IBA Reports Full Year Results for 2017
Louvain-La-Neuve, Belgium, March 22, 2018 - IBA (Ion Beam Applications SA, EURONEXT), the world's leading provider of proton therapy solutions for the treatment of cancer, today announces its audited consolidated annual results for the 2017 financial year.
| FY 2017|
| FY 2016|
|PT & Other Accelerators||233 584||280 666||-47 082||-16.8%|
|Dosimetry||53 837||48 108||5 729||11.9%|
|Total Net Sales||287 421||328 774||-41 453||-12.6%|
|REBITDA||-4 740||42 690||-47 430||-111.1%|
|% of Sales||-1.6%||13.0%|
|REBIT||-11 596||37 137||-48 733||-131.2%|
|% of Sales||-4.0%||11.3%|
|Profit Before Tax||-19 607||27 899||-47 506||-170.3%|
|% of Sales||-6.8%||8.5%|
|NET RESULT *||-39 201||24 440||-63 641||-260.4%|
|% of Sales||-13.6%||7.4%|
|* Including exceptional deferred tax impacts of EUR 16.1 million in 2017|
Olivier Legrain, Chief Executive Officer of IBA SA commented: "2017 was a challenging year for IBA, reflecting a slower market and individual project delays. However, with the world's most attractive proton therapy offering, we have clear competitive strengths and a strategy to continue to profitably capture projected market growth over the long-term.
"The Group has taken a number of actions to streamline its business with a view to returning to a positive REBIT and net profit after tax in 2018. These include reduction of operational expenses, and productivity measures, which enable us to deliver our offering to our customers faster and at a significant advantage compared to competition, thereby improving our gross margin.
"Although the proton therapy market remains lumpy, it is growing steadily over time and we continue to have a robust equipment and services backlog with revenues secured over three and up to ten years respectively. The quality of our backlog and the fastest demonstrated times from installation to customer acceptance position us optimally to leverage the expected growth in proton therapy and maintain our position as market leader. In addition, Dosimetry had a strong year with good backlog conversion.
"Proton therapy offers great potential in the treatment of many cancers. IBA is focused on enabling the clinical potential of proton therapy by 1) growing the proton therapy market by encouraging the adoption and awareness of proton therapy, including through education and facilitating the generation of a strong body of supporting data and 2) increasing IBA's market share by maintaining the most innovative solutions, the swiftest project execution, proven upgradability and best system reliability, supported by our global network of best-in-class partners.
"We remain confident in our long-term growth potential. Although current market conditions make it harder to predict our near-term growth trajectory, we will keep the market updated on our progress as the current year progresses."
- Total Group 2017 revenues of EUR 287.4 million, down 12.6% (2016: EUR 328.8 million)
- Proton Therapy and Other Accelerators revenue of EUR 233.6 million, down 16.8% due to project rescheduling primarily as a result of customer construction delays, a cyclical slowdown in the overall proton therapy market and aggressive activity by competitors to boost market share
- Dosimetry revenue up 11.9% to EUR 53.8 million due to strong conversion of backlog and higher sales both from radiotherapy and proton therapy related business
- REBIT margin of -4.0% impacted by low Proton Therapy and Other Accelerators gross margin
- Equipment and service backlog of nearly EUR 1 billion, comprising an equipment backlog for Proton Therapy and Other Accelerators of EUR 283 million at full year 2017 including upgrades and a growing services backlog of EUR 689 million
- Total Group loss of EUR 39.2 million affected by strengthening EUR vs USD and including a EUR 16.1 million deferred tax asset write-off mainly due to tax reforms and the impact of R&D tax incentives in Belgium. Without the tax write-off, the Group loss would have been EUR 23.1 million
- Net cash position of EUR -15.5 million at the end of 2017 compared to EUR 44.7 million at the end of December 2016 driven down by higher working capital requirements. The Group has sufficient credit lines from its banks to finance its cash flow requirements
- Order intake of five rooms comprising two Proteus®ONE* solutions sold in Egypt and Spain, one Proteus®PLUS* sold in Virginia, US and an additional Proteus®PLUS treatment room sold in Argentina
- Two IBA centers became operational in the US in 2017 and two more became operational in early 2018 in The Netherlands and the UK. Five site installations started in 2017 in India, Japan and the UK
- Completion of a review into Proton Therapy project management; enhanced systems in place and all projects on track with revised timelines
- Construction and installation timelines adjusted to reflect new project schedules
- A reorganization of the Group's Proton Therapy business unit as part of the plan to further enhance efficiency, project management and delivery, which took place in the fourth quarter of 2017, including appointment of dedicated regional project directors to address project management more closely with customer teams early in the building construction process and a headcount reduction to reflect current market conditions
- Significant progress in increasing speed of delivery, a major competitive advantage for IBA and our customers
- First patient treated post period-end at University Medical Center Groningen Proton Therapy Center within 13 months of installation of its Proteus®PLUS by IBA
- Testing completed post period-end with Proton Partners International at the UK's first high energy proton beam system following a record nine month installation in Newport, South Wales
- Accelerated initiatives to improve technologies, construction delivery, cost competitiveness and commercial reach, whilst maintaining tight cost controls and efficiencies
- Partnership with leading equipment and software provider Elekta, including joint software development and sales to advance proton therapy treatments
- Collaboration with VINCI Construction to provide dedicated proton therapy center design and construction support for customers
- Updated guidelines from the American Society for Radiation Oncology (ASTRO) and National Comprehensive Cancer Network (NCCN) further endorse proton therapy as a treatment option in the fight against cancer, with several new indications added in 2017
Post-period end summary
- First proton beam therapy patient successfully treated in The Netherlands, within 13 months of installation of the Proteus®PLUS solution by IBA at the University Medical Center Groningen
- Installation and testing of the first high energy proton beam machine in the UK completed at the Rutherford Cancer Centre in Newport, South Wales, within a record nine months from synchro-cyclotron delivery on site, demonstrating IBA's speed of delivery from contract signature to first patient treatment
- Dosimetry management team reinforced with the appointment of Jean-Marc Bothy as President, IBA Dosimetry
- Signature of three new contracts with Proton Partners International (PPI) to install three Proteus®ONE* compact proton therapy solutions across the UK. The contracts are subject to financing
The conference call will be held on Thursday, 22 March 2018 at 15:00 CET / 14:00 GMT / 10:00 EDT / 07:00 PDT and can be accessed online at:
If you would like to participate in the Q&A, please dial (PIN code 74532914#):
The presentation will be available on IBA's investor relations website and on https://iba-worldwide.com/content/full-year-2017-results-web-conference-presentation shortly before the call.
To ensure a timely connection, it is recommended that users register at least 10 minutes prior to the scheduled webcast.
First Quarter 2018 Business Update May 9, 2018
General Assembly May 9, 2018
First Half 2018 Results August 23, 2018
Third Quarter 2018 Business Update November 15, 2018
IBA (Ion Beam Applications S.A.) is a global medical technology company focused on bringing integrated and innovative solutions for the diagnosis and treatment of cancer. The company is the worldwide technology leader in the field of proton therapy, considered the most advanced form of radiation therapy available today. IBA's proton therapy solutions are flexible and adaptable, allowing customers to choose from universal full-scale proton therapy centers as well as compact, single room solutions. In addition, IBA also has a radiation dosimetry business and develops particle accelerators for the medical world and industry. Headquartered in Belgium and employing about 1,500 people worldwide, IBA has installed systems across the world.
IBA is listed on the pan-European stock exchange NYSE EURONEXT (IBA: Reuters IBAB.BR and Bloomberg IBAB.BB). More information can be found at: www.iba-worldwide.com
*Proteus®ONE and Proteus®PLUS are brand names of Proteus 235
For further information, please contact:
Chief Financial Officer
+32 10 475 890
Vice-President Corporate Communication
+32 10 475 890
For media and investor enquiries:
Consilium Strategic Communications
Amber Fennell, Matthew Neal, Ivar Milligan
+44 (0) 20 3709 5700
IBA is focused on creating a global proton therapy platform that is built for the long term and is optimally positioned to capture the projected growth of the proton therapy market.
Our growth strategy is focused around two axes: 1) growing the proton therapy market by encouraging the adoption and awareness of proton therapy, including through education and facilitating the generation of robust supporting data and 2) increasing IBA's market share by focusing on technology, speed of delivery and reducing cost.
This strategy is underpinned by our strong global network of partnerships and collaborations which is central to IBA being able to provide a full spectrum proton therapy offering that will remove barriers to adoption, and enable further acceptance and market growth.
Proton Therapy and Other Accelerators
| FY 2017|
| FY 2016|
|Net Sales||233 584||280 666||-47 082||-16.8%|
|- Proton Therapy||193 391||226 529||-33 138||-14.6%|
|- Other Accelerators||40 193||54 137||-13 944||-25.8%|
|REBITDA||-11 517||38 613||-50 130||-129.8%|
|% of Sales||-4.9%||13.8%|
|REBIT||-17 261||34 115||-51 376||-150.6%|
|% of Sales||-7.4%||12.2%|
Total net sales for Proton Therapy and Other Accelerators were down 16.8% year on year to EUR 233.6 million. This decrease is a result of:
- Lower sales in 2017 compared to 2016 with five rooms sold compared to 12 in 2016. This slowdown reflects the lumpy nature of the proton therapy market, which operates on three- to four-year growth cycles with slower years tending to follow higher growth years. The overall market trend remains positive
- Lower conversion of the Proton Therapy backlog due to customer building delays in around half of the Proton Therapy installations, with milestones shifted to 2018 and 2019. IBA completed an in-depth review of its Proton Therapy project management and has put in place enhanced project management systems
- Some one-off project cost overruns related to specific projects
- A more aggressive stance by competitors seeking to increase market share. IBA is confident that its focus on building a full spectrum cutting-edge offering, making its systems as affordable as possible and ensuring the fastest installation times on the market and superior operations and maintenance will enable it to maintain its long-term market leadership
IBA continued to see good Proton Therapy Services revenue growth, up 4.5% from 59.5 million in 2016 to EUR 62.2 million in 2017. Moreover, upgrades of IBA's installed base began to make a greater impact on the Proton Therapy and Other Accelerators business in 2017 with EUR 5.6 million coming from upgrades of existing proton therapy equipment, up 27% from last year. Both factors demonstrate the long-term sustainability of revenues as the installed base grows.
IBA sold 11 Other Accelerator systems in 2017, maintaining a healthy order intake in this segment. However, net sales for the Other Accelerators business segment were impacted by exceptional sales in 2016 resulting in a decline in Other Accelerator revenues of 25.8% year-on-year to EUR 40.2 million.
Services for Other Accelerators grew 13% to EUR 23.2 million due to a growing number of maintenance contracts and upgrades.
The improved performance of the combined Services for Proton Therapy and Other Accelerators resulted in this part of the business accounting for approximately 37% of total revenues. The performance also demonstrates the strength of the existing long-term contracts the Group has in place and helps to provide visibility with a backlog of EUR 689 million to be converted to sales over the next ten years.
Over the period, five new proton therapy rooms were sold by IBA. These were spread over customer sites in the US and Europe and include the first proton therapy system in Egypt, as well as a contract in South America.
Updates to US proton therapy policies and guidelines
Alongside our proton therapy customers and partners, IBA has a clear strategy to support the enhancement of clinical evidence supporting the adoption of proton therapy treatment and its use in a range of indications and to ensure the inclusion of proton therapy treatment into the critical clinical guidelines for healthcare systems across the world.
During the period, both the American Society for Radiation Oncology (ASTRO) and National Comprehensive Cancer Network (NCCN) expanded their indication policies for proton therapy, leading to greater penetration of the market for proton therapy in the US. The guidelines further endorse proton therapy as an important treatment option in the fight against cancer.
The body of evidence for proton therapy is growing with 620 proton therapy publications published in 2017 and a total of 160 trials active. IBA is committed to support multi-centric data collection initiatives in the US and Europe in order to accelerate the generation of clinical evidence regarding clinical outcome, cost effectiveness and patient selection criteria.
Moreover, IBA commissioned a study across a wide variety of proton therapy centers to give the Group a greater understanding and quantification of patient access to proton therapy in the US and Europe. In particular, the study shows that in US, hospital-based proton therapy centers, an average of 23% of the radiotherapy patients are treated with proton therapy. This number is very much in line with the Proton Radiotherapy Horizon Scanning report published in 2009 and revised in 2016 by the Health Council of The Netherlands.
Proton therapy partnerships
In September, IBA announced that it had entered into a memorandum of understanding with the radiotherapy leader Elekta to collaborate on software development and the sales and marketing of each other's products. As part of the agreement, the companies are co-investing in the development of new functionality for proton therapy treatment in Elekta's Monaco® treatment planning system and MOSAIQ® oncology information system. The goal is to further improve patient care by offering a more seamless experience for comprehensive radiotherapy departments. In addition to the software development collaboration, both companies expect to offer a joint portfolio of radiation therapy solutions and co-market each other's products, based on a shared vision of integration and adaptive radiation therapy.
IBA continues to make use of strong partnerships with Raysearch and Philips to integrate its solutions with the leading software used today by radiation oncologists. IBA also collaborates with Philips and Canon Medical Systems (previously Toshiba) in order to maximize its worldwide market coverage.
Together, these partnerships form the basis from which IBA is seeking to build its global proton therapy platform that can provide fully integrated support for proton therapy treatment from diagnosis to treatment planning and delivery.
Market leading installation time and technology
IBA is a market leader in the delivery of proton therapy solutions and our quality and fastest time to treating patients was demonstrated in January 2018 when the first patient was treated at University Medical Center Groningen Proton Therapy Center within 13 months of start of installation of its Proteus®PLUS. The Proteus®PLUS at UMCG is configured with two gantry treatment rooms equipped with IBA's pencil beam scanning (PBS) and Cone Beam Computed Tomography (CBCT) large field of view image guidance. These technologies improve the precision of treatment and enable adaptive treatment.
Post period end, alongside Proton Partners International, testing was completed at the UK's first high energy proton beam machine, following a record nine months installation in Newport, South Wales; a global record and at least 50% faster than any competitor. The single room Proteus®ONE solution, installed and maintained by IBA, is the industry's only truly compact image-guided IMPT proton therapy system.
This speed of delivery and time to go clinical is critical for customers for achieving their proton therapy business plan potential, and is of further importance for a system, which is the first in its local market.
Radiopharma Solutions and Industrial Accelerators
IBA sold 11 other systems in 2017 with particular success following the launch of the new Cyclone®KIUBE, and also building on the record level of upgrade orders.
In Industrial Accelerators, in particular, IBA's focus has been on its Rhodotron integrated solution with the launch of its new Rhodotron generation, including the new compact TT50, offering undisputable modularity and energy efficiency. IBA is leading the market with the sale of three Rhodotrons over the past three months and a promising pipeline, with fast growth expected in alternative applications such as sterilization, cargo screening and radioisotope production. Services for this segment also continued to add a growing revenue stream.
| FY 2017|
| FY 2016|
|Dosimetry||53 837||48 108||5 729||11.9%|
|REBITDA||6 777||4 077||2 700||66.2%|
|% of Sales||12.6%||8.5%|
|REBIT||5 665||3 022||2 643||87.5%|
|% of Sales||10.5%||6.3%|
Dosimetry saw excellent sales performance in 2017 with revenues up 11.9% to EUR 53.8 million thanks to fast conversion of the backlog and a strong 2017 order intake. REBIT has also increased 87.5% to EUR 5.7 million with a margin improvement to 10.5% from 6.3%.
The total order intake in 2017 was EUR 51.5 million, up 7% compared to last year, boosted by medical imaging and services. This has helped to maintain a backlog that remains high at EUR 15.4 million at end of 2017.
During the period, IBA launched the new RAZOR Nano Chamber, the smallest available ionization chamber in the market for small-field dosimetry. In addition, the IBA Dosimetry Blue Phantom system was used for acceptance of the first Varian Halcyon(TM) machine in Europe. IBA now has more than 1,000 worldwide customers using its myQA® quality assurance platform, a unique platform that connects QA applications and data through a central database and software application.
IBA reported revenues of EUR 287.4 million, down 12.6% from 2016.
Recurring operating loss before interest and taxes (REBIT) fell sharply due to cyclical market slowdown and individual project delays. The Group REBIT fell to EUR -11.6 million from EUR 37.1 million in 2016.
Financial results were strongly affected by the strengthening of the euro against the US dollar. Other operating expenses were mostly related to restructuring and reorganization costs and write-offs on some assets and receivables.
IBA booked a deferred tax charge of EUR 16.1 million, due to tax reforms that became effective in Belgium at the end of December, as well as a very favorable tax regime for companies investing in R&D in Belgium that reduced recoverability of deferred tax assets against future taxable income.
As a result of the above effects, IBA reported a net loss of EUR -39.2 million down from a profit of EUR 24.4 million in the prior year.
Operating cash flow during 2017 amounted to EUR -44.6 million with recurring operations impacted by the growth of activity at the working capital level to support ongoing installations, at the same time affected by the delays in project scheduling. Inventory levels grew to deliver equipment on time and support installations.
Cash flow from investing was EUR -12.9 million, mostly related to CAPEX for asset maintenance and for the new factory that will become operational in 2018.
As a consequence, the net cash position fell to EUR -15.5 million at the end of 2017. IBA has secured adequate credit lines from its financial institutions to finance its working capital requirements.
The fundamentals of the proton therapy market continue to be solid, as demonstrated by the numerous prospects IBA is pursuing across all global markets. IBA remains fully focused on driving growth and, alongside our strategic partnerships and ongoing focus on cost controls and maintaining the world's most competitive and attractive proton therapy offering, IBA will continue to drive towards a positive REBIT and net profit after tax in 2018 and beyond.
This will be focused around our two axes for growth: growing the market by facilitating evidence generation and creating awareness of the benefits of proton therapy, whilst improving its affordability, and increasing IBA's market share with its superior clinical technology, fastest installation times, proven quality of service and unique ability to completely upgrade all systems to the latest technology available.
Although current market conditions make it harder to predict IBA's near-term growth trajectory, the Group will continue to keep the market updated on its progress as the current year progresses. Whilst it is IBA's intention to keep providing quarterly qualitative business updates to the market, going forward, key financial figures and detailed analysis of its financials will only be provided at the time of its half and full year results.
Report of the statutory auditor on the financial information presented in the annual press release of Ion Beam Applications SA
The auditor, Ernst & Young, Reviseurs d'entreprises SCCRL, represented by Vincent Etienne, has confirmed that the audit procedures on the consolidated financial information included in this press release are substantially completed and have not revealed material corrections that should be made to the information included in the press release. The auditor will issue an unqualified opinion on the IFRS Consolidated Financial Statements.
In accordance with the Royal Decree of November 14, 2007, IBA indicates that this announcement was prepared by the Chief Executive Officer (CEO), Olivier Legrain, and the Chief Financial Officer (CFO), Soumya Chandramouli.
|(EUR '000)||(EUR '000)||(EUR '000)||%|
|Sales and services||287,421||328,774||-41,353||-12.6%|
|Cost of sales and services||192,501||190,213||2,288||1.2%|
|Selling and marketing expenses||28,842||27,651||1,191||4.3%|
|General and administrative expenses||43,239||41,424||1,815||4.4%|
|Research and development expenses||34,435||32,350||2,085||6.4%|
|Other operating expenses/(income)||4,573||7,929||-3,356||-42.3%|
|Share of (profit)/loss of equity-accounted companies||-92||-145||53||-36.6%|
|Profit/(loss) before tax||-19,607||27,899||-47,506||-170.3%|
|Tax (income)/ expenses||19,526||3,359||16,167||481.3%|
|Profit/ (loss) for the period from continuing operations||-39,133||24,540||-63,673||-259.5%|
|Profit/(loss) for the period from discontinued operations||-68||-100||32||-32.0%|
|Profit/ (loss) for the period||-39,201||24,440||-63,641||-260.4%|
|(EUR '000)||(EUR '000)||(EUR '000)|
|Other intangible assets||12,396||9,972||2,424|
|Property, plant and equipment||22,686||16,322||6,364|
|Investments accounted for using the equity method and other investments||8,909||10,311||-1,402|
|Deferred tax assets||6,017||22,796||-16,779|
|Long-term financial assets||2,289||2,171||118|
|Other long-term assets||18,572||18,467||105|
|Inventories and contracts in progress||140,288||132,702||7,586|
|Short-term financial assets||3,049||1,346||1,703|
|Cash and cash equivalents||27,273||74,564||-47,291|
|EQUITY AND LIABILITIES|
|Currency translation difference||-3,320||-1,367||-1,953|
|Capital and reserves attributable to Company's equity holders||108,695||150,391||-41,696|
|Long-term financial liabilities||0||1,423||-1,423|
|Deferred tax liabilities||667||582||85|
|Other long-term liabilities||8,970||3,916||5,054|
|Short-term financial liabilities||118||3,006||-2,888|
|Current income tax liabilities||756||90||666|
|Total equity and liabilities||332,518||380,617||-48,099|
CASH FLOW STATEMENT
|(EUR '000)||(EUR '000)|
|Net profit/(loss) for the period||-39,201||24,440|
|Depreciation and impairment of property, plant and equipment||3,381||2,451|
|Amortization and impairment of intangible assets||2,742||2,219|
|Write-off on receivables||1,994||253|
|Changes in fair value of financial assets (gains)/losses||834||-141|
|Changes in provisions||-2,146||2,579|
|Share of result of associates and joint ventures accounted for using the equity method||-92||-145|
|Other non cash items||-737||-250|
|Net cash flow changes before changes in working capital||-16,639||31,804|
|Trade receivables, other receivables, and deferrals||-3,477||-10,445|
|Inventories and contract in progress||-20,066||-53,024|
|Trade payables, other payables, and accruals||1,044||17,530|
|Other short-term assets and liabilities||-3,019||-1,455|
|Change in working capital||-25,518||-47,394|
|Income tax paid/received, net||-3,436||-2,510|
|Net cash (used in)/generated from operations||-44,641||-17,018|
|Cash flow from investing activities|
|Acquisition of property, plant, and equipment||-9,913||-9,406|
|Acquisition of intangible assets||-5,363||-3,559|
|Acquisition of third party and equity-accounted companies||7||-1,793|
|Disposals of other investments and equity-method-accounted companies, net of assigned cash||-494||63,437|
|Other investing cash flows||2,891||-380|
|Net cash (used in)/generated from investing activities||-12,871||48,300|
|Cash flow from financing activities|
|Proceeds from borrowings||15,000||15,750|
|Repayments of borrowings||-2,151||-17,524|
|Interest paid/Interest received||-796||-812|
|Capital increase (or proceeds from issuance of ordinary shares)||981||4,201|
|Other financing cash flows||5,391||-49|
|Net cash (used in)/generated from financing activities||10,193||-38,781|
|Net cash and cash equivalents at the beginning of the year||74,564||81,715|
|Changes in net cash and cash equivalents||-47,319||-7,499|
|Exchange gains/(losses) on cash and cash equivalents||28||348|
|Net cash and cash equivalents at the end of the year||27 273||74 564|