Ion Beam Applications SA (IBAB) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the IBA Web Conference. I am pleased to present Mr. Olivier Legrain, CEO; and Madam Soumya Chandramouli, CFO. [Operator Instructions] I would now like to give the floor to Mr. Olivier Legrain. Sir, please go ahead.

Thank you. Thank you very much. Good afternoon, everybody, and thank you for joining us on our full year results call. I am Olivier, the CEO of IBA, and with me today is Soumya, our CFO.

Good afternoon.

Good afternoon. Before we begin, as always, I would like to draw your attention to the company disclaimers on forward-looking statements. I'll start today by thanking the entire IBA team, our customers and loyal shareholders for your continued support in what has been quite a challenging year for all of us and everyone. Today, I will give an overview of our business and run through our long-term strategy for a sustainable and profitable growth. Soumya and I will then summarize the group's performance for the year. And then I'll talk about the outlook and dividend. Soumya and I will then be happy to take your questions. So firstly, I would like to touch on how our group is structured and talk more about our growth strategy. Core to the IBA business is our ionizing world-leading expertise in particle beam technology, which has enabled the development and sustained growth for our fourth robust business lines. RadioPharma Solutions, industrial solutions, Dosimetry and proton therapy. Each of these 4 businesses has huge potential for sustainable and profitable growth in the coming years. IBA's long-term strategy is focused on 3 core areas to drive profitable and sustainable growth and development. We will capitalize on and develop our market-leading position across all of our businesses. We will invest in new technologies and products to ensure the group retains its edge in deploying the leading solutions in the market that are tailored to our customer needs. Finally, we will ensure excellent operation execution across all of our businesses to demonstrate improving margins and ensure that we continue to increase our recurring revenue streams, which are increasingly forming a strong foundation for the group. Underpinning our long-term growth objectives is our commitment to environment, social and governance goals as we deliver the best offering and services to our customers while being a responsible corporate citizen. We, at IBA, very much believe in companies being a force for good. As part of this, we aim to be carbon-neutral by 2030, while investing 10% per year in research and development. We remain a key player in the diagnosis and treatment of cancer and other serious condition while being committed to providing the optimal work environment for our employees. All of this is driven by a strong culture focused on transparency for all our stakeholders as we remain independent and committed to delivering sustainable profitable growth. I'll now run you through the key operational highlights for 2020 and 2021 so far. In 2020, there was a resilient performance across business lines of IBA. We saw a particularly strong performance in Asia. As you will be aware, we signed a strategic partnership with the Chinese partner, CGNNT, around ProteusPLUS in a deal worth a minimum of EUR 100 million, of which EUR 63.5 million revenues were recognized in 2020. This deal has further strengthened our access to the growing market in China. Also, in China, we signed a 4 room contract for a ProteusPLUS proton therapy solution in Chengdu, Sichuan province. It's worth noting that we delivered a strong case in this region across all our business units. Other Accelerators had another good year with 17 systems sold, of which 12 were in the second half. Our Dosimetry business also showed a resilient performance with an order intake up 10% from 2019 and sales up slightly versus last year on a like-for-like basis in spite of the pandemic. Alongside this, we maintained strong cost control, actually offsetting the impact of COVID-19, while also maintaining strategic R&D investment. Importantly, our balance sheet is stronger than ever with a cash position that has significantly improved in the course of the year, providing us with a robust position for future growth. We are pleased to also strengthen our Board in the year with the appointment of Christine Dubus and Richard Hausmann as nonexecutive directors. As we focus on long-term profitable growth, we remain committed to returning cash to shareholders. And the Board is proposing a dividend of EUR 0.20 per share, in line with the new dividend policy that I will elaborate on later. This strong progress has continued into 2021. In January, we were selected for a multi-room ProteusPLUS solution in China, highlighting continued progress in this strategically important region. Then in February, we received the third payment for -- from CGNNT, taking the total cash received to date for this contract to EUR 70 million. Finally, in March, we received a down payment on the ProteusONE contract with National Cancer Center, Korea, a contract that we did sign in December. It's worth highlighting that National Cancer Center, Korea is already an IBA customer, having previously purchased 3 room ProteusPLUS solution and this ongoing relationship highlight or IBA is able to capitalize on its existing agreement. I will now hand you over to Soumya to take you through the financial highlights.

Thank you, Olivier. So on the slide, you'll see that we highlight strong financial progress that we made in 2020, and which we had already started basically in 2019. Group revenues were up 10% versus 2019, largely driven, of course, by the licensing revenues from the CGN deal, but also by the large proportion of recurring clients' revenues that continue to grow over 2020. Our profitability was also strong with REBIT of EUR 40.4 million and net profit of EUR 31.9 million. Backlog continues to remain at an all-time high of EUR 1.1 billion. And 2020, as I mentioned, was another good year for our service business with 53 new overall PT contracts and overall service growth of 4%. We also had a record equipment order intake at EUR 112 million with 5 PT rooms and 17 Other Accelerators sold. This order intake does not include the EUR 100 million coming in from the CGN deal. Finally, as Olivier said, our balance sheet is really stronger than ever, and we reported a year-end net cash position of EUR 65 million, which was an improvement of more than EUR 86 million from last year. On this slide, you will see that we illustrate the key numbers and the movements versus prior year. I've already touched upon these, but just to pull out the large increase in PT sales as a result of the CGN deal. Also, what flagging is that there was a slight drop in Dosimetry as a result of the 2019 numbers, including the RadioMed business, which was sold at the end of 2019. On a like-for-like basis, Dosimetry sales actually grew 1%. The full year EBIT, of course, reflects the CGN deal, which offset some of the -- offset some of the weakness that we've had on equipment due to the effects of COVID. As we mentioned, our balance sheet is really strong, and we are pleased to report a gross cash position of EUR 151.3 million at year-end, net cash being EUR 65 million. We also have EUR 37 million in undrawn short-term credit lines still available and have complied with all of our bank covenants. This robust financial position stands us in good stead for the future. Now moving on to proton therapy and Other Accelerators. Overall, sales were up 14.1%, reflecting the deal mentioned earlier in China, but also strong continued growth of the service business and important source of recurring revenue stream as well as the high order intake in the Other Accelerators business, mostly generated over the second half of 2020. In PT and Other Accelerators, when you look at the split between equipment and service, you'd see that the significant deal with CGN helped to offset weakness in the PT equipment line as a result of the pandemic as well as some delays with new prospects causing delays in backlog conversion. Other Accelerators were also resilient with equipment sales up 6%, reflecting high order intake. And looking at services, we saw a 4% revenue growth, enabling a positive impact on recurring revenues. PT services on their own were up for the third consecutive year with revenue increasing by 7.2% as all treatment centers remained fully operational. This offset slight weakness in the Other Accelerators, which include upgrade installations that were slightly delayed due to the pandemic. In terms of order intake, as I mentioned, it was strong despite the pandemic after we saw a really all-time record in 2019. We are back to the levels of 2018 basically. And Asia, in particular, was very strong this year, with 2 PT solutions and 11 out of the 17 Other Accelerators sold in that region. This order intake of EUR 112 million, as I mentioned, does not include the EUR 100 million intake from the CGN deal, which includes licensing, equipment and service components. We also noted a significant second half waiting for the Other Accelerators, as I mentioned, with 12 of the 17 machines sold in the second half, and this market recovery has continued into 2021 with 4 machines sold during the first months. Moving to backlog. Our equipment backlog remains at an all-time high, which grew EUR 382 million at year-end. Within this, ProteusONE represents around 35%. And as you can see, Other Accelerators also starts to represent 26%, largely thanks to the sales in the second half of 2020. The pie on the right shows you the split between PT and Other Accelerators. Our PT and Other Accelerators service revenue continued to grow and stood at EUR 113 million, up more than 4% from 2019, despite COVID creating payment difficulties from some customers and the slowdown on installations and therefore, the subsequent start-of-service contracts. Within this, our PT service backlog remains high with EUR 666 million at year-end. The chart on the top left highlights how this has developed over time. Our Dosimetry business performed extremely well with a like-for-like growth of 1%. And if you exclude exchange rate fluctuations, then practically 2%. The drop in revenue reflects the fact that last year, RadioMed was included in the numbers, while there was a very strong order intake in 2020 of EUR 54.1 million, up 10%. I now hand back to Olivier to provide an update on the 4 business units.

Thank you very much, Soumya. During 2020, IBA maintained its global leadership position in proton therapy. And as you may remember, we were pleased to mark the milestone of 100,000 patients treated by IBA customers. We continue to have a strong focus on Asia, which is a market we previously identified as being strategically very important. In addition to the strategic license deal in China with CGNNT, we sold 4 room in Chengdu, China and post period and one room in Korea to an existing IBA customer as we continue to capitalize on existing relationships. IBA has also been selected in 2021 for the supply of a multi-room ProteusPLUS solution in China with a negotiation ongoing. In the U.S., we have taken steps to reinforce our presence and have added further resource to help us to take market share. Recent extension of proton therapy indication in the national comprehensive cancer network guideline in the U.S. is also very encouraging. Looking at installations, we started 2 new projects in 2020 in India and Taiwan in spite of the pandemic. As of quarter 4, we achieved 97% system availability with similar performances for both ProteusONE and ProteusPLUS. We continue to work closely with all of our partners, and we're particularly pleased to recently strengthen our long-term relationship with Elekta with its latest proton therapy solution, and we also continue our close collaboration with RaySearch. We have recently deployed both the RayCare and RayStation in UZ Leuven in Belgium, one of the leading international research Hospital. This slide highlights IBA leading market share in proton therapy. In 2020, we took 62.5% of the market share, which compares favorably to variance 37.5%. You can see the split between ProteusONE and ProteusPLUS contract during the year. Looking to total proton therapy market share, IBA continue to maintain the larger share with 129 rooms, representing 42%. You can also see the total number of patients treated across the industry with IBA representing 100,000 of this as per the previous slides. This slide highlights the technologies that are critical to the future of potent therapy. We are already offering motion management as a way to treat more mobile tumors with increased confidence. Our therapy offers a continuous radiation dose and is a more efficient and simpler way to deliver proton therapy. The short-term focus for us is on offering ARC to new and existing customers. Long term, we remain committed to partnering with key knowledge leaders around FLASH therapy. Preclinical research of FLASH on IBA system internationally is already underway and future clinical adoption is a key discussion point for IBA's next Clinical Advisory Board. Looking now at RadioPharma, IBA is a market leader in radioisotope production accelerators, helping nuclear medicine department to design, build and operate positron emission tomography centers for the production of radiopharmaceutical use for the detection of cancer. Our new generation cyclone cube, cyclotron offers the highest production capacity currently available, enabling increased diagnostic capabilities while producing the widest range of radioisotope. We have seen strong demand for our high energy machine, including the cyclone icon, which is a more compact offering. Finally, just a word on our Center for Radiochemistry modules, where we completed remote installation at 2 sites. As you will be aware, IBA industrials provide leading industrial solution to the ion beam sterilization industry. Our Rhodotron solution continued to create strong interest in the global market and the new generation brings new opportunities. This new -- new work systems allows us a unique alternative to cobalt and ethylene oxide for sterilization and provide potential for growth. The TT300 high-energy system is undergoing testing in Leuven. We also know the recent installation of the Rhodotron TT1000 in the Netherlands. On Dosimetry, as you heard earlier, the business has continued to perform strongly, and IBA Dosimetry remains a world-leading provider of innovative high-tech quality insurance solutions and imaging markers for radiation diagnostic therapy. We continue to take market share in QA and conventional radiation therapy in 2020. We continue to invest in patient QA radiotherapy and market-leading those inventory tools for proton therapy with further product plans such as myQA SRS, which is planned this year. Continuous innovation is a key priority for us, and we also noted regulatory progress with myQA iON unique patient QA software solution for proton therapy, receiving FDA approval in July. Now back to Soumya to talk about the numbers in more detail.

Thanks, Olivier. Now looking quickly at the group P&L, we already spoke about the increase driven in part by CGNNT, but also by the resilient performance of the service business on revenues. At the expense level, while there was a strong decree in selling and marketing costs naturally due to the lower level of travel and marketing expenditure due to the pandemic, there was an uptick in R&D as we intentionally and meaningfully invested in the future growth of the business. General and administrative costs increased due to write-downs on some customers facing difficulties due to COVID-19 with an overall increase in operating expenses of 2.8%. As a result of the strong top line, we reported a net profit of EUR 31.9 million compared to EUR 7.6 million in 2019. Now turning to cash flow. You'll see that we had a strong improvement over the year. Operating cash flow during 2020 was more than EUR 100 million, up from around EUR 48 million in 2019. This was driven by the increase in profit of cost, but also reflects a positive movement in working capital. Cash flow user investing was EUR 5.6 million, mostly from maintenance CapEx and investments related to Dosimetry software developments compared with an inflow of EUR 1.8 million last year, where the sale of RadioMed contributed. Finally, cash flow generated from financing was EUR 13.4 million, mostly as a result of a drawdown on the term loan at the beginning of 2020 for EUR 21 million. Finally, on the balance sheet. Just to reiterate what I said earlier, this was significantly strengthened with our year-end net cash position of EUR 65.7 million compared with the net debt position of EUR 21 million in the previous year. I'll go back to Olivier to discuss outlook now.

So just to give you an update now on the situation with the COVID-19. Firstly, at the manufacturing and supply chain level, we saw no significant impact and know that all suppliers are open in all geographies. As a global business, the restrictions did impact the signing and installation of new contract and looking at the 20 proton therapy projects under construction or installation, we have rescheduled several project time lines as a result of this. On the service side, all proton therapy centers remained operational with IBA providing full support both on and off-site. As a result of this element, the overall direct impact on EBIT was close to EUR 15 million. This does not include a significant indirect part on the financials, which is hard to quantify and mostly stems from sales, which did not materialize in 2020. I would now like to give an update on our dividend policy. The Board believes that the dividend policy should allow IBA to deliver consistent value to its shareholders while protecting its resources in adverse operating conditions such as COVID-19 and maintaining its capacity to invest strategically to capture further potential. The move to a more progressive dividend policy will enable us to pay out stable and yet a growing amount each year that takes into account the fluctuation of our financial results, but reflect the performance of the company over the long term. We're grateful for the continuing support of our loyal shareholders. And for 2020, the Board is recommending a gross dividend of EUR 0.2 per share. To wrap things up, I will now talk about the company outlook. Although 2020 was clearly a challenging year, IBA showed considerable resilience across all -- across all our business lines, and we were particularly pleased by the improvement of the performance in the second half. The situation remains complex in 2021 with regard to the installations of project, and IBA continues to closely monitor the situation. Other Accelerators and Dosimetry continue to have a healthy order intake, and in proton therapy, new contracts are on the horizon in key strategic regions. We remain committed to progressing new tenders internationally and the overall pipeline is quite encouraging. Recurring revenues are clearly important to the business, and we are, therefore, encouraged by the stable growth in services. All of this is underpinned by our robust financial position. Looking ahead, research and development investment will form a core part of our plan for longer growth -- longer-term growth. As you will appreciate, the ongoing uncertainty with the pandemic means that we are unable to provide reliable projected 2021 performance at this time. The group continues to focus on delivering value to its stakeholders and is committed to remaining the leader in all of its markets while driving efficiency across the board. Before we move to Q&A, I would like to highlight the financial calendar for the remainder of this year. We will provide our quarter 1 business update on May 20. Our general meeting will be held on the 9th of June. Then in August, we will report our half year results as normal. I'd like also to mention ASTRO in October as we hope to hold a Capital Market Day alongside this, although this will be dependent on the COVID restrictions at the time. Thank you very much. Soumya and I will now be pleased to take your questions.

[Operator Instructions] We have a first question from David Vagman from ING.

So first question about the working capital development. So you've achieved a very nice inflow in 2019 and 2020 for EUR 14 million and EUR 15 million. How should we be thinking about the development of working capital in the coming years? So 2021, but also the beyond. Having in mind that you need to execute your contract, you need to manufacture and you need to install them? And then secondly, on the U.S. proton therapy market. So I'm quite curious about comments you made in the press release published this morning. So you say you have taken steps to reinforce your presence in a view to capture more market share and that you're seeing an uptick in sales. So maybe you can comment on that, please. And lastly, also, if you can elaborate on the recent extension of PT indication in the U.S. by the National Cancer Network.

Okay. Thanks, David. I will take the first one, and then I think Olivier and I will share the rest. So on working capital requirements, well, as you've seen, indeed, we've had a drastic improvement over 2020, which comes from several impacts. The first one is that indeed, we've been consistently going into cash collection, and it's been quite successful because we've been able to get our cash on time from most of our customers. You did see that we mentioned a few write-downs that we had to take on some customers who have difficulties. But even for those customers, we are working constructively with them to try and take actions to the best solution possible basically. So that is number one. Number two, indeed, we have managed our inventory very prudently by making sure that we order our equipment when it's required for delivery, which, of course, means that with some of the delays that we have in installation, the equipment that is already there is there. And of course, we can't cancel our commitments to our suppliers. But to the extent possible, we have pushed some things across to 2021. So I would say that overall, I would expect that working capital should deteriorate very slightly, but overall will remain stable over 2021 and also over 2022. Now it's very difficult to predict because it's very much dependent also on the overall level of order intake. So I would say in a normal circumstances, we will remain stable to slightly deteriorating. If things fluctuate more, then, of course, it will depend on those fluctuations.

David, on the U.S. PT market, I think for competitive reason, I don't want to be too specific on the different initiatives we have taken. We're quite pleased to see that, of course, U.S. has been quite impacted by the pandemic in 2020, but it's coming back quite strong with a lot of prospects on the horizon, as we have said. And thanks to -- first of all, we thank our team over there. We also established a number of strong partnership with a number of people in the U.S. Once again, I don't want to be specific on that. But the pipeline looks quite strong and revitalized. And I believe U.S., thanks to vaccination, is slowly coming out of the crisis, and we expect to see more activities coming out of the U.S. in the -- probably the second half of 2021. And thanks to this relationship, I think we are very well positioned in terms of having the lead on the different prospect for IBA to win these -- those bids.

And maybe just a word, Olivier, on the [ Ray ] box market because we have had quite a volatile environment with, let's say, the Affordable Care Act and then the [ mobile demand ] and then Trump pushing back, and now you have the Biden administration. Any word you could say on that? Do you think the Biden administration is supportive? What is your first impression?

I think actually, I've seen a movie, I think, yesterday, Biden did some speech and spoke about proton therapy in Ohio. So I didn't speak to Biden myself, but sounds like a good supporter, indeed. You're right. I think the volatility and the back and forth didn't help for sure. I think what I can see is that the financing is available in the U.S. And I think with the plan that they've put together in order to regrow the economy and so on and so forth could be accessible -- part of it could be accessible for financing of proton therapy systems. And I think many people will take this window to actually start to invest into -- potentially, into proton therapy. So I think a bit more stability, how do they call it, the package for the economy.

Civil stoppage.

Yes. So we'll bring, I believe, financing capabilities in the U.S. with some appetite for investment. And indeed, in an environment where we have seen, as we have mentioned, a small improvement on reimbursement ecosystem with a number of indications that are now approved, such as bone metastases, head and neck, even lung we've seen. So there's a bit of -- slightly more favorable environment for proton therapy with financing a little bit more possibilities on reimbursement.

We can share more details with you, David, if you like, on that specifically.

Next question is from Kit Lee from Jefferies.

I have 3, please. My first question is just on CGNNT. Can you just talk about the rapid -- the contribution to the EBIT line for full year '20 from the licensing deal? And then my second question is just on your order backlog for proton therapy systems. Can you just confirm how many proton systems are in the order backlog today? And you also talked about the 20 proton projects. How should we think about the time line for those installations to be done by for the 20 projects? And then my third question is just on your write-down of receivables for the customers who did face some payment difficulties. Was that a region-specific issue? Or are the customers from different regions? If you can share more color on that, please?

Okay. So on CGNNT, Kit -- hi, first of all. On CGNNT, just like for other contracts, we don't disclose specific margin. But I'll say that it's a high level of margin because, of course, the contract has 3 components. There's a licensing component, which is a high-margin component, and then there are service and equipment components, which are normal margin components. So the mix is reasonably high. In terms of order backlog, indeed, there are 20 systems right now in the proton backlog. Those are the 20 that need to be installed. And the estimated time line for installation is over the next 3 years or so, depending on when the contracts were sold. Now the exact time line will really be very much dependent on what happens in 2021 also with COVID. You did see that we mentioned in the press release that we started 2 installations, despite the pandemic, in India and in Taiwan. And hopefully, we'll be able to start more as the world gets more used to working with COVID-19, but it's still quite an uncertain world out there. So it will probably take a little more time for us to...

And very specifically, this is the uncertainty providing us to give guidance. Unfortunately, we don't have a crystal ball and -- or it doesn't work. And that's the uncertainty remaining on the things going forward. The reality is that we have a huge backlog. So the day we can start to execute on it, we know it will look good for IBA.

Yes.

On the write-down, maybe before I would like to comment as well on the pro forma without CGN, but maybe on the write-down, Soumya?

Yes, on the write-down, well, it's -- let's say that we've had customers, a few customers across the board who've had issues. It's mostly been those who are dependent to some extent on patients coming in from outside the country. In this case, the write-down is mostly in the U.S. but the reasons are a bit specific. One of the centers has entered a chapter 11 position. It's a very old center. And the other one has some temporary issues. Of course, from an IFRS standpoint, we have to take a write-down based on our accounting rules, but we really hope that we will be able to find solutions that allow us to continue to operate these 2 centers with our customers over the coming year.

Most of it being a refinancing issue and not an operational issue or not even so much of a recruitment issue -- patient recruitment issue. On CGNNT contribution, I think, let's be blunt about it. I think everybody is obsessed with a pro forma -- pro forma P&L or IBA without CGNNT. I think there's always plus/minus. Overall, what I can share with you is that without CGNNT, the group would have been breakeven to slightly positive. And then as we have disclosed in our press release, the 15 -- including the EUR 15 million of impact -- direct impact of COVID and you can estimate that more or less the same indirect impact of COVID. So overall, I think the pro forma of IBA without CGNNT and without COVID would have been a profitable outlook for 2020 pro forma, let's say. And this is really thanks to the, let's say, all the actions we have taken over the years to actually be less dependent on big proton therapy order and also built on recurring revenues, PT service is one of them. And you have seen that it's growing quite nicely. I was looking at the number. I think the CAGR over the last 4 years for our service has been more than 10%. So we have been a very strong and growing recurring revenue base for IBA, which is helping us with the profitability, making us less dependent on big proton therapy orders. And the success of our other business units as well, RadioPharma Solutions, industrial and Dosimetry is really helping us to build a strong and profitable business. And yes, you will get here where proton therapy will be extremely successful, and we will be very -- well, let's say, more profitable in some years where we will see less proton therapy orders and a slower macro conversion where the group will be slightly less profitable. But going forward, that's how we should look at it. The reason why we cannot give guidance at this stage is once again because nobody knows where we're going with this pandemic, even though we see light at the end of the tunnel with the vaccination campaign. But tell me when we will get out of it and how the world will look like after that, I will tell you what the profitability profile of IBA will be. But since we don't know, and I didn't hear any convincing, let's say, narrative about what will be the world after COVID. I can unfortunately not give guidance at this stage.

That's great. Can I just follow-up on the backlog? So is the entire proton therapy equipment backlog made up of the 20 projects? And so there is no other contract of -- sorry, there is no other order where you haven't started the construction or any installation work yet. Is that how we should understand the backlog today?

So backlog includes any contract on which we have received down payment and a signed contract, whatever the stage of construction or installation of that contract. So some contracts are at the very beginning. For example, if you take the Korea deal that was signed end of 2020 and for which we got the down payment early 2021, well, I would say, probably nearly all of the revenue from that contract is currently in the backlog. Whereas if you take on earlier contracts for maybe one sign in 2018 or '19, then there, we probably have maybe 30% or 40% of the revenue still in backlog. So it really depends on the timing of the contract. The backlog that you see, the EUR 382 million includes PT, but it also includes the other accelerator and upgrade backlog.

Yes. So if I just look at the PT backlog, which is around EUR 260 million, how many systems that you've taken as order are not in construction phase today? I'm just trying to understand on top of the 20 project, how many more do you have in the balance today?

On top of the 20, I don't have anything else in the backlog because the backlog contains both equipment and installation.

Okay. So that's the 20 projects are the entire equipment backlog for proton therapy.

Yes. Part of the backlog. Any revenue which has not yet been recognized on equipment is in the backlog.

Next question from Matthias Maenhaut from Kepler Cheuvreux.

A couple of questions from my end. Hello?

We can hear you, Matthias. Go ahead.

Yes. Okay. A couple of questions from my end. Maybe starting in terms of OpEx evolution for next year. I think I understand that there's limited visibility on the revenue lines, but I guess, in terms of costs and definitely R&D and general and administrative costs, you could give us some guidance that would be that will be much appreciated. And also, in terms of cost inflation, we have seen a lot around shipping rates. Is that something of an impact for you? And is that sizable impact? A little bit more color on that would be much appreciated. Then a second question maybe on the competitive environment, your largest competitor is in the process of being acquired. Does that have had any impact? Do you see them less? Are they less aggressive? Are they, I would say, less concentrated, given the merger process, that would also be much appreciated? Any color on that? And then maybe a third question is on FLASH therapy. Can you just situate a little bit where we are today? And what is still required to bring this to the mass market? Who will be the key driver of this technology? And what is the progress?

Okay. Maybe I can start with the question on OpEx. So indeed, I think, you're right in saying that we can give you some level of view on the OpEx. Now you've seen that we've had a slight increase in OpEx in 2020, but most of that increase is actually from the write-downs that we took on some customers, as I mentioned earlier, in 2020. So in 2021, excluding effects like that, which, of course, cannot be foreseen ahead of time, we will probably see a slight increase of OpEx, but it should be very gradual because you may remember that we have also had the impact of less travel and less expenditure on marketing in 2020, and we should come back to something more normal in 2021. I would say you should expect maybe between 1% and 3% increase in 2021 in line with inflation basically, which basically means that we will absorb a big chunk of the inflation with -- in 2021, but at the same time, we potentially hope at least, so there will be more increased activity in travel and marketing.

On the inflation...

Shipping rates?

Yes, exactly. I think -- well, shipping rate, and there's a little bit of pressure on steel and copper, for instance, steel and copper in the mix is not that big. It's something we manage with some inventory. On the shipping thing, there's one thing you have to know is that we are never so much in a hurry, so to speak. So, so far, we've been able to find some spot without a significant increase of our cost now. We have to see how long it will take to take the ship out of the Suez Canal, but so far, we've been able -- and we don't anticipate a major increase of our cost due to that. On the Varian, Siemens deal, I would say, up to now, it's quite neutral. We don't see them more. We don't see them less. I guess they're also very busy merging. But so far, I would say it has been no effect for us, no more activity, not less activities. On the FLASH, I think, I see it really as a 3-step process, first of all, and that's the one currently going on is to really understand the biological effect of it and being able to reproduce it, then we will go to -- together with our customers to animal trials before we can start some human trials in the future. The driver for it, we believe, IBA -- we see IBA as a technology enabler and our clinical partners to be in the driving seat from a clinical development standpoint. So that's what we can see. I think it's more a kind of at least 5-years process than something for next year, really. Now it has certainly some, let's say, make proton therapy a bit more attractive for the FLASH believer and as this is today, the only way to get access to FLASH. So I think, overall, it's positive for proton therapy before it becomes a clinical reality, it will take some time. And once again, biological effect, understanding then animal trial then human trials before it becomes, let's say, standard practice in the field of radiation therapy.

Yes. Okay. May I have just one follow-up on Varian? I saw that they signed this Chinese contract, the China Medical University Hospital, was that a contract in which you were also fully running? Is that by -- does it make part of one of the 5 projects that was kept out of the CGNNT deal? And maybe just following up on that, on those 5 projects, is there like a time line in which you need to sign those contracts? Or is this just indefinite exclusivity?

So on the China Medical, actually, the China Medical University Hospital is in Taiwan. And as you may have read, the contract we signed with CGN is for the Mainland -- for Mainland China only. So this one is not part of deal. Secondly, in terms of the timing that CGN has, well, there's no specific timing as such on -- for us to be able to realize those deals because as part of our deal with them, those contracts are ones for which we were already in discussion with our customer. And so they are not included in the deal through CGN. And -- I'm sorry, I don't know what your other question was.

That's it, I believe.

Okay.

That is just, can we expect those contracts at short notice? Or what is actually the...

Well, it's the same thing with proton contracts. I wish I could, as Olivier said, have a crystal ball and tell you when those contracts materialize. We're working on them right now, but I can't give any guidance on when it will happen. Of course, we hope it will happen sooner rather than later.

And once again here, I mean, COVID has an impact. As you guys know, there is some country where we can travel, there is some country where it's not possible to travel, China being one of them. So it doesn't stop the process, but certainly it makes the process very difficult.

Next question from Thomas Guillot from Degroof Petercam.

Just one question regarding the services revenues and its dynamics, notably for the accelerators. You had a strong year in selling Other Accelerators instrument. Still, the growth for services is declining. Just would like to understand the correlation between your instruments' revenue growth and the decrease in services revenue and how actually it penetrates on a business basis. And what is your forward-looking on the services revenues, notably for Other Accelerators?

Okay. Thank you very much. I think we -- first of all, order intake of the year doesn't really mean service for the year because we have to deliver and install the system before we can provide services. One thing that we did mention on the Other Accelerators services for 2020. Clearly, there, you have a COVID impact contrary to the proton therapy service where we have people on site. Other Accelerators services usually are basically -- they're made of 3 main items: one is spare parts. And this one, we could continue to operate because we can ship a spare part to customer and then the rest is upgrades that customers are buying and services we do provide. And these services are usually preventive maintenance that they buy from us and for both upgrade and preventive maintenance, the fact that we could not travel did have an impact on our revenue for services. So I think we'll see this Other Accelerators business service continue to grow in the future, thanks to the growth of the installed base. It will fluctuate a bit based on potentially having big upgrade orders in a year -- in a specific year. But overall, as the service component as well as the spare part components will continue to grow with the installed base and the upgrade somehow as well, but is less, let's say, predictable or less linear going forward. So you should not look at 2020 as the new trend, so to speak. This has been heavily impacted by COVID.

We have no more question for the moment. [Operator Instructions] Next question from Simon Vlaminck from Degroof Petercam.

A follow-up on the question of Thomas, if I may. On the Other Accelerators, so you sold already 4 systems this year, if I understood correctly. You were hinting that we were getting close to a potential inflection point on that front. Have you -- are you still in touch with the big potential buyers that were flagged last year? Just getting -- want to get a little bit more sense on how we should expect the rollout on that division going forward.

Yes. I think that -- hello, Simon. First of all, long time no see. Good to hear from you. And yes. So you're right. And specifically, in the field, there's 2 big opportunities for the Rhodotron. Here, we speak specifically about Rhodotron. One is medical device sterilization. And we have really started to see a shift away from ethylene oxide and cobalt in 2019 and this has been slowed down by the COVID crisis actually. I think we have seen much less deal in the field of medical device in 2020. And not that we lost them to competition or that they have been canceled but the overall medical device industry has obviously been shaked by the COVID crisis. And actually, counterintuitively, the volume has decreased because the medical device sterilization business is really driven by the surgery, the number of surgery going on and because of COVID, the surgery has decreased. And therefore, the demand for sterilization, a slightly decrease in 2020 because of COVID. But we expect to see it coming back quite strongly post pandemic and from our understanding at this stage, the pipeline that was very strong in end of 2019 did not disappear, and we see actually a lot of activity going on right now in the field of medical device sterilization. And we're pretty optimistic about it, once again, depending on when the world will go out of this pandemic. But that's really something we focus on. We are quite bullish on it. And let's stay tuned, and I believe it's a very good opportunity for us at IBA. And the second application is around theranostic and radioisotope. We are selling higher energy of Rhodotron. We have sold one to a customer in the U.S. called NorthStar. They intend to produce technetium-99 with it. They're progressing very well. Actually, we have shipped the first machine or we're about to ship the first machine in the next few days. And this has some potential as well. You might remember that NorthStar did sign a blanket agreement for 8 TT300 high energy, 2 of them are in the backlog and currently going through production and installation. If they activate the rest of the contract, it's also a potential accelerator drive for us. So for Rhodotron, both in the field of medical device sterilization and radioisotope production, I think, we're in good shape and in the right place to be able to resume the potential as soon as the pandemic is gone.

Interesting. And then on the proton therapy, on the 20 projects that are now ongoing, I mean, obviously, COVID is impacting a lot, but you also clearly -- or we see the news flow coming out of the U.S. So that market seems to be stabilizing, your hinting that it's quite promising going forward. If we have to run these 20 or put them in the different regions, because I would think U.S., normalizing; Asia, normalizing; Europe, pretty difficult. Can you maybe rank these 20 in those brackets? And maybe give a comment also on Europe, how the current momentum or situation is on the PT market?

Okay. So the 20 are in the backlog. They are not prospects. Actually on the 20, I believe there is one in the U.S., and we just added the installation of the one in the U.S. last week, I believe. So indeed, we resume the rest, most of it being in Asia, most of it in China, actually.

China, India.

India.

Korea.

Korea.

Taiwan.

Taiwan. We have a lot of activity going on in this jurisdiction, Singapore, where it's normalizing, yes, but no. So very difficult to travel in all jurisdictions in China. To my knowledge at this stage, it's even impossible to travel. So it's still very difficult and brings a lot of uncertainty on our backlog conversion in the next few months. For the market prospect, you rightfully say that indeed, U.S. is normalizing, and we see a lot of activity in the U.S., China with the -- just what I just mentioned, difficulty to travel, but also quite a number of prospects. And in Europe, very, very slow activity. As you know, we've been selected by Unicancer in France. But since then, I think, France is badly impacted by COVID. So there's not much activity going on. And there's a very few prospects in Europe. It's still possible in 2021 to see maybe 1 or 2 deals emerging for Europe. But I think our focus and our, let's say, expectations for new orders in 2021 comes more from the U.S. and Asia and mainly China and Asia.

Okay. And then on the U.S., you mentioned new collaborations or partnerships without really mentioning the name. Do we have to think about partnerships of the like of procure back in the days? Or what kind of partnerships are those?

Once again, for competitive reason, I prefer to be -- yes.

We have a new question from Matthias Maenhaut from Kepler Cheuvreux.

One question actually remaining on Dosimetry business. The order intake was up 10% for the full year. That does seem to imply, if I'm not wrong, a bit of a slowing in the second half. Could you just maybe elaborate a little bit on what has driven that? And then more broadly, in terms of the investments you're doing, can you talk a little bit about the investments you're doing? And what is the potential for this business?

Okay. I can take the first part and a little bit of the second one to add on, if you like. So on order intake, no, there was no slowing down as such. It's really related to the fact that sometimes you have larger orders in which the actual execution of the order takes a bit more time. So potentially, for example, you can have a big order intake in 2020, but for which the delivery is staggered over 6 months or 9 months, and so it will happen over 2021, more than 2020. And that's what really explains the gap between the revenue and the order intake. Also, just as a reminder, as I had said earlier on, the 2019 numbers included RadioMed, and -- which was sold by the end of 2019. But if you look at it on a very constant scope, actually, sales did increase nearly 2%. So most of the gap really comes from the fact that a big chunk of the order intake taken in 2020 and taken in the second half of 2020, by the way, will be delivered in 2021. On your other question in terms of investment, well, there's been quite -- I mean, you know that once we decided that we were not -- we were going out of the strategic review of Dosimetry, and we were maintaining the complete scope of Dosimetry in the company, I think, I'd already mentioned that the idea was that if we remain in the company, we continue to make investments to grow the business. And so quite some investment has been made really in developing certain products. In. Particular, I think, Olivier mentioned that the patient QA is an area of focus for us because that's where we see quite some development happening in the market and in growth. And in the past, IBA was not as present in that area. And so we're really reinforcing and coming back strongly in that area by investing in it with some product launches related to that patient QA, which will happen over 2021 also.

So yes, indeed, it's about reinvesting and repositioning the product portfolio and mainly in patient QA. And I think we start to see the result of this, as we -- as you have seen, our order intake has grown 10% which is much better. We have beat the market. Therefore, I believe we start to see the effect of the repositioning of our product portfolio, gaining market share. And we expect to see more product release in 2021. So investment is about R&D and with a clear focus on patient QA.

And maybe also, I think we've mentioned in the past that we also have a very strong collaboration between the Dosimetry business and the proton therapy business where Dosimetry is a strong enabler of proton. And IBA Dosimetry is, of course, the leader by far in proton -- for Dosimetry for proton. And there also, we continue to invest in improving the tools that we have.

We have no more questions by phone. [Operator Instructions]

If there is no more questions, I would like to then conclude the call. Once again, I would like to thank you all for joining, and looking forward to see you or speak to you in the course of 2021 and certainly, for the call on our half year results, end of August, and hopefully, for Capital Markets Day during ASTRO in October. Thank you very much again, and I wish you all a very nice day. Thank you.

Bye, everyone.

Thank you, ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.