Earnings Release • Mar 23, 2017
Earnings Release
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Louvain-la-Neuve, Belgium, March 23, 2017 - IBA (Ion Beam Applications SA), the world's leading provider of proton therapy solutions for the treatment of cancer, today announces its audited consolidated annual results for the 2016 financial year.
| FY 2016 (EUR 000) |
FY 2015 (EUR 000) |
Variance (EUR 000) |
Variance % |
|
|---|---|---|---|---|
| PT & Other Accelerators | 280 666 | 216 261 | 64 405 | 29.8% |
| Dosimetry | 48 108 | 54 096 | -5 988 | -11.1% |
| Total Net Sales | 328 774 | 270 357 | 58 417 | 21.6% |
| REBITDA | 42 690 | 33 710 | 8 980 | 26.6% |
| % of sales | 13.0% | 12.5% | ||
| REBIT | 37 137 | 29 553 | 7 584 | 25.7% |
| % of Sales | 11.3% | 10.9% | ||
| Profit before tax | 27 899 | 65 192 | -37 293 | -57.2%* |
| % of Sales | 8.5% | 24.1% | ||
| NET RESULT | 24 440 | 61 189 | -36 749 | -60.1%* |
| % of Sales | 7.4% | 22.6% |
* Impacted by almost EUR 40 million non-recurring profits, including foreign exchange gains on USD and the capital gain on exit from the Molecular business in 2015
Net cash of EUR 44.5 million (EUR 50.0 million at end of 2015)
IBA's Board of Directors will recommend to the General Assembly the distribution of a dividend of EUR 0.29 per share, representing more than 35% of its net profit, continuing the regular rate from 2015 (excluding the exceptional dividend distributed following the sale of the Molecular business)
Olivier Legrain, Chief Executive Officer of IBA, commented: "Our proton therapy business continues to grow internationally with top line growth being driven, in particular, by our single room solution Proteus®ONE, and also from increasingly important revenue from service contracts and system upgrades. We anticipate that this momentum will continue in 2017 and beyond, especially as the investments in the scale up of our production enable greater efficiencies and operating leverage to make proton therapy even more affordable."
In addition to the press release, Olivier Legrain, Chief Executive Officer, and Soumya Chandramouli, Chief Financial Officer, will host a conference call and webcast, conducted in English, to present the full year results, followed by a Q&A session.
This conference call will be held on 23 March 2017 at 16:00 CET / 15:00 GMT / 11:00 EDT / 08:00 PDT and can be accessed online at:
http://arkadinemea-events.adobeconnect.com/ibafullyear2016/event/registration.html. If you would like to participate in the Q&A, please dial (PIN code 18574023#):
| Belgium: | +32 2 402 96 40 |
|---|---|
| UK: | +44 20 304 32 440 |
| NL: | +31 10 713 81 94 |
| LU: | +352 20 88 06 96 |
| US: | +1 64 67 22 49 07 |
| FR: | +33 1 72 00 15 10 |
The presentation will be available on IBA's Investor Relations website and at https://ibaworldwide.com/content/full-year-2016-results 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 2017 trading update May 10, 2017 General Assembly May 10, 2017 First Half 2017 results August 24, 2017 Third Quarter 2017 trading update November 16, 2017
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 to be 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
IBA Bernard Dandoy Investor Relations
Soumya Chandramouli Chief Financial Officer +32 10 475 890 [email protected]
Thomas Ralet Vice-President Corporate Communication +32 10 475 890 [email protected]
Consilium Strategic Communications Amber Fennell, Matthew Neal, Ivar Milligan +44 (0) 20 3709 5700 [email protected]
| FY 2016 (EUR 000) |
FY 2015 (EUR 000) |
Variance (EUR 000) |
Variance % |
|
|---|---|---|---|---|
| Net Sales | 280 666 | 216 261 | 64 405 | 29.8% |
| - Proton Therapy |
226 529 | 161 938 | 64 591 | 39.9% |
| - Other Accelerators |
54 137 | 54 323 | -186 | -0.3% |
| REBITDA | 38 613 | 25 270 | 13 343 | 52.8% |
| % of Sales | 13.8% | 11.7% | ||
| REBIT | 34 115 | 21 956 | 12 159 | 55.4% |
| % of Sales | 12.2% | 10.2% |
Net sales grew by 29.8% in 2016 for Proton Therapy and Other Accelerators, driven in part by fast execution of orders in the backlog, in addition to continued strong growth of service revenues, now accounting for 29% of segment revenues.
IBA's Other Accelerators division delivered stable revenues, mostly due to slow conversion of backlog on industrial accelerators, despite 14 orders in 2016. Revenues declined very slightly by - 0.3% to EUR 54.1 million, from EUR 54.3 million in 2015.
Proton Therapy service revenues alone increased by 21.7% and, including Other Accelerators, by 16.9%, further indicating the sustainability and predictability of this important revenue stream. The Company now has 42 PT service contracts signed, totaling a backlog of EUR 673 million in future booked recurring revenues over the next 10-15 years.
In addition, IBA has a record year-end backlog in Proton Therapy and Other Accelerators of EUR 335.5 million, up from EUR 332 million at the end of 2015. This figure excludes the H1 2016 order in China (Qingdao) which is awaiting down payment.
IBA has continued to deliver a strong commercial performance with eight systems sold, comprising 17 proton therapy rooms in 2016 across all major markets including India (1 system, 3 rooms), China (2 systems, 9 rooms), US (1 room), UK (2 systems, 2 rooms), Belgium (1 room) and Abu Dhabi (1 room).
Additionally, IBA is generating growing revenues from the upgrade of its existing installed base of machines. EUR 19.5 million worth of upgrades were sold in all business lines in 2016 with major upgrades on several PT sites in the US and Europe to bring them up to standard on the latest IBA technologies available to customers today.
Following the proton therapy orders booked over the last few years globally, IBA launched an international plan to recruit 400 new employees over 2016. Approximately half of these are now based in Louvain-la-Neuve, Belgium, with the remainder in the USA, Europe and Asia. The majority of hires are field service engineers, responsible for the installation and maintenance of proton therapy solutions. Building on this growth and to support further revenue growth, IBA will recruit a further 200 engineers through the course of 2017.
As IBA's operations grow worldwide, the Company has also reorganized its activities, building up a more regionalized structure for certain functions. Notably installation, services and S&M organizations which are being decentralized to better serve customers.
IBA is investing more than EUR 16 million in CAPEX as part of a "scale up" program to increase production capacity. The construction of a new testing vault is well on its way and the permit for the new superconducting synchrocyclotron assembly line (for Proteus®ONE), the marketing infrastructure and the customer center was obtained at the end of the year 2016. The majority of these expenses will be in 2017. The assembly line should be operational in Q1 2018 and the rest of the infrastructure will follow in the course of the same year.
Building on collaborative achievements since 2014 to provide advanced diagnostic and therapeutic oncology solutions, initiatives continue with Philips to jointly develop next-generation proton therapy planning methods to further increase efficiencies in the patient treatment workflow.
More than 30 IBA proton therapy centers are expected to benefit from an enhanced Cone Beam CT imaging technology as a result of this collaboration with Philips. This advanced imaging technology provides the large field-of-view needed for enhanced image guidance during proton therapy procedures.
IBA announced in August that it has invested USD 2 million in HIL Applied Medical Ltd to develop a laser-based proton therapy solution. HIL is applying a novel, patented approach to particle acceleration and delivery, combining nano-technology with ultra-high-intensity lasers and ultra-fast magnets. This potential technological breakthrough could enable a meaningful reduction in the size and cost of proton therapy solutions without compromising clinical utility in the medium to long term.
In September, IBA entered into a long-term strategic alliance with RaySearch to combine respective technologies and advance adaptive proton therapy. As part of the collaboration, the RayCare® oncology information system, which is currently in development at RaySearch, will be customized for optimal use together with the IBA delivery solutions. The result will be a complete turnkey solution for all software and hardware needed to deliver outstanding adaptive proton therapy treatment.
With the regulatory approval of Proteus®ONE in Japan in December, IBA's compact proton therapy solution is now certified in three major regions: the US, Europe and Japan. Certification in Japan also unlocks the potential of the Japanese distribution agreement signed with Toshiba in 2015 and is expected to add to positive momentum in this market in 2017 and beyond.
In July, Penn Medicine and IBA announced the world's first patient treatment using IBA's Prompt Gamma camera in Pencil Beam Scanning Mode under a research agreement, providing in vivo feedback on the proton beam penetration depth within the patient on an individual spot basis, thus allowing unprecedented quality control of the target volume coverage.
Constantly looking to advance technologies in order to provide better solutions for patients, IBA is working on a number of developments. Motion management will accommodate movement of the target tumor during treatment, improving accuracy and reducing treatment time. To further refine the penetration depth, advanced imagery will reduce the effects of range uncertainties. And adaptive therapies will improve accuracy to account for anatomical changes during the course of treatment.
IBA launched a new evolutionary cyclotron at the 2016 Society of Nuclear Medicine and Molecular Imaging (SNMMI) annual meeting in San Diego, California, United States, in June. The Cyclone®KIUBE is a true evolutionary cyclotron meaning that production capacity can be increased step-by-step. Positron Emission Tomography (PET) imaging procedures play a critical role in medical care today and growing demand for radioisotopes means a greater need for efficiency. This new 18MeV cyclotron is more compact (about 30% weight reduction), more powerful, and comes with a self-shielding option.
IBA also launched the Synthera + chemistry box system, in addition to completing the acceptance testing of two Cyclone® 70 for cardiac imaging.
Over 250 IBA Industrial Accelerators are used in the world today, including some that have been functioning for more than 50 years. IBA's Industrial Accelerators division focuses on two markets: the sterilization of single-use medical products, and the improvement of the physical properties of polymers (crosslinking). IBA Industrial is evaluating new long term markets such as container screening solutions. These new markets could contribute to growth of the segment.
At the 18th International Meeting on Radiation Processing in Vancouver, Canada, in November, IBA announced its new 10 MeV Rhodotron® : the TT50; a new compact and cost efficient system with a more efficient use of power.
The first fully integrated cargo screening solution integrating a TT100 Rhodotron is in the final commissioning phase before a handover to US Customs for a full year of testing and validation. This solution will dramatically increase the efficiency of detection of radioactive or other threats for cargos entering the Port of Boston, as well as commercial smuggling.
| FY 2016 (EUR 000) |
FY 2015 (EUR 000) |
Variance (EUR 000) |
Variance % |
|
|---|---|---|---|---|
| Net Sales | 48 108 | 54 096 | -5 988 | -11.1% |
| REBITDA | 4 077 | 8 440 | -4 363 | -51.7% |
| % of Sales | 8.5% | 15.6% | ||
| REBIT | 3 022 | 7 597 | -4 575 | -60.2% |
| % of Sales | 6.3% | 14.0% |
Dosimetry sales were down 11.1%, despite strong Dosimetry for PT activity, partly due to an unusually strong 2015 and also the low conversion rate on long-term orders, even though sales caught up well over Q4 with conversion rates improving.
The total order intake in 2016 of EUR 48.1 million was down 11.1% on FY 2015 due to strong prior year including long term orders in South America as well as exchange rate effects.
Despite this, the backlog of EUR 17.9 million remains high (EUR 18.4 million at the end of 2015) and, importantly, over the last three years, the average growth of the Dosimetry business (excluding temporary periodic effects) continues at around 3% in line with Linac market.
In August, Dosimetry announced the first worldwide clinical implementation of its newly released Dolphin Online Ready Patient QA and Monitoring system. The team at the radiation therapy department of the Klinikum Bayreuth GmbH in Germany, has successfully validated and clinically implemented three Dolphin systems at two of its sites.
In addition, IBA has also announced the third release of its global quality assurance platform: myQA® . myQA is a unique platform that connects QA applications and data through a central database and software application.
In March, IBA completed the sale of IBA Molecular ("IBAM"), in which IBA had a 40% stake, to funds advised by CapVest Partners LP ("CapVest"). With this transaction, IBA has fully exited its joint venture with SK Capital Partners and retains no interests in IBA Molecular. Most of the capital gain booked in 2015 was distributed to IBA shareholders as part of a dividend payout of EUR 40.1 million in June 2016.
IBA reported a 21.6% increase in revenues to EUR 328.8 million during 2016 (2015: EUR 270.4 million).
Recurring operating profits before interest and taxes (REBIT) continued to improve compared with 2015 due to exceptional Proton Therapy equipment revenues, productivity gains and operational leverage. The Company's REBIT increased 25.7% in 2016 from EUR 29.6 million in 2015 to EUR 37.1 million in 2016.
Non-recurring results were mostly affected by one-off incentives to staff, reorganization costs and write-offs on some minor loss-making projects.
The reported net profit of EUR 24.4 million is down from EUR 61.2 million in the prior year due to the relative strength of 2015, which was boosted by the capital gain on full exit from Molecular business.
The Board of Directors intends to recommend to the General Assembly that a gross dividend of EUR 0.29 per share be paid in 2017, based on 2016 results.
Operating cash flow during 2016 amounted to EUR -17.0 million with recurring operations impacted by the growth of activity at the working capital level. This remains favorable and was affected by year-end cut-off and scheduling of projects rather than being indicative of any future trend.
Cash flow from investing was EUR 48.3 million, including EUR 62.3 million received in March 2016 from sale of remaining stake in Molecular business.
The net cash position remains stable, with a year-end figure of EUR 44.5 million, including the cash from the sale of IBA Molecular in Q1 and the subsequent EUR 40.3 million dividend in Q2, of which around EUR 32 million was an extraordinary dividend representing most of the capital gain realized on the disposal of IBA Molecular.
Proton therapy's penetration of the radiation therapy market continues to grow due to increasing interest from the clinical community, affordability and technological advances. To keep ahead of and to lead this growth, IBA continues to scale up production capacity, including investment in a new Proteus®ONE assembly line and a new customer center, with an expected further combined CAPEX of about EUR 16 million, of which around EUR 10 million will be invested in 2017. The Company is also recruiting an additional 200 engineers and qualified staff, worldwide, through 2017.
IBA has a record backlog of EUR 335.5 million and the sustainable revenue source from service and maintenance contracts now represents EUR 673.3 million of revenue over the next 10-15 years. IBA expects to achieve revenue growth between 15% to 20% in 2017 and double digit thereafter.
The Company expects its operating margin to be 11% to 12% in 2017, increasing to 13%-15% by 2018 and stabilizing at 15% by 2020.
IBA is planning to maintain a dividend payout ratio of 30%.
This guidance is not only based upon the continued expected growth of the proton therapy market but also the balance between the economies of scale that we can achieve at a higher production rate. In addition, the growing importance of service revenue versus the increased demand driven by the equipment price tag reduction in the proton therapy market and our continued investment in R&D and software capabilities are anticipated to be contributing factors.
The auditor has issued an unqualified audit report on the annual consolidated accounts for the year ended 31 December 2016 and has confirmed that the accounting information included in the press release does not show inconsistencies with the annual consolidated accounts.
Diegem, March 22, 2017
Ernst & Young Reviseurs d'Entreprises SCCRL Commissaire Represented by Vincent Etienne, Partner
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.
| 31/12/2016 31/12/2015 |
Variance | ||||
|---|---|---|---|---|---|
| (EUR '000) | (EUR '000) | (EUR '000) | % | ||
| Sales and services | 328 774 | 270 357 | 58 417 | 21.6% | |
| Cost of sales and services | 190 213 | 156 702 | 33 511 | 21.4% | |
| Gross profit/(loss) | 138 561 | 113 655 | 24 906 | 21.9% | |
| 42.1% | 42.0% | ||||
| Selling and marketing expenses | 27 651 | 24 528 | 3 123 | 12.7% | |
| General and administrative expenses | 41 424 | 32 827 | 8 597 | 26.2% | |
| Research and development expenses | 32 350 | 26 747 | 5 602 | 20.9% | |
| Recurring expenses | 101 425 | 84 102 | 17 323 | 20.6% | |
| Recurring profit/(loss) | 37 136 | 29 553 | 7 583 | 25.7% | |
| 11.3% | 10.9% | ||||
| Other operating expenses/(income) | 7 929 | -32 534 | 40 463 | -124.4% | |
| Financial expenses/(income) | 1 453 | -3 227 | 4 680 | -145.0% | |
| Share of (profit)/loss of equity-accounted companies | -145 | 122 | -266 | -219.0% | |
| Profit/(loss) before tax | 27 899 | 65 192 | -37 293 | -57.2% | |
| Tax (income)/ expenses | 3 359 | 3 930 | -572 | -14.5% | |
| Profit/ (loss) for the period from continuing operations | 24 540 | 61 262 | -36 722 | -60.0% | |
| Profit/(loss) for the period from discontinued operations | -100 | -73 | -28 | 38.5% | |
| Profit/ (loss) for the period | 24 440 | 61 189 | -36 749 | -60.1% | |
| REBITDA | 42 690 | 33 710 | 8 980 | 26.7% |
| 31/12/16 | 31/12/15 | ||
|---|---|---|---|
| (EUR '000) | (EUR '000) | (EUR '000) | |
| ASSETS | |||
| Goodwill | 3 821 | 3 821 | 0 |
| Other intangible assets | 9 972 | 8 629 | 1 344 |
| Property, plant and equipment | 16 322 | 9 327 | 6 995 |
| Investments accounted for using the equity method and other | 10 311 | 9 004 | 1 307 |
| investments Deferred tax assets |
22 796 | 23 221 | -424 |
| Long-term financial assets | 2 171 | 779 | 1 392 |
| Other long-term assets | 18 467 | 16 691 | 1 776 |
| Non-current assets | 83 860 | 71 472 | 12 388 |
| Inventories and contracts in progress | 132 702 | 99 959 | 32 743 |
| Trade receivables | 65 736 | 59 938 | 5 798 |
| Other receivables | 22 409 | 81 846 | -59 436 |
| Short-term financial assets | 1 346 | 422 | 924 |
| Cash and cash equivalents | 74 564 | 81 715 | -7 151 |
| Current assets | 296 757 | 323 880 | -27 123 |
| Total assets | 380 617 | 395 352 | -14 735 |
| EQUITY AND LIABILITIES | |||
| Capital stock | 41 776 | 40 864 | 911 |
| Capital surplus | 40 618 | 37 329 | 3 289 |
| Treasury shares | -8 502 | -8 502 | 0 |
| Reserves | 9 496 | 11 675 | -2 179 |
| Currency translation difference | -1 367 | -1 993 | 627 |
| Retained earnings | 68 370 | 84 260 | -15 890 |
| Capital and reserves attributable to Company's equity holders | 150 391 | 163 632 | -13 241 |
| Long-term borrowings | 27 750 | 15 220 | 12 530 |
| Long-term financial liabilities | 1 423 | 879 | 544 |
| Deferred tax liabilities | 582 | 697 | -115 |
| Long-term provisions | 10 112 | 5 896 | 4 216 |
| Other long-term liabilities | 3 916 | 3 162 | 754 |
| Non-current liabilities | 43 783 | 25 854 | 17 929 |
| Short-term provisions | 6 311 | 7 007 | -696 |
| Short-term borrowings | 2 151 | 16 454 | -14 303 |
| Short-term financial liabilities | 3 006 | 2 110 | 896 |
| Trade payables | 56 041 | 44 887 | 11 154 |
| Current income tax liabilities | 90 | 75 | 15 |
| Other payables | 118 844 | 135 333 | -16 489 |
| Current liabilities | 186 443 | 205 866 | -19 423 |
| Total liabilities | 230 226 | 231 720 | -1 494 |
| Total equity and liabilities | 380 617 | 395 352 | -14 735 |
| 31/12/16 | 31/12/15 | |
|---|---|---|
| (EUR '000) | (EUR '000) | |
| Cash flow from operating activities | ||
| Net profit for the period after technical recycling of CTA | 24 440 | 61 189 |
| Adjustments for: | ||
| Depreciation and impairment of property, plant and equipment | 2 451 | 1 873 |
| Amortization and impairment of intangible assets | 2 219 | 2 226 |
| Write-off on receivables | 253 | -49 |
| Changes in fair value of financial assets (gains)/losses | -141 | -814 |
| Changes in provisions | 2 579 | -1 217 |
| Deferred taxes | 398 | -107 |
| Share of result of associates and joint ventures accounted for using the equity | -145 | 63 |
| method | ||
| Other non cash items | -250 | 2 686 |
| Net cash flow changes before changes in working capital | 31 804 | 65 850 |
| Trade receivables, other receivables, and deferrals | -10 445 | -8 994 |
| Inventories and contract in progress | -53 024 | 14 982 |
| Trade payables, other payables, and accruals | 17 530 | 11 774 |
| Other short-term assets and liabilities | -1 455 | -37 256 |
| Change in working capital | -47 394 | -19 494 |
| Income tax paid/received, net | -2 510 | -2 211 |
| interest (income)/expenses | 1 082 | 1 249 |
| Net cash (used in)/generated from operations | -17 018 | 45 394 |
| Cash flow from investing activities | ||
| Acquisition of property, plant, and equipment | -9 406 | -2 484 |
| Acquisition of intangible assets | -3 559 | -1 821 |
| Disposal of fixed assets | 1 | 23 |
| Acquisitions of subsidiaries, net of acquired cash | 0 | 76 |
| Acquisition of third party and equity-accounted companies | -1 793 | -7 083 |
| Disposal of subsidiaries | 0 | 6 781 |
| Disposals of other investments and equity-method-accounted companies, net of | 63 437 | 20 |
| assigned cash | ||
| Other investing cash flows | -380 | 10 000 |
| Net cash (used in)/generated from investing activities | 48 300 | 5 512 |
| Cash flow from financing activities | ||
| Proceeds from borrowings | 15 750 | 0 |
| Repayments of borrowings | -17 524 | -5 201 |
| Interest paid/Interest received | -812 | -1 371 |
| Capital increase (or proceeds from issuance of ordinary shares) | 4 201 | 5 910 |
| Sales/(Purchase) of treasury shares | 0 | 230 |
| Dividends paid | -40 347 | -5 216 |
| Other financing cash flows | -49 | 68 |
| Net cash (used in)/generated from financing activities | -38 781 | -5 580 |
| Net cash and cash equivalents at the beginning of the year | 81 715 | 37 176 |
| Changes in net cash and cash equivalents | -7 499 | 45 326 |
| Exchange gains/(losses) on cash and cash equivalents | 348 | -787 |
| Net cash and cash equivalents at the end of the year | 74 564 | 81 715 |
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