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.

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.”

Financial summary

• 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

Business summary

• 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

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