had a really big impact overall on our P&L and specifically on our margins. So this year, we revised our project costs down. I would say it's had a couple of percent impact overall in terms of improvement. But because we now continue to generate revenue and margin at the same level as revised margins, we should be able to catch up and continue on that level.

Okay, thank you. And I guess a quick follow-up on this one. I guess going forward, and especially taking into account the 10% EBIT margin guidance for 2026, that we should expect several percentage points of further improvement in gross margin from this year to 2026. That is correct?

Well, again, achieving the rebate margin is a combination of gross margin and OPEX. And I think Olivier mentioned it earlier, but we maintain our OPEX pretty much under control. And while we expect that our top line will double, that will generate... an absolute value of higher gross margin. So if we're able to keep our costs under control, which we do plan to do, that will also kind of contribute. So it's not just the gross margin. It will also come from the overall absorption of OPEX by a larger gross margin and absolute value.

Okay. Thanks very much. And my second question is actually, it's a good follow-up. Let's hit on OPEX. can you um quantify a little bit more let's say a bit more in in detail your um your guidance of opex well under control for for the year 2024 so when you we look at each one i think you had a a sort of soft guidance in R&D, for instance, of, let's say, the higher end of the 10% to 12% of sales range. So, let's say, 12% for this year. Is this still valid? Yeah, kind of this type of element. And also, a bit related to OPEX, but we had some non-recurring, let's say, or exceptional expense in H1. Should we expect more of that in H2? That's my second question.

Thanks. Yeah, okay. So, if you look at... R&D overall. We did around 13% on top line in H1. I think maybe we'll go down slightly to around 12% or so, but that's more or less where we expect to land. So I think you should expect that it would be more or less the same amount, maybe in the same range for H2 in terms of R&D. In terms of the overall OPEX, I think we should remain very close or just maybe slightly above H1 for H2 because we do see that sales and marketing expenses, for example, are slightly H2 skewed because all the trade shows and you mentioned Astro, E&M, et cetera, happen in H2.

Okay. So higher than, sequentially higher, but not too much.

No, I think maybe slightly higher, but as you mentioned, we also have more backlog conversions, so one should compensate.

Okay, thanks. And last question, a more general question on the demand side. Okay, you've addressed the point that the pipeline was well-filled or active pipeline. Can you comment, let's say, maybe zooming on PT and other accelerator? What is your view? Maybe not just for 2024, but also 2025, 2026, taking into account that, okay, you've got, of course, this 15% top-line CAGR ambition, but then, okay, the question is also what's next? So, okay, of course, you've got this very large Spanish contract, But once the Spanish contract is executed, would you fear a drop, let's say, if the order intake does not move substantially up from here where it is? Thanks.

Well, there are different drivers, of course. And if I start with proton therapy, I think the pipeline is quite easy. We know that how unpredictable and volatile it remains, but I would say the overall dynamic in the market is very positive. If I can just comment a few seconds on the PEN order, I think this is quite a milestone in my opinion because it's one of the thought leaders that is contributing to the expansion of the proton therapy as a modality. And to see them having such a capacity is a very strong sign of their commitment to proton therapy. And many people are looking at them. We see, and by the way, also the fact that they bought a double protease one is also a confirmation that our strategy to go on the market, focusing on the single room uh way to go about it is the future so the future of multi-room outside of china let's say is a multi-protease one and to see a big big player like that going into this embracing this vision as well is a very strong sign of the quality and the strength of our value proposal and so it's kind of showing the way and as i said many people are looking at them So now we have, you know, with Proteus One, a very versatile product that can answer the single-room segment, but also the multi-room segment, once again, outside of China, for sure. So that's number one. And we are in conversation with many, you know, institutions, that have already proton therapy and want to expand or some others that are not in proton therapy and want to move into the space because they fully understand that it's part of the future when it comes to oncology treatment. The other thing is, it might seem a bit anecdotical, but it's everything but anecdotical is this clinical trials that the result of the clinical trial published by MD Anderson because in the history of proton therapy the first time there is level one evidence of what we claim from a number of years which is that proton therapy can control the tumor but also dramatically reduce the side effect and by doing that offer better quality of life to the patient but also reduce the cost of the overall management of the patient, so to speak. So suddenly you have a level one evidence that, you know, proton therapy is not expensive because with reduction of side effect is cheaper to treat with proton therapy, even though the treatment is more expensive. The overall cost of the patient management is less expensive than many other way to treat it. So it will take some time to spread around. And there is more and more, you know, trials going around, but I think through this publication, the medical relevance of proton therapy went up dramatically. And therefore we see the number of projects that we have in the pipeline is actually very significant and not decreasing. It depends on the jurisdiction, but certainly the US is very active. Asia is very active. China is very active. Europe, somehow, we expect to see more projects in Europe as well, in some jurisdictions. So I think the signals are quite good, and it will be enough to continue to fuel some growth. So back to your question, post-COVID, post delivering the Spanish order, I don't expect to see a drop. It will be fueled by new project and of course by service growth. We're still going to, I think it's about doubling the install base in Proteus 1 when we deliver the backlog that we have secured. So it will also offer very nice platforms to continue to grow post-2026. And for the other division, maybe Henri wants to comment as well.

David, thank you for the question. I think if I look at industrial solution, in a few words, I would simply say that we see indeed increasing commercial momentum on the back of greater adoption of accelerator-based technologies for sterilization. And also from where I sit, I'm very confident on that development. And if I tell you about my solution, I'm equally enthusiastic about the commercial prospect. As we are able to cast a quite wide net, we have a wide range of machines that can deploy for a very wide range of applications. Diagnostic, Theranostic, Indiagnostic, Oncology, Cardiology, Neurology. And I see that with a range of machines we can cast as well a wide net from a geographical point of view. We can serve lower income markets as well as very sophisticated advanced markets. So those two elements are for me commercial dynamics that are supporting our commercial development. Maybe the last one is more longer term, but I see new applications emerging. And we've briefly touched upon it, but water treatment is one as we bake the next chapter that shows promising signs and will contribute to our growth momentum for the next horizon.

Okay, thank you very much.

There's a follow-up question from Matthias. Matthias?

Yeah, thank you. I still have a couple. Maybe on the execution of the backlog and VT. Historically, this has... incur some delays. Could you maybe give us an idea how you assess the risk of the delays at this point and why? And following up on that question, if I look at the Spanish contract, a lot of the payments are due towards the end of the contract. So it's acceptance and delivery, I believe. Should we see those contracts, so these different rooms as separate contracts, and so each time the delivery is separate, or is it just one large contract, given that it's actually one large buyer, and so do all the rooms need to be delivered and accepted before they will be paid? That was my first thought.

I have two other. Don't worry, I will not cut you out. The Spanish contract, the payments are linked to every single room. So every time we ship one, we get the payment. So it's not in one go. And from what we see, there is a significant progress on their side, on the building of the different facilities. So we are reasonably confident. that we will be able to deliver a significant amount of them starting in the quarter for next year. So it will be spread across quarter for next year, 2026, and maybe a system will be in 2027, but not more than that. And every time we will be paid.

And for the overall order book, if I may ask, how do you assess the risk there? And why are you probably more comfortable that there will be less delay than previously you had when you had like record order books for execution?

I think, you know, the short answer to this question is that we slowly have almost only Proteus 1. And except for a few Chinese orders, we don't have any Proteus Plus in the backlog. And most of the Proteus Plus, if not all the Proteus Plus that we have in the backlog, they have started installation. So a lot of the volatility from the proton therapy segment was coming from Proteus Plus, which was last year. which makes me more confident about the prospect of backlog condition. Thanks to that.

Thank you. Maybe following up on the level one evidence, you clearly state that this is potentially or is big news because it proves that PT can be very competitive with traditional RT despite a higher initial cost. But I just want to buckle down on the levers you have to further bring down the costs. Could you maybe just elaborate on how many levers there are and what is the progress of those projects?

I think the biggest lever we have is on the workflow. I think the more, the shorter, let's say, the treatment we take, the more patient our customer will be able to treat. or they will be able to pay for revenue. So that's why hypo-fractionation, dynamic arc, even flash to the ultimate level, is for me the biggest level to actually increase the throughput in our center, hence reducing the cost of the treatment. On the CAPEX side, I think we can still improve, but more marginally. Yeah, I think workflow is the focus. And flash, hypofactionation, that's the way to go.

Thank you. Maybe last question then. You gave an indication that you probably will arrive net debt by the end of the year. would you maybe just elaborate under which assumptions that's been done for order intake? Because as far as I know, order intake triggers down payment, so I guess that also plays a role in your working capital requirements. That's great.

Soumya?

Yeah, indeed. Obviously, order intake has an impact, but I think the biggest impact, so let's say that there are two things that can have an impact on this cash position. One is the Spanish contract, where it can It will continue to have an impact depending on how much we procure on that project. And the other one is the overall order intake that we will have in all our businesses, but, of course, in particular in proton therapy and in industrial. So I can't give you an order of magnitude as such because we don't guide in specific order intake, but, indeed, one way or the other, it could have an impact positively or slightly more negatively.

Okay. Thank you. We have one more question. We have David.

Yes, thanks. Thanks. One follow-up on China. Can you comment a bit on the Chinese market and maybe the regulatory environment? You've discussed also about the anti-corruption. Okay, so that's more on the market. Let's say, how do you see the pity market evolving in China? And then related to that, how is your partner progressing? What is the status of your collaboration with CGNNT, maybe technically and commercially? Thank you.

Okay. Yeah, I think on the Chinese front, let's say the new private plant has, I think, allowed for 40 licenses. in China. So it's a massive increase. So we can expect the market to grow significantly in China in terms of demand. So it looks quite promising. Our Chinese partner is gearing up. They have built a factory. As we speak, they have the first cyclotron in their factory. It's a cyclotron that we have produce here partially, and they are taking over. So they're slowly taking over the production of it, and they will start their first installation for the first contract they have sold, I think it's in October or November. So they are moving upstream to being able to demonstrate that they can complete a project by themselves. Of course, we are supporting them to do that. And that's really the focus now is to make sure that this first project is a success for them so they can gain full credibility on the market. When it comes to multi-room, they are frontline in the go-to market in China. Of course, there as well, we are there to support them. I think they're very well positioned to take a similar market share than IBA globally on the Chinese 40 licenses. And being said that, the 40 licenses, part of it will go to Ardron, so carbon heavy iron type of, I think about 10 of these licenses will go to heavy iron. So it remains 30 licenses, and some of them will be single room. So we expect CGM to be in a position to take leadership on the multi-room part of the licenses, and we will be present as a lead then on the single room segment.

Thank you. Very helpful. Thank you. We have no more questions.

So I guess I will close the call and thank you all for joining today. Thank you, Henri. Thank you, Soumya.

Thank you, everyone. See you soon.

See you soon. Thank you very much.

Take care.

Thank you.