Q2 20/21

Nov 26, 2020

Good morning, everyone, and warm welcome to the presentation of Elekta's Second Quarter in our Fiscal year 2021. My name is Cecilia Kirtos, and I'm Head of Investor Relations at Elekta. With me today here in Stockholm, I have Gustal Salford, Elekta's newly appointed President and CEO and Johan Aderbeck, our acting CFO, who will present the results. Today's agenda starts off by Gustaf highlighting the development in the 2nd quarter. Then Johan will give you details on the financials. And finally, Gustaf will take a view on Elekta's outlook. And after the presentation, there will, as usual, be time for questions. But before I start, I want to remind you that some of the information discussed on the call contains forward looking statements, and these include projections regarding revenue, operating result, cash flow as well as products and product development. And these statements involve risk and uncertainties that may cause actual results to differ materially from those set forth in the statements. And with that, I hand over to you, Gustaf. Thank you, Cecilia. Today, it was announced that I've been appointed as the new CEO of Elekta. I'm very humbled and proud by the trust and confidence in me shown by our Board of Directors. Ever since I started at Elekta, every day, I've enjoyed being part of a truly global company, delivering innovation that helps our customers to improve and save lives. I look forward to leading a fantastic company together with all my amazing colleagues around the world. I would also like to start with a couple of comments about Elekta's purpose and strategy. To help clinicians, to improve patients' lives has never been more important than today, but also more challenging due to the COVID pandemic. All employees at Elekta are working relentlessly so that everyone with cancer should have access to and benefit from precise personalized radiation therapy. We will continue to leverage our position as the only independent radiation therapy player of scale and also continue to form strong partnerships. We are confident that we are confident that we'll continue to accelerate with a clear focus on our customers and their patients. And if we now turn to a couple of highlights from the last quarter. One main event was the launch and regulatory clearance of our new Harmony LINAK. I'll come back to Harmony later in the presentation. We also received the EU Medical Device Regulation, or MDR, certificate for the existing Linac portfolio, with ongoing processes for the remaining products in our portfolio. We see strong momentum for MR Linac, and we received regulatory clearance in China in August, opening the Chinese market for additional unity orders. Of course, a key focus is to secure continued high levels of machine utilization globally during COVID. We have managed this well with uptimes at normal levels or higher. We have also shown resilience and performed in challenging market conditions. In the quarter, we managed to perform better than the overall radiation therapy market, both in terms of orders and revenue, with improved margins and stabilized cash flows. From a margin and cash flow perspective, the 1st 6 months has been the best start of a fiscal year ever for Elekta in absolute terms. Regarding orders and revenue, we saw a stable development during COVID, but below historical levels and the long term potential for the radiation therapy market. During the quarter, we experienced a continued negative impact on orders due to lockdowns and reduced access to customers, especially in emerging markets, and the order development came in at -2% in the quarter. However, in some markets, the situation improved. Europe returned to order growth and our global linac volumes grew and gained market share. We continued to drive revenue from our strong backlog, resulting in 3% growth. We saw good growth in Asia Pacific, with a very strong development in China and Europe, and in Europe we saw increased linac installations. Our installed base continues to grow with around 6% on an annual basis, supporting our long term ambition to close the linac gap of more than 10,000 linacs globally. Our installed base growth and service business continues to support Elekta's resilience, and we are currently focusing on expanding our service offering and reach across regions and business lines. Digitalization is key for the service business, and we have the most advanced remote monitoring technology and uptake in the industry, which dramatically reduces unplanned system downtime. We use artificial intelligence to diagnose, predict and correct errors before there arises and also to improve response and resolution time to customer. We see continued improvement on our customer satisfaction from already high levels, and I'm especially pleased to see this during the COVID pandemic. It is a sign that our service engineers and organization is doing a fantastic job around the world under very challenging circumstances. If we now turn to the overall market development in the quarter, I would like to share some observations. On North and South America, we saw in U. S. Patient volumes increase during the autumn, followed by a worsening COVID situation in the end of the quarter. CMS released the radiation on quality alternative payment model, or ROAPM. This model is now set to start in July 2021, and we believe the announcement will reduce uncertainties for the providers in relation to future CapEx investment decisions. We see less face to face customer interaction. For example, this year's ASTRO was fully digital. And although our virtual events and user meetings worked well in a virtual environment, we, of course, missed being able to interact with our customers in person. For Europe, Middle East and Africa, we experienced an improvement in the beginning of the quarter, especially in North Europe, but the situation deteriorated in the last month. We start to see first signs of stimulus packages in parts of Europe and also a larger focus on radiation therapy and cancer care, for example, the work on the upcoming European beating cancer plan. In Asia Pacific, China started to get back to normal levels throughout the quarter, and there are no major issues in relation to customer access or procurement processes. In the rest of Asia Pacific, we see very varied level of activities, whereas some markets still have very low levels of business activities. Europe's order performance varied across the regions. We saw strong order recovery in Europe in the quarter, but the situation was challenging in many emerging markets. North and South America came in at -12% in the quarter and plus 25% for the first half. Europe, Middle East, Africa at a strong plus 20% in the quarter and -3% for the first half year and Asia Pacific at -12% for the second quarter and also -12% for the first half. And below, you can see some examples of deals per region. I'm especially glad to see the first Unity being ordered in China after the regulatory clearance and also the first orders for Harmony to the French market. We participated in the 1st major face to face trade show, the China International Import Exhibition, CIIE. And as a market, China is back to normal levels, and we saw strong interest in our solutions, especially Unity. We celebrated our market leading position with a ceremony for the 1,000th installed Elekta linac in China, something we are very proud of. One of the key events in the quarter was, of course, our launch of our new linac platform, Harmony. It's a solution balancing productivity, versatility and precision without compromise. For example, when it comes to improved productivity, the new fast track in room experience reduces patient setup time by as much as 50%. Combined with further workflow enhancements, treatment slots can be reduced by up to 25%, enabling clinicians to deliver high quality cancer care to more patients. The products also have smaller size to fit into smaller existing bunkers. And we're offering the product in 2 versions, Harmony and Harmony Pro, in order to offer full versatility. We received CE Mark early November, and we expected FDA approval in the beginning of the next calendar year and then Chinese National Medical Products Administration approval in the beginning of 2022. We have received great customer feedback on the solution and its enhancements of workflow and ease of use, and we see a very strong demand and traction for the new platform. After Q2 closed, last week, we launched Elekta Studio, which with the imaging ring is a true 3 d image guided adaptive therapy suite for brachytherapy. In the studio, the imaging is coming to the patient instead of having the patient being transported around in a hospital to get the images, saving time and personnel resources. The wide bore, 121 centimeters in diameter, also enables to do the treatment without moving the patient for both gynecological and prostate cancer, securing the precision and patient comfort. Now to Unity. We see a very strong and accelerating development for Unity. More than 1700 patients have been treated by our customers for more than 30 different indications. The pace at which this breadth of clinical experience can be achieved is unprecedented in our field. We're seeing clinicians focus on disease sites that we did not expect, and this is just the start of the discoveries that we can make. We can actually see what is happening during treatment. And we see very good progress on the MOMENTUM study that now includes more than 800 patients treated for more than 30 indications. Overall, there is a strong increase in the number of mrlinac related scientific publications globally, a trend that will continue going forward. We also had our 15th MR Linna Consortium meeting virtually with more than 5 50 customers from almost 50 sites and 18 different countries. It was great interaction and sharing our best practices. And he has to mention a couple of Wisconsin describing their work on both liver and pancreas cancer cases, Negrar in Italy with scientific publications around bone, oligomets or nodal boost treatments And a year ago, we invited you to see a Unity treatment in Tubingen. And today, they have done more than 2,800 treatments fractions, sorry. And with that description of the strong global and positive momentum for Uniti, I hand it over to Johan. Thank you, Gustav. I will go through the financials, starting with net sales and EBITDA margin development. As you know, the pandemic has reduced access to our customers and have delayed installations, which in turn has negatively impacted solution sales. Service sales has, however, continued to grow throughout this period. In the Q2, the pandemic effect on sales was somewhat lower, and we returned to sales growth after 2 quarters with declines. Total net sales increased 3% in the quarter with both solutions and service sales growing. Solutions were 2% and service with 4%. This also resulted in a normalization of the sales mix to 60% solutions and 40% service. For the 1st 6 months, sales was down 1%, with solution sales down 5% and service growing with 6%. Although we are pleased with the net sales development under the challenging circumstances, we are not satisfied from a more long term perspective and expect to get back to a significantly higher growth rate post the pandemic. Our EBITDA margin came in at a strong 20%, both year to date and on rolling 12 months. In the 2nd quarter, EBITDA margin was 21.3%, and I will give some more details of drivers later in the presentation. Continuing with sales, the regional picture was mixed in Q2. Starting with Asia Pacific, we delivered strong growth of 32%. This was mainly driven by China, which grew more than 50%, And here we are back to normal business conditions. Turning to North America. We saw a decline of 16% from COVID related installation delays. Canada was the exception and showed good growth in the quarter. Finally, region Europe, Middle East and Africa. In Europe, we had positive growth. In Middle East and Africa, we reported lower revenue, which resulted in a small decline for the region in total. Overall, we saw better performance in mature markets, while emerging markets were more challenging. Gross margin was in line with Q2 last year, but down from Q1. The decline from the Q1 was primarily due to the normalization of product mix with a higher proportion of solution sales in the quarter. Bottom line, we increased net profit with 70% after high financial costs and with income taxes on the same percentage level as in the Q1. Moving on to expenses. The pandemic has led to many of our internal as well as external activities continuing on digital platforms. Product launches and ASTRO, as Gustaf talked about previously, are some examples of virtual meetings that resulted in a lower selling expense. We are investing some of the savings in selling and administrative expenses and improved digital ways of working, which enable us to build a lower sustainable cost base. Selling expenses continued on a very low level, but was slightly higher than in the Q1 as travel increased somewhat. Admin expenses decreased, and the change from the Q1 came mostly from a reduced external services spend. Turning to R and D. On a rolling 12 month basis, our gross R and D expenses increased to 10.4% of net sales from 9.7% last year as we continue to invest. Net R and D expenses decreased somewhat in the quarter compared to last year from higher capitalization and lower amortization. In constant currency, we also saw an increase from the Q1 even though amortizations came in at a lower level. As I mentioned earlier, our EBITDA margin for the first half year was 20%, corresponding to SEK 1,303,000,000. And we continue to successfully mitigate the negative market conditions through resilience and good cost control. This bridge illustrates the EBITDA growth of SEK 316,000,000, or 32%, during the 1st 6 months compared to last year. The negative impact from the decline in net sales was mitigated by favorable effects from higher share of services sales and higher margin products, as well as with significantly lower sales and R and D expense. FX also had a positive impact on the profitability, with the main effect coming from a large negative impact we saw last year. The net effect from foreign exchange, when taking into account effects on sales and costs, was approximately SEK 90,000,000. Moving on to cash flow. We saw the strong earnings result in a higher cash flow for the first half year. Cash flow after continuous investments came in at SEK 389 1,000,000, and we achieved an operational cash conversion of 50% for the first half year and 61 rolling 12 months. This is the best start ever in a fiscal year for Elekta. Net working capital increased in the quarter, mostly from higher crude income from a number of Chinese and Japanese projects. In the quarter, we repaid SEK 2,000,000,000 in outstanding loans as we see the stable earnings and cash flow development we have experienced warrants a lower cash position. The repayment have had no effect on net debt, and we maintain a higher cash position also after this loan repayment. To summarize the financials, we are satisfied with our performance in the second quarter and first half, especially given the challenging market conditions. And with that, I hand the word back to Gustav. Thank you, Johan. And now we just would like to discuss a bit on our strategic priorities going forward. And we see 4 key areas right now. And of course, it's about continuing our resilience activities. It's about adapting to new ways of working around traveling or marketing activities and a more flexible work environment for employees. Also, of course, reducing COGS, always a focus area for us and to continue with simplification of our processes through better IT systems and digitalization. We will drive innovation for long term growth and accelerate our investments in order to develop the best new software and solutions and platform going forward. Service is crucial for Elekta, and we will continue to focus and drive also a bigger focus on customer satisfaction, new innovations in this field, but also improving processes with more automation, standardization centralization. We'll also leverage on partnerships, as Elekta always has done. And we will continue to be the largest independent player in radiation therapy of scale, and we'll also form strong partnerships. So we're confident that we'll continue to accelerate with a clear focus on our customers and their patients. And now to a brief outlook in Q3. We expect the new way of lockdown measures to affect us in the Q3 with continued uncertainty in order growth and increased risk for delayed installation impacting revenue. We, of course, focus on resilience activities to control our costs, as we've shown in the first half, and prepare for getting back to growth. We will further strengthen our investments in innovation to capture long term growth trends. So with that, I would like to thank you for listening in, and I would look also to address a special thank you to all our customers. The clinicians working day and night to prevent the effects of COVID pandemic on cancer care. And we are dedicated to support to keep their devices and solutions up and running during challenging circumstances. We will keep being resilient throughout the pandemic and support our customer for as long as it takes. And with that, I hand it over to Cecilia. Thank you. And as you probably remember, Astra was postponed in spring in April and will now start on Saturday and be virtual. So if you are interested, please join us in Elekta's Lounge Supposition, for example, or visit our virtual both. However, you will need a AstroPass to join this event. And with this, we now open for questions. So please, operator, will you give the instructions and let the first question in? Thank you. Thank you. Our first question comes from Annette Lykke from Handelsbanken. Please go ahead. Thank you so much and congrats on some very nice margin here in the Q2. First of all, in respect to margins, could you, Gerstel, help us a little bit on how we should see it beyond COVID-nineteen? You have an EBITA margin of 21% for the Q2. It will be very nice to have some indications where you see should we go back to normal levels as it were before COVID-nineteen? Or are you still expecting to see some sort of savings to continue and looking into beyond COVID-nineteen? Then my next question goes to the service business and the installed base you have. Right now, solutions as I account is down around 10% for the 1st 6 months. How long will it take before the decrease in solutions potentially have some impact on the service and service software that you are selling to the installed base? Or will you be able to compensate for that by winning new contracts? And then on the win of market share, could you share a little bit with us where it is you see Elekta having your game changer? Is it Harmony? Is it Unity? That will be that. And then I will jump back to the queue for my other questions. Thank you. Thank you, Annette. I will start with the margin question and what's the solution question and then the market share increase. So if we look at the margins as we see it, right now, of course, the expenses are low, travel, marketing events, travel, marketing events, internal meetings as well. And we are working diligently and have many projects running to continue to make these savings sustainable. Course, but we are not expecting to get back to the high levels we were before COVID because of these initiatives. Exactly how much that will be, we'll need to get back to because it's difficult to predict. We'll see that will probably mostly affect the sales and marketing expenses and maybe admin to some extent because that's the primary functions that have a lot of events and also traveling. I think as always, and we start to talk about it more and more, is the mix between solutions as service, as you said, Annette, that really understanding the impact on that on our margins. And we are focusing a lot on the service business right now, the service initiatives throughout the installed base to have a good strong growth there as well and that should have a positive effect on margins. And then how to compensate for the lower solutions, if I understood your question right, going forward. I see this more as a delay actually on the orders and some of the installations due to COVID. The demand is the same, if not even higher going forward for our products. We have said it many times, but there is a gap of more than 10,000 linacs around the world. And every second, cancer patients should get radiation therapy, but it's actually just accessible to 2 out of 10 cancer patients around the world. So I see it as a pent up demand that will be released when we see more certainty after COVID. Market share increase. We saw very strong development in Europe in the quarter. And it's you can say it's not just about unity and Harmony has not yet made a big impact on the market shares because it's going through the different regulatory processes. So it is about our existing platforms like the Versa HDs, for example, that is taking share around the world. So I hope that answered your question, Sanita. Yes. Just on, for example, the marketing spending, would you I mean, before COVID-nineteen, you were around the 10%. Would it be fair to assume those should be closer to would you have a saving of maybe 50 basis point or it 100 basis point that we should so we should see the margin the adjusted EBITDA margin being closer to 19%, 20% or something like that? I think yes. That's an indication of how much you believe you can continue to make as a saving for, for example, next year? Yes. I think it's too early to assume anything there really. But we are driving initiatives to reduce travel and more kind of different meetings, both internally, externally, but we'll need to get back to exactly how that will impact the margins. Okay. Thank you so much. Our next question comes from Michael Schuckerman from Morgan Stanley. Please go ahead. Thank you very much. I have three questions. The first one is for Gustaf. Can you be perhaps a little bit more precise about whether you intend to make some meaningful changes to the strategy of Elekta, and I'm talking here about geographical focus, and also the technology focus. Will Uniti be the same important growth driver as it was before under a different leadership structure? And perhaps also comment around M and A. Question number 2 is on government grants. You mentioned that in the 1st 6 months you had €40,000,000 of grants, but you didn't mention that in the Q1 result. Does that mean that you booked €40,000,000 in the second quarter? And are there more grants coming up in the second half of your fiscal year that you could perhaps indicate for us today? And then finally, on order bookings, can you comment on whether the second quarter had an impact from Harmony? I suspect not given the way that the regulatory time frame worked out, but maybe if there was. And also should we expect therefore in Q3 a pretty meaningful pent up demand order number coming through for Harmony? Thank you. Thank you, Michael. So the question is meaningful changes in strategy, governmental grants and the order uptake Harmony and kind of the ramp up of that was my understanding of the question. So if I start with the first one, meaningful changes to the strategy. I'm a true believer and are executing on our focused strategy on precision radiation medicine. I think that's clear to say. Focusing on helping our customers, the clinicians treating patients. But geographic areas, I think Elekta in my mind has always stood for early out in markets, emerging markets. We have followed the growth. We will continue to do so. So I think you will continue to see that around the world. But I think that has not really changed. It's what we have always have done, and that has made us successful historically. Unity, of course, a key growth driver, both in terms of volume, innovation and number of patients around the world. So that's key. But I would say, Elekta in many years, if you compare it to right now, has never been in a better product portfolio situation with Harmony, with Unity. You saw the RakkRing or the Electa Studio coming out as well, more and more interesting software solutions. We're number 1 or number 2 in all our 5 segments. So I think you will see a balanced portfolio strategy going forward. It's not just about Unity. We have a lot of other growth opportunities as well. And growth in terms of M and A, it's something we're always looking for, both on the innovation side. You saw Kaiku, you saw Prono, you saw SmartClinic or Pallabra apps that had been added very successfully to our software portfolio. But you will also see more going into new markets, and that could be both from own operations, but also from acquiring companies. I think Johan, you have the latest on the governmental grants. Yes. I would say that mostly of this came in, in the second quarter, but there were some of it in the first one as well. We most came in the second quarter. And then on the Harmony. So it's, of course, early stage from a volume perspective with Harmony, but we see very good interest and traction for the product, and we see the first orders coming in. I was referring to the 2 linac deal for France, and we see more and more of that activity going on, especially now after Sea Marks that we recently achieved. So I think that's where you see the first orders coming, and I see that will be positive contribution both to Q3 and Q4. Okay. Can I quickly clarify this then with these government grants, mostly in Q2, anything coming through in Q3? Because if I look at Q2, that probably benefited your margins by maybe 100 basis points or a bit more. Is there a similar magnitude of benefit in the Q3 coming from government grants? I don't have that number available. So we'll need to get back on that one. Okay. And then briefly also on order booking. So can I just confirm that Harmony did not have a meaningful impact yet on Q2 order bookings, but is perhaps likely or at least the numbers line up in a way that Q3 could be benefiting materially from Harmony? Is that a fair summary? Yes. It's kind of built up the demand, and we just recently got the CE mark. So you're absolutely right. Okay. Thank you. Our next question comes from the line of Veronika Dubajova from Goldman Sachs. Please go ahead. Yes, good morning and thank you for taking my questions. I will keep it to 2 please. My first one is just on the outlook statement for fiscal 2021. And I'm just curious, what do you guys need to see to be able to provide guidance? I mean, I appreciate there's a fair amount of uncertainty, same time, you continue to have an order backlog that is supportive. The revenue growth year to date has been fairly predictable to a large extent. So I'm just surprised that 2 quarters in, you're still unwilling to give us a guidance. And if you can talk to what it is that you need to see to be able to give us a guidance for the full year, that would be helpful. And then just related to that, the China Unity revenue recognition, do you anticipate the 2 remaining Unitys to be recognized in Q3? And then my second question is please on the moving pieces of the R and D expense line. Slightly surprised by the low amortization figure in the quarter. Is this the new run rate we should be anticipating? And then Gustaf, I noticed you made some comments around sort of your desire to increase R and D spending as you move into Q3 and Q4. Any guidance or insight you can give us into what the magnitude of that increase is, that would be great. Thank you, guys. Thank you, Veronika. And around guidance and uncertainty, it's not our unwillingness not to guide, but we go out to the customers. We ask them for orders and when they want to start to install the linacs. And when they are not sure, I think it would be almost irresponsible of us to guide. We need to have that clarity from the customer base in order to then be able to predict in more detail our revenue and order over the next 1, 2 quarter. But as I mentioned, I see a great potential and I see a pent up demand post COVID, but exactly when that will happen, it's difficult to say. So as soon as we get that clarity from the customer base, it's easy for us then to also look forward to look for the growth numbers and also look for the innovation initiatives as well. I think you just mentioned I can take the R and D question as well and our additional acceleration of those investments. We believe that's very important to kind of take the opportunity right now to invest in innovation to secure long term growth over the next 1, 2, 5, 4, 5 years going forward. So that's what we're saying. And historically, we said around 10% to 11% on as a percentage of sales and we believe that will then be a bit higher going forward. And then Johan on China. Yes. Yes. The Chinese unit is, as you know, we took free revenue on 3 of them in the Q2 and we do expect to take revenue on the remaining 2 in the Q3. And maybe a bit comment on the R and D expense. So we saw a decrease in amortizations in the second quarter. And this is as it is for capitalizations as well, dependent on where projects are, so when you can start capitalizing and when you finish the amortization. So we had reduced amortizations, projects where amortizations was ended was a key driver in the second quarter, but also some in Swedish krona terms, some foreign exchange effect making it lower. And Jan, is that SEK160 1,000,000 or so of amortization the right run rate going forward? Or would you expect it to pick up in Q3 and Q4? I wouldn't expect it to pick up in Q4 or Q3, Q4. But as I said, it depends on where projects when projects come to the phase when you can start to do amortizations. Okay. Thank you guys very much. And the next question comes from Kit Lee from Jefferies. Please go ahead. Good morning and thank you. Yes, two questions please. I think first question is just on Unity in 2Q. Can you just provide us with more color just around installation staff and also order intake of Unity in 2Q? And I guess for installation as well, what would be your plan just for Unity on installation starts for the year? And then my second question is just on the situation in China. Can you just give us an update on the lean at quarter, whether the tendering is now progressing or is there still some bottleneck issues in the market when it comes to licensing? And also for the Unity system, can you just confirm if that would be a Class A or Class B system for the licenses? Thank you. Okay. Hi, Kit. I will start with a bit on the Unity and then we go to China. But Unity overall, I mean, we see very good traction. We highlighted a couple of deals in the material, but we have more. So you saw the first Chinese deal coming in post the regulatory clearance, and then we also mentioned one important deal in the U. S. But we have more than that. It's not on last year's level. I can say that as well, but we'll not disclose the number quarter by quarter as we said in the previous call. So on the installation side, that's going well. It's a bit more challenging, of course, now during COVID, but we see good installations. We see shortening of the installation times and so on. So it's progressing according to plan, but a bit more challenging due to COVID, as I mentioned. On the China situation and the licensing and so on, there we see great opportunity and a great potential. And we saw it at the CIIE, so the Chinese International Import Show. That's very big interest for Uniti. And so that's a brief summary of the unit situation in China. And we also see the regular coming back to normal levels with both public procurement processes ongoing as well as private initiatives in the Chinese market as well. But if you look at the additional quarter that was announced back in 2019, has that started to come through in terms of the tendering process and the order intake you see in China? Yes. The program we mentioned, 1400 linacs, I think, back then, if that's what you are referring to. So I think it's this has not been clear earmarked units linked to that plan. And I think the plan didn't roll out as expected. But still, we see a huge unmet demand in China, and we foresee very good volumes going forward as well. But it's different to link it to the plan actually. And can you just confirm if Unit C is a Class A or a Class B system in China? I need to get back on that one. Okay. That's great. Thank you. Our next question comes from Christophe Liddeburg from Carnegie. Please go ahead. Thank you. I have three questions. First, around the cost. And there, the government grants you talked about, what line in the P and L do we see then? And how should we think about operating costs in the Q3 versus the Q2? The second question relates to cash flow. You mentioned the higher accrued income was related to China and Japan. Could you give some more explanations for that? I guess you might have not sent invoice, for example, for the unit in China. What's the reason for that? And then on the unit installations, just a follow-up, if you could say how many installations started, I. E, revenue recognized in the quarter? And how many installations do you expect now for the full year? That's all for me. Thank you. I need to get back on which lines in the P and L. We have a government grant, so I don't have that in front of me. So I need to go back to that. Crude income, I can as you point out, it came mostly from the 3 units we had in China. We had a couple of Japanese projects and so on. We do expect to invoice most of that in the Q3. So the expectation is that, that will come down from those projects. And on Unity installation starts, I mean we prefer not to go in to the details on numbers on all of this for Uniti's or for other products as well. So I don't have a comment on that one. Okay. Part of my first question was about operating cost in the 3rd quarter versus the 2nd quarter. Yes. Again, looking forward, given the how it looks in when it comes to pandemic and so on, the expectations is that we will continue to have low costs going into the Q3. And so, I'm not going to give you an exact forecast on it, but we expect continued low cost level in the 3rd quarter where we stand today. And the comment that you want to accelerate, I think it was R and D investments, how material is that on a sequential basis here in the 3rd Q4? It would be gradual ramp up, but I think it's more that we give an indication that we will continue and accelerate innovation investments over the next months, quarters here and years as well. Then of course, some of it will be capitalized and it will not be the same P and L effect, but we are driving new innovations, software and on our new platforms. Okay. Thank you very much. Thank you. Our next question comes from Stenk Gustafsson from Nordea. Please go ahead. Yes, good morning. Thank you for taking my questions. Coming back to the Unity installations here, and I appreciate you don't want to go into exact details for the quarter. But could you talk about the visibility for the coming 1 to 2 years when it comes to Unity installations? I think you should have a backlog of Unity orders of something like 40 to 50 systems. And my question is, well, if we assume that the COVID-nineteen will sort of go away fairly soon or at least the vaccine is coming, which will help. When it comes to installations, how what type of visibility do you have to install your backlog over the coming 1 to 2 years, given the feedback you hear from customers? That would be interesting. Hi, Sene. It's Gustave here. So the visibility from that perspective, we have installation start dates in our contracts and so on, but it's more if something changes and the customers due to COVID or lockdowns or focus on COVID treatments in a specific hospital needs to push that forward a bit. That's what's difficult to evaluate right now. But I mean, we have full visibility on the installation start dates in the coming years from a contractual perspective. So do you feel comfortable that your backlog would be installed over the next 2 years? We often say I think that's a good number often to consider that between order and revenue on a regular linac project, it's around 1 year. It can, of course, be shorter and longer. On a more like a Unity or Gamma Knife, we've seen more around 15 to 18 months, I would say, on average. I expect that actually to shorten a bit going forward with Unity when we see have said that you have the capacity to install 2 systems per month. Has that changed? No, it's the same, I would say. We have that capacity and we can build it up as well with adding more resources. And we're doing that continuously. We train new installers and service engineers and so on to cater for that future growth. Okay, excellent. Thank you very much. Thank you. Thank you. Our next question comes from Scott Bardo from Berenberg. Please go ahead. Yes. Thanks for taking my questions. So firstly, please on Harmony. Have you had any expressions of interest or any success in upgrading your existing order book for standard linear accelerators towards Harmony, perhaps if you can share some sort of insight there and how realistic that may be to upgrade your existing order book, please? Second question on Unity. It seems like your enthusiasm for Unity is increasing. You talk about accelerated interest, yet the disclosure surrounding Unity is decreasing. I appreciate, of course, that you don't want to provide near term guidance here. But of course, we as analysts need to try and model your company effectively to allow effective capital market valuation for the business. So I'd just like to push you on a few points here for Unity, please. Can you please tell us how many Unity's you have yet to install and book us revenues? I think that's an important number for us all, please. And could you also please share with us what the dynamic looks like in terms of leads out there at the moment that you're talking to customers? How is the market opening up as you enter into this new phase as you communicate? Last question, please. Again, Gustaf, I very much appreciate the comments about the near term uncertainty and business managing quite well. But you refer constantly to the medium term outlook remaining robust for Elekta. We don't have a medium term outlook in the market with respect to financial guidance. So the question is, is there any view in your mind, why your business can't grow in this high single digit, low double digit category as previously outlined? Has anything changed in your perspective at this point? Thank you. Thank you, Scott. So I think we went through if you remember from the Capital Days 3 years ago, we had kind of 3 phases in our Unity commercialization. The first phase was, of course, to get to the unit number, the 75, and get it at the first phase. The second phase we set back then as well was more about the clinical adoption, gradual reimbursement going into new countries. And the 3rd phase would be start around 2022 would be more about having reimbursement and further growth phase. So we saw it when we hit the targets, we went into the 2nd phase. Then we start then we stopped being so explicit quarter by quarter on all the numbers because we're not doing that with Gamma Knife or Linux and so on as well. It's part of our business. We have 5 strong business lines, as we call them, that will drive our growth going forward. Unity is one of those that we are super excited about, and we see we're doing what we say. We see that in a second wave here with that traction building and a consortium meeting with more than 550 customers talking what they can do about this fantastic product. And we also see that we have more than 20 5 or around 25 clinical machines treating patients. So I think you will hear more about Unity and more details about Unity, but we will not go back to guide on Unity numbers by quarter. We don't think that's the right thing to do. Mid term guidance compared to historical levels, if you have followed this market for a long time, Scott, you've seen it going up and down, but you saw it also being over 10% before COVID hit. And we also expect to see very positive development. Exactly what that will be after COVID, it's difficult to say. But as with a huge underlying demand, especially from emerging markets, we have a positive growth outlook, but it's too early to say any specific numbers at the moment. Thank you. And on Harmony then, please. Sorry, Harmony. So on the opportunity to kind of upgrade already from the order backlog, we see good opportunity because of the tractions from the products or from the customers for the products. So we see good opportunity. It's too early now to say in this quarter, in the Q2, But we'll see good opportunities for that also in Q3 and Q4. Understood. And maybe last question, Gustaf, and I appreciate you've had a lot to sort of deal with this year for the company in unprecedented times. But given there has been some changes in the end market and obviously your portfolio of products is strengthening, when can we expect some sort of capital markets event where Elekta sets new targets, midterm targets for the group? It implies that sort of volatility. Is that something we can expect in the near term horizon? Yes. So our ambition is, of course, to give Capital Markets update as soon as we can. We want it to stabilize a bit so we can have a clarity from the installed base and then we're ready to talk more about the next year and the years after. I cannot commit to a certain date here, but we'll get back to that as soon as possible. I just want to say 1 Let's say, likely next year we'll have that sort of event. Yes. Let us come back to that, Scott. This is quite a new announcement here today. So let me come back with that. Just a clarification we have, Scott, on the unit in China to your question, Kit, that will be Class I Class A, sorry, device. Just to clarify on a previously asked question. Thanks, Joseph. Thanks. Our next question comes from Lisa Clive from Bernstein. Please go ahead. Hi, there. Thanks for taking my questions. I have 3. During the 2018 CMD, the previous CEO indicated that Uniti had the potential to convert a third of the market to MR Linacs by 2023. Do you still believe this is an achievable target? What steps need to happen in terms of timeline of clinical data publication and reimbursement in order to get there? Second question, and you commented a bit on this, but just asking from a slightly different direction. Your total order backlog has steadily increased over the years and is now around 2x your annual gross order intake, while your larger competitor has stayed sort of near parity between their gross order book or their order backlog and their gross order intake. Does this mean it's taking you longer to deliver machines? Or is this somehow putting you at a competitive disadvantage? And what really needs to happen in order to decrease the size of your order book? Is it just coming down to I mean, you mentioned training people for installations. So is it just greater investment in installations and manufacturing? And then last question, could you provide any comments, I believe your list price for Uniti is about $8,000,000 to $10,000,000 Could you comment on what the realized ASP that you're generally getting is today versus that list price? Thanks very much. Thank you. Thank you. So on the first question, I mean, the market potential for Unity. We've said since the Capital Markets Day that it will be addressable market of around 25% is what we believe that the MR Linac technology should take of the had the opportunity to take of the total market. It's also kind of those numbers, if you look at what additional cancer indications and treatments you can do with MR linac compared to a regular CT based or cone beam CT based linac. So that's how we see it going forward. That will, of course, take some time, but that is a huge opportunity for us. On the order book question, our large order book, I mean, it's very good to have right now, of course, where we convert that order book to strong revenue numbers in the month and the quarters that we're right now. I think when you compare with competition, I think they have a bit different market mix. So they're more based in the U. S. And they also have a bit different ways of booking orders as well is my understanding. On the price levels, I mean, it's now we're in the 2nd phase and we see also a bit more varied price levels in the markets, but it's not something disclose externally. Okay. Thank you. Thank you. Thank you. Unfortunately, this is all the questions time permits. So I'll hand back to the speakers. Yes. And I mean, if you have more question, please don't hesitate, but reach out to me after the call. But we would like to thank you for participating today. And thank you, and have a good day.