Earnings Release • Aug 25, 2016
Earnings Release
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Louvain-La-Neuve, Belgium, August 25, 2016 - IBA (Ion Beam Applications S.A., EURONEXT), the world's leading provider of proton therapy solutions for the treatment of cancer, today announces its consolidated results for the first half of 2016.
| H1 2016 (EUR 000) |
H1 2015 (EUR 000) |
Variance (EUR 000) |
Variance % |
|
|---|---|---|---|---|
| Sales & | ||||
| Services | 145 128 | 120 997 |
24 131 |
19.9% |
| REBITDA | 17 970 | 14 605 |
3 365 |
23.0% |
| % of Sales | 12.4% | 12.1% | ||
| REBIT | 15 133 | 12 614 |
2 519 |
20.0% |
| % of Sales | 10.4% | 10.4% | ||
| Net Result | 8 297 | 14 450 |
-6 153 |
-42.6% |
| % of Sales | 5.7% | 11.9% |
Growth strategy on track, including staff recruitment and production capacity scale-up to meet proton therapy demand. The recruitment of 400 engineers is progressing well, with 206 already hired
Olivier Legrain, Chief Executive Officer of IBA, commented: "The strong first-half performance has demonstrated the continued momentum of proton therapy growth globally, led by the increasing success of Proteus®ONE, our unique compact solution. The collaboration with HIL announced earlier this week underlines our commitment to constant innovation, identifying new opportunities and technologies that will enable us to deliver ever higher standards while potentially reducing the costs of treatment."
"As demand for our technology grows, so does the IBA team. We are on course to recruit 400 additional specialists that we have targeted as part of our ambitious growth strategy, with more than 50% already selected."
"The order pipeline for the rest of 2016 is strong. With continued demand for our proton therapy solutions and despite challenging times for our Dosimetry business, we are on track to meet our guidance for the full year."
IBA will host a conference call and webcast today at 16:00 CEST / 15:00 BST / 10:00 EDT / 07:00 PDT. Olivier Legrain, Chief Executive Officer, and Soumya Chandramouli, Chief Financial Officer, will host the call which will be conducted in English. The conference call will be webcast live and can be accessed online at: http://arkadinemea-events.adobeconnect.com/iba. If you would like to participate in the Q&A, please dial (PIN code 76832733#):
Belgium: +32 2 404 03 05
Press release | August 25, 2016 2 | 13
| UK: | +44 207 750 9926 |
|---|---|
| NL: | +31 207 133 488 |
| LU: | +352 278 601 66 |
| US: | +1 914 885 0779 |
| FR: | +33 172 040 033 |
The webcast presentation will be available on the Company's website shortly after the call.
Third Quarter Business Update November 17, 2016 Full Year Results 2016 March 24, 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, 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 1,300 people worldwide, IBA has installed solutions across the world. IBA is listed on the pan-European stock exchange EURONEXT. (IBA: Reuters IBAB.BR and Bloomberg IBAB.BB) and more information can be found at: www.ibaworldwide.com
* Proteus®PLUS and Proteus®ONE are the brand names of new configurations of the Proteus®235
IBA Investor Relations Jean-Marc Bothy Chief Strategy Officer Soumya Chandramouli Chief Financial Officer +32 10 475 890 [email protected]
Thomas Ralet Vice-President Corporate Communication +32 10 475 890 [email protected]
For media and investor enquiries:
Consilium Strategic Communications Jonathan Birt, Matthew Neal, Ivar Milligan +44 (0) 20 3709 5700 [email protected]
Rx Communications Group (US) Melody Carey + 1 917 322 2571 [email protected]
Press release | August 25, 2016 3 | 13
| H1 2016 (EUR 000) |
H1 2015 (EUR 000) |
Variance (EUR 000) |
Variance % |
|
|---|---|---|---|---|
| Net Sales | 121 232 | 94 211 | 27 021 | 28.7% |
| - Proton Therapy |
96 637 | 68 603 | 28 034 | 40.9% |
| - Other Accelerators |
24 595 | 25 608 | -1 013 | -4.0% |
| REBITDA | 15 255 | 9 105 | 6 150 | 67.5% |
| % of Sales | 12.6% | 9.7% | ||
| REBIT | 12 904 | 7 778 | 5 126 | 65.9% |
| % of Sales | 10.6% | 8.3% |
Total net sales were up 28.7% in the first half to EUR 121.2 million, driven by strong growth in Proton Therapy including double digit growth for both equipment sales and services at 33.5% and 18.5% respectively. The slight decline in Other Accelerators is due to a slowdown as a result of production planning, however it is expected to be recovered in the second half of the year. Service revenues continue to contribute approximately one third of segment revenues.
REBITDA for the business segment grew significantly by 67.5% to EUR 15.3 million as equipment revenues continue to grow and the installed base expands.
IBA has had a strong first half performance with several major commercial wins. With the sale of 11 proton therapy rooms in the first half of 2016, IBA has had record sales and has confirmed its leadership position. The PT solutions sold by IBA in this period are spread over customer sites in the US, Europe and Asia and include the following:
The Tata Memorial Centre in Mumbai, India, will be equipped with IBA's Proteus®PLUS threegantry room configuration, including latest generation Pencil Beam Scanning capability.
IBA has signed a contract with the University Hospitals Leuven (UZ Leuven) and Katholieke Universiteit Leuven (KU Leuven) to install a Proteus®ONE solution. This will be Belgium's first proton therapy center in a project with Université Catholique de Louvain (UCL), Cliniques universitaires Saint-Luc and other Belgian universities.
The University of Florida Health Proton Therapy Institute (UFHPTI) will install a new Proteus®ONE solution.
IBA has also signed a contract with Qingdao Zhong Jia Lian He Healthcare Management Company Limited to install a Proteus®PLUS* five-room solution in Qingdao, Shandong Province, China. China has become a major focus for IBA Proton Therapy division.
Press release | 25 August 2016 4 | 13
Regulated information
IBA has signed a new binding term sheet with Proton Partners International (PPI), to install a Proteus®ONE compact proton therapy solution. This latest purchase is part of PPI's strategy to expand its proton therapy network internationally. The location of this center will be disclosed at a later stage.
Additionally, IBA generates increasing revenue from the upgrade of existing PT centers equipped with IBA technology, keeping them at the forefront of research and advanced treatments in the fight against cancer. For example, IBA and the Institut Curie announced the signature of an agreement for the manufacturing, delivery, installation and maintenance of a new research beam line. This line will be connected to the existing beam transport line. This agreement also includes future research projects to be performed jointly by the two organizations over the next ten years. Another example is the upgrade of proton therapy equipment of University of Florida Health Proton Therapy Institute (UFHPTI) with IBA's latest technologies including Pencil Beam Scanning and Cone Beam CT.
IBA recently received CE mark authorization of its new super conducting accelerator. Getting the CEmarking for the new Proton Therapy Synchro-Cyclotron is crucial to Proteus®ONE business plans.
Post period close, IBA also received FDA approval for all features of the integrated solution Proteus®ONE.
Post period close, Penn Medicine and IBA announced the world's first patient treatment using IBA's Prompt Gamma camera in in Pencil Beam Scanning Mode, 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.
Finally, IBA announced in August that it 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.
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. 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 and powerful.
Regulated information
| H1 2016 (EUR 000) |
H1 2015 (EUR 000) |
Variance (EUR 000) |
Variance % |
|
|---|---|---|---|---|
| Net Sales | 23 896 | 26 786 | -2 890 | -10.8% |
| REBITDA | 2 715 | 5 500 | -2 785 | -50.6% |
| % of Sales | 11.4% | 20.5% | ||
| REBIT | 2 229 | 4 836 | -2 607 | -53.9% |
| % of Sales | 9.3% | 18.1% |
The Dosimetry market continues to be challenging with H1 sales decreasing 10.8% to EUR 23.9 million versus the same period in 2015, in part due to the comparative strength of H1 2015 as well as a slower conversion rate in 2016 on long-term orders. It is worth noting that the longer-term growth trajectory remains in line with that of the market. Over the last three years, the average growth (excluding temporary periodic effects) shows 3% growth in line with the Linac market. The Dosimetry backlog remains high at EUR 18.3 million (EUR 17.8 million at the end of H1 2015).
In August Dosimetry announced the first worldwide clinical implementation of its newly released Dolphin Online Ready Patient QA and Monitoring. 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 their sites.
In addition, IBA Dosimetry 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.
Following the proton therapy orders booked over the last few years globally, IBA launched an international plan to recruit 400 new employees over the year. Approximately half of these will be 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. Of the planned 400 hires, 206 positions have been filled as of end June 2016.
In June, IBA announced the strengthening of its management team with the appointment of Jean-Marc Bothy as Chief Strategy Officer and Soumya Chandramouli as Chief Financial Officer.
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.
Regulated information
IBA confirms strong top line growth, with a 19.9% increase in revenues to EUR 145.1 million during the first half of 2016 (H1 2015: EUR 121 million) across both service and equipment delivery.
The gross margin improved to 44.3% in the first half of 2016 from 44.1% in the first half of 2015.
Recurring operating profits before interest and taxes (REBIT) grew in line with top line revenues despite a EUR 8.4 million increase in operational expenses in the first half of 2016 and lower profitability in the Dosimetry segment.
Within operational expenses, sales and marketing expenses grew 15% in the first half of 2016, reflecting continuing efforts to further expand the record order intake and the overall Proton Therapy market. General and administrative expenses increased by 25% reflecting the support required for the ongoing operational scale-up. Research and Development expenses increased by 21% compared to the same period last year, in line with the revenue growth, maintaining R&D spending at around 11% of revenues.
As a consequence, the Company's REBIT grew by 19.9% in H1 2016 to EUR 15.1 million from EUR 12.6 million in H1 2015. REBIT margins remained constant at 10.4% in H1, mostly stemming from heavy scale-up efforts during H1 and the lower profitability of Dosimetry and are expected to meet the target of 11% for the current financial year.
Net other operating expenses of EUR 4.5 million include the fluctuating valuation of stock options; special discretionary bonuses granted to IBA employees, excluding management; accruals on a long term incentive plan now nearing maturity; severance fees; and write-offs on Other Accelerators projects and other assets, all of which are non-recurring.
Net financial expenses amounted to EUR 1.5 million in H1 2016 compared to an income of EUR 2.6 million a year earlier. This was mostly due to foreign exchange gains on US dollar holdings in the prior period.
Following the completion of the sale of IBA's stake in IBA Molecular during H1 2016, the share of (profit)/loss of equity-accounted companies is no longer material.
Despite on-track topline growth and similar REBIT growth, profit before tax declined to EUR 9.2 million in H1 2016 from EUR 16.5 million a year before, mostly due to the one-off positive impacts last year from exchange rate financial gains, other operating income from the reversal of a decommissioning provision on a closed facility and the share of result of equity-accounted entities.
The Group booked current income tax charges of EUR 1 million during H1 2016.
Cash flow from operations fell to a negative EUR 12.9 million at the end of June 2016 from EUR 17.6 million at the end of June 2015, mostly due to the negative variation of working capital stemming from the inventory build-up to sustain increased production and timing of down payments strongly concentrated on H2 2016. Cash flow from investments was EUR 58.3 million in H1 2016 compared with negative cash flow of EUR 1.5 million a year before. This was mainly due to a payment of EUR 62.3 million received during H1 2016 following the disposal of IBA Molecular and a deferred dividend payment received from Pharmalogic of EUR 1.2 million, slightly offset by CAPEX of EUR 4.8 million reflecting the start of investment in the scale-up program.
Cash flow from financing was negative EUR 38.2 million in H1 2016, following EUR 40.3 million of dividend payment and capital increase from the exercise of share options. The anticipatory repayment of debt to the European Investment Bank was accompanied by its refinancing at a lower cost.
IBA had a very strong cash position of EUR 89.5 million at the end of H1 2016, even after the dividend payout of EUR 40.3 million.
IBA reiterates its guidance given at the time of the Company's 2015 Full Year Results in March 2016 of above 20% top line growth for the year.
The Company confirms it expects its operating margin to be about 11% in 2016 and then to rise to 13- 15% by 2018. This guidance is supported by the increasing economies of scale combined with the growing importance of service revenues, although, it is offset to some extent by price erosion.
The Company is also investing in scaling up production capacity and resources and further investment in R&D in order to continue leading the market. This scale-up program includes investment in a new Proteus®ONE assembly line and new marketing infrastructure, investing EUR 15 million over two years. Investment is also being made in recruitment, with an additional 400 engineers and qualified staff expected to take the total headcount to around 1600 by year-end.
IBA expects to maintain the dividend target pay-out ratio at 30%.
Regulated information
We have compared the accounting data presented in the semi-annual communiqué of Ion Beam Application SA with the interim condensed consolidated financial statements as at 30 June 2016, which show a balance sheet total of € (thousand) 371,789 and a net profit (group share) for the period of € (thousand) 8,297. We confirm that these accounting data do not show any significant discrepancies with the interim condensed consolidated financial statements.
We have issued a review report, in which we declare that, based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements is not prepared, in all material respects, in accordance with IAS 34 as adopted for use in the European Union
Diegem, 23 August 2016
Ernst & Young Réviseurs d'Entreprises SCCRL Statutory auditor represented by
Vincent Etienne Partner
Press release | 25 August 2016 9 | 13
Regulated information
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.
Press release | 25 August 2016 10 | 13
Regulated information
| 30-06-16 | 30-06-15 | Variance | ||
|---|---|---|---|---|
| (EUR '000) | (EUR '000) | (EUR '000) | % | |
| Sales and services | 145 128 | 120 997 | 24 131 | 19.9% |
| Cost of sales and services | 80 881 | 67 655 | 13 226 | 19.5% |
| Gross profit/(loss) | 64 247 | 53 342 | 10 905 | 20.4% |
| 44.3% | 44.1% | |||
| Selling and marketing expenses | 13 615 | 11 842 | 1 773 | 15.0% |
| General and administrative expenses | 19 422 | 15.600 | 3 822 | 24.5% |
| Research and development expenses | 16 077 | 13 286 | 2 791 | 21.0% |
| Recurring expenses | 49 114 | 40 728 | 8 386 | 20.6% |
| Recurring profit/(loss) | 15 133 | 12 614 | 2 519 | 20.0% |
| 10.4% | 10.4% | |||
| Other operating expenses/(income) | 4 472 | -280 | 4 752 | -1697.1% |
| Financial expenses/(income) | 1 473 | -2 564 | 4 037 | -157.4% |
| Share of (profit)/loss of equity-accounted companies | -41 | -1 072 | 1 031 | -96.2% |
| Profit/(loss) before tax | 9 229 | 16 530 | -7 301 | -44.2% |
| Tax (income)/ expenses | 888 | 2 039 | -1 151 | -56.4% |
| Profit/ (loss) for the period from continuing operations | 8 341 | 14 491 | -6 150 | -42.4% |
| Profit/(loss) for the period from discontinued operations | -44 | -41 | -3 | 7.3% |
| Profit/ (loss) for the period | 8 297 | 14 450 | -6 153 | -42.6% |
| REBITDA | 17 970 | 14 605 | 3 365 | 23.0% |
Press release | 25 August 2016 11 | 13
Regulated information
| 30-6-16 | 1-01-16(*) | ||
|---|---|---|---|
| (EUR '000) | (EUR '000) | (EUR '000) | |
| ASSETS | |||
| Goodwill | 3 821 | 3 821 | 0 |
| Other intangible assets | 8 520 | 8 629 | -109 |
| Property, plant and equipment | 11 866 | 9 327 | 2 539 |
| Investments accounted for using the equity method and other investments | 8 687 | 9 004 | -317 |
| Deferred tax assets | 23 319 | 23 221 | 98 |
| Long-term financial assets | 2 497 | 779 | 1 718 |
| Other long-term assets | 18 576 | 16 691 | 1 885 |
| Non-current assets | 77 286 | 71 472 | 5 814 |
| Inventories and contracts in progress | 118 977 | 99 959 | 19 018 |
| Trade receivables | 66 233 | 59 938 | 6 295 |
| Other receivables | 18 855 | 81 846 | -62 991 |
| Short-term financial assets | 930 | 422 | 508 |
| Assets Held for sale | 0 | 0 | 0 |
| Cash and cash equivalents | 89508 | 81 715 | 7 793 |
| Current assets | 294 503 | 323 880 | -29 378 |
| Total assets | 371 789 | 395 352 | -23 563 |
| EQUITY AND LIABILITIES | |||
| Capital stock | 41 438 | 40 864 | 574 |
| Capital surplus | 39 462 | 37 329 | 2 133 |
| Treasury shares | -8 502 | -8 502 | 0 |
| Reserves | 13 854 | 10 509 | 3 345 |
| Currency translation difference | -2 124 | -1 993 | -131 |
| Retained earnings | 52 227 | 84 259 | -32 032 |
| Reserves for assets held for sale | 0 | 0 | 0 |
| Capital and reserves attributable to Company's equity holders | 136 355 | 162 466 | -26 111 |
| Non-controlling interests | 0 | 0 | 0 |
| TOTAL EQUITY | 136 355 | 162 466 | -26 111 |
| Long-term borrowings | 28 814 | 15 220 | 13 594 |
| Long-term financial liabilities | 215 | 879 | -664 |
| Deferred tax liabilities | 697 | 697 | 0 |
| Long-term provisions | 6 488 | 7 062 | -574 |
| Other long-term liabilities | 3 263 | 3 162 | 101 |
| Non-current liabilities | 39 476 | 27 020 | 12 456 |
| Short-term provisions | 6 043 | 7 007 | -964 |
| Short-term borrowings | 2 147 | 16 454 | -14 307 |
| Short-term financial liabilities | 2 073 | 2 110 | -37 |
| Trade payables | 48 022 | 44 887 | 3 135 |
| Current income tax liabilities | 17 | 74 | -57 |
| Other payables | 137 655 | 135 334 | 2 321 |
| Liabilities directly related to assets held for sale | 0 | 0 | 0 |
| Current liabilities | 195 957 | 205 866 | -9 909 |
| Total liabilities | 235 434 | 232 886 | 2 548 |
Total equity and liabilities 371 789 395 352 -23 563
(*) Restatement through equity following a change in accounting policy
IBA sa. | Chemin du Cyclotron, 3 | 1348 Louvain-la-Neuve | Belgium | Tel.: + 32 10 47 58 11 | Fax: + 32 10 47 58 10 | E-mail: [email protected] | www.iba-worldwide.com | RPM Nivelles | VAT: BE 0428.750.985
Regulated information
| 30-6-16 | 30-6-15 | |
|---|---|---|
| (EUR '000) | (EUR '000) | |
| Cash flow from operating activities | ||
| Profit/(loss) for the period before technical recycling of CTA | 8 297 | 14 450 |
| Technical recycling of CTA to income statement further to liquidation of a dormant Swedish entity |
0 | 0 |
| Net profit/(loss) for the period after technical recycling of CTA Adjustments for: |
8 297 | 14 450 |
| Depreciation and impairment of property, plant and equipment | 1 079 | 924 |
| Amortization and impairment of intangible assets | 1 252 | 1 012 |
| Write-off on receivables | 1 | 53 |
| Changes in fair value of financial assets (gains)/losses | 154 | 816 |
| Changes in provisions | 262 | -4 988 |
| Deferred taxes | -146 | 346 |
| Share of result of associates and joint ventures accounted for using the equity method | -41 | -1 102 |
| Other non cash items | -263 | 1 079 |
| Net cash flow changes before changes in working capital | 10 595 | 12 590 |
| Trade receivables, other receivables, and deferrals | -8 671 | -9 821 |
| Inventories and contract in progress | -22 358 | 20 933 |
| Trade payables, other payables, and accruals | 11 805 | -7 231 |
| Other short-term assets and liabilities | -3 162 | 963 |
| Change in working capital | -22 386 | 4 844 |
| Income tax paid/received, net | -1 778 | -388 |
| interest (income)/expenses | 702 | 558 |
| Net cash (used in)/generated from operations | -12 867 | 17 604 |
| Cash flow from investing activities | ||
| Acquisition of property, plant, and equipment | -3 633 | -1 080 |
| Acquisition of intangible assets | -1 143 | -472 |
| Disposal of fixed assets | 1 | 12 |
| Acquisitions of subsidiaries, net of acquired cash | 0 | 0 |
| Acquisition of third party and equity-accounted companies | 0 | 0 |
| Disposal of subsidiaries | 0 | 0 |
| Disposals of other investments and equity-method-accounted companies, net of assigned cash |
63 437 | 20 |
| Other investing cash flows | -390 | -1 |
| Net cash (used in)/generated from investing activities | 58 272 | -1 521 |
| Cash flow from financing activities | ||
| Proceeds from borrowings | 15 750 | 0 |
| S.R.I.W. Reverse convertible bond | 0 | 0 |
| Repayments of borrowings | -16 463 | -2 596 |
| Interest paid/Interest received | -545 | -549 |
| Capital increase (or proceeds from issuance of ordinary shares) | 2 707 | 4 936 |
| Sales/(Purchase) of treasury shares | 0 | 230 |
| Dividends paid | -40 332 | -4 999 |
| Other financing cash flows | 561 | -308 |
| Net cash (used in)/generated from financing activities | -38 322 | -3 286 |
| Net cash and cash equivalents at the beginning of the year | 81 715 | 37 176 |
| Changes in net cash and cash equivalents | 7 083 | 12 797 |
| Exchange gains/(losses) on cash and cash equivalents | 710 | -43 |
| Net cash and cash equivalents at the end of the year | 89 508 | 49 930 |
Press release | 25 August 2016 13 | 13
IBA sa. | Chemin du Cyclotron, 3 | 1348 Louvain-la-Neuve | Belgium | Tel.: + 32 10 47 58 11 | Fax: + 32 10 47 58 10 | E-mail: [email protected] | www.iba-worldwide.com | RPM Nivelles | VAT: BE 0428.750.985
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