Quarterly Report • May 28, 2015
Quarterly Report
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ZhongDe Waste Technology AG
| 1 | Key Figures | 3 | |
|---|---|---|---|
| 2 | Share Performance | 4 | |
| 3 | Interim Group Management Report | 5 | |
| 4 | Condensed Consolidated Financial Statements for the period from 1 January to 31 March 2015 |
16 | |
| 4.1 | Condensed Three-Month Consolidated Statement of Comprehensive Income |
16 | |
| 4.2 | Condensed Interim Consolidated Statement of Financial Position |
17 | |
| 4.3 | Condensed Three-Month Consolidated Statement of Cash Flows |
18 | |
| 4.4 | Condensed Three-Month Consolidated Statement of Changes in Equity |
19 | |
| 4.5 | Selected Notes to the Condensed Interim Consolidated Financial Statements |
20 | |
| 5 | Review Report | 26 | |
| 6 | Cautionary Note Regarding Forward-looking Statements |
28 | |
| 7 | About ZhongDe Waste Technology AG |
29 | |
| 8 | Financial Calendar and Contact Information | 30 |
| in k€ | Q1 2015 | Q1 2014 ¹⁾ | Change |
|---|---|---|---|
| Order intake | 0 | 0 | +0% |
| Order backlog ²⁾ | 234,199 | 219,060 | +7% |
| Revenues | 5,568 | 1,072 | >100% |
| Gross profit | -122 | -30 | <-100% |
| Gross profit margin | -2% | -3% | 1 pp |
| Cost of sales | -5,690 | -1,102 | <-100% |
| EBITDA | -573 | -1,073 | +47% |
| EBITDA margin | -10% | -100% | 90 pp |
| EBIT | -951 | -1,368 | +30% |
| EBIT margin | -17% | -128% | 111 pp |
| Net result | -2,168 | -2,259 | +4% |
| Net result margin | -39% | -211% | 172 pp |
| Earnings per share (in €) ³⁾ | -0.17 | -0.18 | +0% |
¹⁾ Reclassified.
²⁾ Based on exchange rate at the end of the period.
³⁾ Calculated on the basis of 12,600,000 shares.
| in k€ | Q1 2015 | Q1 2014 | Change |
|---|---|---|---|
| Cash flow used in operating activities | -6,023 | -7,542 | +20% |
| Cash flow used in (-) / generated from (+) investing activities | -13 | 1,193 | <-100% |
| Cash flow used in financing activities | -1,541 | -1,087 | -42% |
| in k€ | 31 Mar. 2015 | 31 Dec. 2014 | Change |
|---|---|---|---|
| Total assets | 279,899 | 249,292 | +12% |
| Non-current assets | 128,829 | 108,647 | +19% |
| Net working capital ¹⁾ | 74,011 | 70,379 | +5% |
| Cash and cash equivalents | 90,531 | 87,205 | +4% |
| Long-term liabilities | 77,587 | 66,127 | +17% |
| Shareholders' equity | 125,253 | 112,899 | +11% |
| Headcount (as at 31 March) | 365 | 371 | -2% |
¹⁾ Current asset less current liabilities
All in all, ZhongDe's share price showed a significant reduction during the first four and a half months of 2015. In January the share price increased strongly at first and reached a peak of € 3.10 on January 27. Afterwards it declined to a level of around € 2.70 and remained relatively stable between February and mid of March. In April a strong downwards trend followed, reaching an interim year-low of € 1.98. On May 18 the share closed at € 2.05 and therewith 18 % below the year-end price of 2014. The current market capitalisation amounts to € 26.7 million.
Meanwhile the benchmark indices DAX and SDAX developed very positive with a performance of 18.2 % and 21.6 %.
(in €)
| Share price | |
|---|---|
| Price 31.03. | 2.40 |
| High 27.01. | 3.10 |
| Low 14.05. | 1.98 |
| Earnings per share | -0.17 |
| Market capitalisation (as at May 18, 2015) |
26.7 million |
According to the preliminary estimation, the gross domestic product (GDP) of China in the first quarter of this year was 14,066.7 billion yuan, a year-on-year increase of 7.0 % at comparable prices.
In the first quarter of 2015, the investment in fixed assets (excluding rural households) kept strong and was 7,751.1 billion yuan, a year-on-year growth of 13.5 %. Consumption and trade surplus increased significantly as well. In the first quarter of 2015. the total retail sales of consumer goods reached 7,071.5 billion yuan, which is an increase of 10.6 %. The total value of exports was 3,149.3 billion yuan growing by 4.9 %; and that of imports was 2,394.0 billion yuan going down by 17.3 %. The trade surplus was 755.3 billion yuan. The investment, trade surplus and consumption remained as the major engine of the economy growth. The service industry has increased by 7.9 %, compared with Q1 2014. The Chinese government continues to stimulate R&D and to upgrade the economic structure of China.
The energy-from-waste industry still benefits from the stimulating environmental protection policies and the efforts to improve environment protection in China.
The new environment protection law taking effect as of 1 January 2015 requires local governments to take responsibility for the environmental quality within their jurisdictions, to set up a monitoring and early warning mechanism regarding resource and environment carrying capacity, to introduce a target responsibility system and ensuing evaluation system for environmental protection, and to take into full consideration the environmental impact of economic policy-making.
On 30 March 2015, the Ministry of environment protection (MEP) held a meeting on establishing the "Green GDP 2.0 accounting system", resuming the studies on "green GDP", in an effort to accelerate the promotion of ecological progress and effectively advance the enforcement of the new environment protection law, which will encourage the development of the environment protection industry e.g. waste-to-energy.
| in k€ | Q1 2015 | Q1 2014 ¹⁾ | Change |
|---|---|---|---|
| Revenues | 5,568 | 1,072 | >100% |
| Cost of sales | -5,690 | -1,102 | >100% |
| Gross profit | -122 | -30 | <-100% |
| Other operating income | 678 | 186 | >100% |
| Selling and distribution expenses | -56 | -119 | -53% |
| Administrative expenses | -1,224 | -1,174 | +4% |
| Research and development expenses | -39 | -38 | +3% |
| Other operating expenses | -188 | -193 | -3% |
| Loss from operations | -951 | -1,368 | +30% |
| Finance income | 1,140 | 749 | +52% |
| Finance costs | -1,121 | -1,436 | -22% |
| Loss before income tax | -932 | -2,055 | +55% |
| Income tax expenses | -1,236 | -204 | >100% |
| Loss for the period | -2,168 | -2,259 | +4% |
1) Reclassified.
During the first quarter of 2015, the revenues reached € 5.6 million, representing an increase of more than 500 % compared to the same period in 2014. Thereof revenues amounting to € 4.9 million were contributed by the progress in the BOT-projects and € 0.7 million by EPC projects (during the first quarter of 2014 €0.6 million were contributed by BOT projects and € 0.5 million by EPC projects).
The gross profit for Q1 2015 amounted to € -0.1 million compared to € 0.0 million for Q1 2014. The slight decrease was mainly due to the fact that the prevailing part of revenues relates to BOT projects, where the zero-profit-method is still applied. In these projects the stage of completion has no influence on the gross profit.
Mainly due to the net proceeds from trial runs other income increased to € 0.7 million compared to € 0.2 million for Q1 2014. EBITDA improved to € -0.6 million compared to € -1.1 million in Q1 2014, while EBIT went up to € -1.0 million compared to € -1.4 million in Q1 2014. Net loss went down to € -2.2 million compared to € -2.3 million in Q1 2014. The increase of BOT receivables, which resulted mainly from the project progress achieved in 2014, led to an improvement of the financial result by € 0.7 million, which was offset by the increase of income tax expenses from € 0.2 million in Q1 2014 to € 1.2 million in Q1 2015, mostly due to the increase of taxable profits caused by foreign currency exchange gains.
| in k€ | 31 Mar. 2015 | 31 Dec. 2014 | Change |
|---|---|---|---|
| Current liquidity ratio ¹⁾ | 1.9 | 2.1 | +0% |
| Equity ratio ²⁾ | 44.7% | 45.3% | -1 pp |
| Net working capital ³⁾ | 74,011 | 70,379 | +5% |
| Cash and cash equivalents | 90,531 | 87,205 | +4% |
| Current assets | 151,070 | 140,645 | +7% |
| Non-current assets | 128,829 | 108,647 | +19% |
| Total assets | 279,899 | 249,292 | +12% |
| Current liabilities | 77,059 | 70,266 | +10% |
| Long-term liabilities | 77,587 | 66,127 | +17% |
| Shareholders' equity | 125,253 | 112,899 | +11% |
¹⁾ Current asset / current liabilities
²⁾ Equity / total assets
³⁾ Current asset less current liabilities
The negative result was compensated for the first quarter 2015 due to foreign currency translation effect. It led to an increase of shareholders' equity by 10.9 % to € 125.3 million until 31 March 2015 compared to 31 December 2014. As total assets increased by 12.3 % compared to 31 December 2014, ZhongDe's equity ratio went down from 45.3% as at 31 December 2014 to 44.7 % as at 31 March 2015.
The cash position as at 31 March 2015 amounted to € 90.5 million, compared to € 87.2 million as at 31 December 2014 (+3.8 %). Regarding the functional currency RMB there was a cash outflow due to the company's normal operation and repayments of loans. The material exchange rate differences led to an overall increase of the cash position.
The management is engaged to secure the cash position of ZhongDe, for example by obtaining more loans.
(as of 31 March 2015)
| EPC projects under construction | Zhucheng | Dingzhou | Wuhai |
|---|---|---|---|
| Daily capacity (tons/day) | 500 | 600 | 1,000 |
| PoC as at 31 March 2015 | 70.1% | 48.8% | 0.0% |
| PoC as at 31 December 2014 | 70.1% | 47.0% | 0.0% |
| Estimated time of completion | 2015 | 2015 | 2017 |
| BOT projects under construction | Xianning | Zhoukou | Kunming | Lanzhou | Feicheng |
|---|---|---|---|---|---|
| Daily capacity (tons/day) | 600 | 500 | 700 | 2,000 | 200 |
| Average annual power generation capacity (MW·h) |
> 60 | > 50 | > 70 | >200 | none |
| PoC as at 31 March 2015 | 95.4% | 89.3% | 84.7% | 21.2% | in operation |
| PoC as at 31 December 2014 | 95.1% | 89.2% | 82.1% | 18.1% | in operation |
| Estimated time of completion | 2015 | 2015 | 2016 | 2018 | in operation |
At the end of Q1 2015, the percentage of completion of the project in Zhucheng is 70.1 % (31 December 2014: 70.1 %).
The construction of the Zhucheng EPC project is approaching to be completed and to enter into trial operation. As part of the acceptance process, the progress of the construction performed by subcontractors needs to be confirmed by both parties. Currently Zhongde is negotiating the price with the subcontractors. As a result no revenue for the Zhucheng project could be recognized.
• Civil construction
The ending improvement for the main factory, boiler room, steam turbine room, gas purification room, decoration works for the complex building; the road construction, greening landscape, civil works for the leachate treatment system, ash treatment system.
• Installation
The debugging works for gas treatment system, ending works for the steam turbine generator, thermal insulation for boiler and gas system, equipment painting, construction works for leachate treatment system and ash treatment system.
The Zhucheng project is expected to be completed in 2015.
At the end of Q1 2015, the percentage of completion of the project in Dingzhou is 48.8 % (31 December 2014: 47.0 %).
Because of Spring Festival and cold weather, the slow construction progress is not unusual in the first quarter of the year. However it is slightly higher in Q1 2015 than in Q1 2014.
The installation works for the steam turbine room and travelling crane for complex pumping room have been completed. The main steam pipeline system has been completed. The thermal insulation for the gas purification system has been completed.
• Civil construction
The rendering works for the main factory, road construction, decoration works for the complex building, pumping house, oil pump room and weighbridge room; the construction works for ash treatment system, outer casing for main factory; construction works for leachate treatment system.
• Installation
Outdoor pipeline construction; installation works for ignition oil pipeline, dosing system, sampling system; oil circulation for steam turbine generator; auxiliary equipment installation for boiler, steam turbine generator; gas purification system installation; complex water pumping room and oil pumping room equipment installation; instrument points and lighting installations for boiler body; plate cabinet installations for electronic equipment room; installation works for leachate and ash treatment equipment
The Dingzhou project is expected to be completed in 2015.
At the end of Q1 2015, the percentage of completion of the project in Wuhai is 0.0 % (31 December 2014: 0.0 %).
The Wuhai EPC project has completed the preparatory stage and is now ready to start with construction in 2015.
The Wuhai project is supposed to enter into normal operation and to be completed in 2017.
At the end of Q1 2015, the percentage of completion of the project in Zhoukou is 89.3 % (31 December 2014: 89.2 %).
Civil construction works have been 100 % completed. Boiler, steam turbine generator unit and auxiliary equipment have been put into the normal operation.
• Installation
The acceptance works for environment protection.
The estimated finalization of the Zhoukou project is at the end of 2015.
At the end of Q1 2015, the percentage of completion of the project in Kunming is 84.7 % (31 December 2014: 82.1 %).
• Civil works
The construction works for factory road; ending works for civil construction of main factory; decoration works for complex building and main factory; greening landscape; construction works for fire protection engineering.
• Installation
Debugging works for gas equipment system, steam turbine generator unit and DCS; installation works for gas on-line monitoring equipment; ending improvement for equipment insulation; debugging for leachate treatment system and ash treatment equipment.
The estimated finalization date for the project is in 2016.
At the end of Q1 2015, the percentage of completion of the project in Xianning is 95.4 % (31 December 2014: 95.1 %).
Defect elimination for slag tap system and ending improvement works have been completed. Steam turbine generator unit has been put into the normal operation.
The project is supposed to be completed at the end of 2015.
At the end of Q1 2015, the percentage of completion at Lanzhou is 21.2 % (31 December 2014: 18.1 %).
The construction works for discharging platform have been completed. Installation works for #1 boiler steel structure and steam drum have been completed.
• Civil Construction:
Structure construction works for feeding trestle, waste storage tank, 1# and 2# steam turbine room and cooling tower; the construction works for ramp retaining wall; road foundation construction; construction works for main controlling room; foundation excavation for complex pumping room.
Installation works for water wall and super heater of 2# boiler; installation works for ladder landing.
The Lanzhou project is expected to be completed in 2018.
| BOT | EPC | Incinerators | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| in k€ | Zhoukou | Xianning | Kunming | Lanzhou | Zhucheng | Dingzhou | Wuhai | Xiangyin | Zhejiang | Total |
| Order Backlog as at 1 January 2015 |
3,415 | 3,295 | 7,567 | 117,584 | 9,770 | 17,997 | 49,662 | 1,554 | 1,645 | 212,489 |
| Order intake in Q1 2015 |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Revenues in Q1 2015 |
12 | 80 | 1,079 | 3,715 | 0 | 658 | 0 | 0 | 0 | 5,544 |
| Currency translation differences |
442 | 422 | 924 | 15,047 | 1,267 | 2,299 | 6,438 | 202 | 213 | 27,254 |
| Order Backlog as at 31 March 2015 |
3,845 | 3,637 | 7,412 | 128,916 | 11,037 | 19,638 | 56,100 | 1,756 | 1,858 | 234,199 |
During the first quarter of 2015 no new order intake was recorded. However order backlog increased by 10.2 % to € 234.2 million in Q1 2015 compared to 31 December 2014 due to the material foreign currency translation differences.
| in k€ | Q1 2015 | Q1 2014 ¹⁾ | Change |
|---|---|---|---|
| BOT | |||
| Revenues (thereof as PoC k€ 4,886 in Q1 2015 / k€ 524 in Q1 2014) |
4,910 | 543 | >100% |
| Gross profit | (252) | (132) | -91% |
| EPC | |||
| Revenues (PoC) | 658 | 529 | +24% |
| Gross profit | 130 | 102 | +27% |
| Small and medium sized incinerators | |||
| Revenues | 0 | 0 | 0% |
| Gross profit | 0 | 0 | 0% |
| Total Revenues | 5,568 | 1,072 | >100% |
| Total Gross Profit | (122) | (30) | <-100% |
1) Reclassified.
In Q1 2015, the current four BOT projects contributed with € 4.9 million to consolidated revenues (€ 0.6 million in Q1 2014).
Two EPC projects contributed with € 0.7 million to consolidated revenues in Q1 2015 (€ 0.5 million in Q1 2014).
In Q1 2015 as well as Q1 2014, no small and medium sized incinerators were sold, because within its strategy the Group is focussed on large-size energy-from-waste projects. As this segment will contribute revenues to the Group in the next years, it is still disclosed in the table above.
| in k€ | 31 Mar. 2015 | 31 Dec. 2014 | Change |
|---|---|---|---|
| Non-current assets | 128,829 | 108,647 | +19% |
| Current assets | 151,070 | 140,645 | +7% |
| Equity | 125,253 | 112,899 | +11% |
| Liabilities | 154,646 | 136,393 | +13% |
| Balance sheet total | 279,899 | 249,292 | +12% |
The balance sheet total amounted to € 279.9 million as of 31 March 2015 increasing by 12.3 % compared to 31 December 2014, while equity went up by € 12.4 million or 10.9% to € 125.3 million. Consequently the Company's equity ratio decreased to 44.7 % as at 31 March 2015 from 45.3 % as at 31 December 2014.
| in k€ | Q1 2015 | Q1 2014 | Change |
|---|---|---|---|
| Cash flow used in operating activities | -6,023 | -7,542 | +20% |
| Cash flow used in (-) / generated from (+) investing activities | -13 | 1,193 | <-100% |
| Cash flow used in financing activities | -1,541 | -1,087 | -42% |
Despite a significantly higher project progress compared to Q1 2014 the cash flow used in operating activities decreased by 20 % to € 6,0 million in Q1 2015 mainly due to large prepayments to the subcontractors of the BOT project in Lanzhou during Q1 2014.
Cash and cash equivalents amounted to € 90.5 million as at 31 March 2015, an increase of 3.8 % compared to € 87.2 million as at 31 December 2014. The increase is solely due to effects from foreign currency translation, while cash in the functional currency RMB declined due to the regular operations.
The company's cash represents an amount of € 7.0 (Q1 2014: € 7.7) cash per share and € 0.7 (Q1 2014: € 2.3) net cash per share (total cash amount minus the loan amount as at 31 March 2015 divided by the amount of shares). The existing funds are planned to be invested in budgeted projects such as the BOT projects in Kunming and Lanzhou, and EPC projects in Zhucheng, Dingzhou and Wuhai. In addition, they are expected to serve to finance further business activities. Generally cash transfers from China are restricted as they require a formal approval from the State Administration of Foreign Exchange ("SAFE").
As at 31 March 2015, the company's total loans amounted to € 81.4 million compared to € 73.6 million as at 31 December 2014. The increase of € 7.8 million is due to the fall in the exchange rate between Euro and the RMB from 7.5358 at 31 December 2014 to 6.6710 at 31 March 2015 leading to the appreciation of the Chinese currency and an increase of € 9.5 million, which is offset by the repayments of current loans amounting to € 1.7 million in accordance with the Company's repayment plan. Two loans granted by the Huarong Financial Leasing Ltd have been fully repaid in Q1 2015.
| Project | Financial Institution |
Total loan amount |
Total loan amount |
Effective interest rate |
Term | Balance as at 31 Mar. 2015 |
Balance as at 31 Mar. 2015 |
|---|---|---|---|---|---|---|---|
| in EUR | in RMB | in % | in years | in EUR | in RMB | ||
| Zhoukou | China Merchants Bank |
14,990,256 | 100,000,000 | 7.22% | 6 | 9,940,525 | 66,313,240 |
| Kunming | China Merchants Bank |
26,982,461 | 180,000,000 | 7.64% | 8 | 26,337,880 | 175,700,000 |
| Xianning | Bank of China | 17,688,502 | 118,000,000 | 7.83% | 7 | 15,140,159 | 101,000,000 |
| Lanzhou | Bank of China | 29,980,513 | 200,000,000 | 8.30% | 2 | 29,980,513 | 200,000,000 |
| 81,399,077 | 543,013,240 |
For the information on opportunities and risks, please refer to our Risk Report in the Group Management Report as at 31 December 2014. There were no significant changes in opportunities and risks compared to 31 December 2014. At present, due to the slow progress of the projects the management board is evaluating the risks and opportunities from the current projects and analysing the strategic options.
In Q1 2015, Zhongde's revenue, EBITDA, EBIT, net profit have been improved, compared to those in Q1 2014.
Looking ahead to the coming quarters in 2015, we expect to further benefit from the favorable political and economic environment for eco-friendly waste disposal, as well as from the growing demand for our energy-from-waste plants both in China and throughout Asia. The new Government of China has set the target of a "Beautiful China" and continuously strives to reduce the pollution and to protect the environment in China. The new Clean Air Law has been passed in 2015.
For the upcoming three quarters in 2015 we expect that the construction progress of the EPC projects (Dingzhou, Zhucheng and Wuhai), the construction progress of the BOT projects (Lanzhou etc.) and the trial run of the BOT projects (Zhoukou, Xianning and Kunming) will continue to contribute to ZhongDe's revenues.
The BOT projects in Zhoukou, Kunming and Xianning are in their trial operation. After the end of the trial runs the projects will receive the final approval from the referring customers, which marks the finalization of the projects. This is expected to take place in 2015 (Zhoukou and Xianning) and 2016 (Kunming). The EPC-projects in Zhucheng and Dingzhou are still expected to be finalized in 2015, although the construction is once again slowed down in the first quarter of the year.
In summary, we are expecting that the coming quarters of 2015 will still be transition period, however, the revenues and other results will be improved compared to the referring quarters in 2014. For 2015, the improvement of the operating result is to be expected. We will try our best to improve ZhongDe Group's profitability in 2015 and to balance the cash position of the Group.
Regarding the future development of the company the management board currently evaluates all strategic opportunities on a regular basis.
There have been no changes to the outlook, risk and chances report compared to them as per 31 December 2014. Please note that these expectations are subject to uncertainty even if currently we do not have any information as to any other developments.
4.1 Condensed Three-Month Consolidated Statement of Comprehensive Income
| in k€ | Q1 2015 | Q1 2014 ¹⁾ |
|---|---|---|
| Revenues | 5,568 | 1,072 |
| Cost of sales | -5,690 | -1,102 |
| Gross profit | -122 | -30 |
| Other operating income | 678 | 186 |
| Selling and distribution expenses | -56 | -119 |
| Administrative expenses | -1,224 | -1,174 |
| Research and development expenses | -39 | -38 |
| Other operating expenses | -188 | -193 |
| Loss from operations | -951 | -1,368 |
| Finance income | 1,140 | 749 |
| Finance costs | -1,121 | -1,436 |
| Loss before income tax | -932 | -2,055 |
| Income tax expenses | -1,236 | -204 |
| Loss for the period | -2,168 | -2,259 |
| Items that may be reclassified subsequently to profit or loss: | ||
| Foreign exchange differences | 792 | 86 |
| Items that will not be reclassified subsequently to profit or loss: | ||
| Foreign exchange differences | 13,730 | -2,742 |
| Other comprehensive income | 14,522 | -2,656 |
| Total comprehensive income | 12,354 | -4,915 |
| Loss attributable to owners of the parent | -2,168 | -2,259 |
| Total comprehensive income attributable to owners of the parent | 12,354 | -4,915 |
| Earnings per share (in €) (diluted and undiluted) | -0.17 | -0.18 |
| Weighted average shares outstanding (diluted and undiluted) | 12,600,000 | 12,600,000 |
¹⁾ Restated.
as at 31 March 2015
| in k€ | 31 Mar. 2015 | 31 Dec. 2014 | 31 Mar. 2014 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Intangible assets | 28,149 | 23,219 | 6,198 |
| Property, plant and equipment | 473 | 442 | 470 |
| Receivables from BOT | 99,244 | 84,103 | 59,716 |
| Deferred tax assets | 963 | 883 | 0 |
| 128,829 | 108,647 | 66,384 | |
| Current assets | |||
| Inventories | 4,140 | 3,474 | 3,802 |
| Trade receivables | 1,649 | 1,747 | 1,069 |
| Other receivables and prepayments | 54,734 | 42,746 | 40,206 |
| Amounts due from related parties and companies | 16 | 14 | 12 |
| Other financial assets | 0 | 5,459 | 3,265 |
| Cash and cash equivalents | 90,531 | 87,205 | 99,927 |
| 151,070 | 140,645 | 148,281 | |
| Total Assets | 279,899 | 249,292 | 214,665 |
| Liabilities and Equity Capital and Reserves |
|||
| Issued capital | 13,000 | 13,000 | 13,000 |
| Own shares | -4,608 | -4,608 | -4,608 |
| Capital reserves | 62,914 | 62,914 | 62,914 |
| Chinese statutory reserves | 8,459 | 8,459 | 8,062 |
| Retained earnings | -2,279 | -111 | -1,022 |
| Foreign currency translation reserve | 47,767 | 33,245 | 19,693 |
| Total Equity | 125,253 | 112,899 | 98,039 |
| Liabilities Long-term liabilities |
|||
| Long-term loans | 75,988 | 64,695 | 63,171 |
| Deferred tax liabilities | 1,599 | 1,432 | 864 |
| 77,587 | 66,127 | 64,035 | |
| Current liabilities | |||
| Trade payables | 39,474 | 31,774 | 10,344 |
| Other payables and prepayments | 26,639 | 25,192 | 28,244 |
| Provisions | 4,190 | 3,709 | 3,084 |
| Amounts due to related parties and companies | 8 | 8 | 7 |
| Tax liabilities | 1,337 | 662 | 56 |
| Other financial liabilities | 5,411 | 8,921 | 10,856 |
| 77,059 | 70,266 | 52,591 | |
| Total Liabilities | 154,646 | 136,393 | 116,626 |
| Total Liabilities and Equity | 279,899 | 249,292 | 214,665 |
for the period from 1 January to 31 March 2015
| Loss before income tax -932 -2,055 Adjustments for: Amortization of intangible assets 339 258 Allowance for doubtful trade debts 0 44 Depreciation of property, plant and equipment 39 37 Interest income / exchange gains -1,140 -749 Interest expense / exchange losses 1,121 1,436 Operating cash flows before working capital changes -573 -1,029 Working capital changes: (-) Increase)/ (+) decrease in: Inventories -204 -300 Trade receivables 308 -422 PoC receivables from BOT projects -4,910 -544 Other receivables and prepayments -100 1,006 Amounts due from related parties 0 8 (+) Increase)/ (-) decrease in: Trade payables 3,403 -8,920 Other payables, provisions and accruals -1,946 4,210 Amounts due to related parties 0 6 Cash used in operations -4,022 -5,985 Interest received 247 110 Interest paid -1,638 -1,573 Income tax paid -610 -94 Net cash used in operating activities -6,023 -7,542 Cash flow from investing activities |
|---|
| Proceeds from disposal of consolidated companies 0 1,197 |
| Purchase of property, plant, equipment and intangible assets -13 -4 |
| Cash flow used in (-) / generated from (+) investing activities -13 1,193 |
| Cash flow from financing activities |
| Repayments of loans -1,673 -1,461 |
| Cash repayments of financial assets (BOT projects) 132 374 |
| Cash flow used in financing activities -1,541 -1,087 |
| Net decrease before income tax -7,577 -7,436 |
| Cash and cash equivalents at beginning of period 87,205 110,076 |
| Foreign exchange differences 10,903 -2,713 |
| Cash and cash equivalents at end of period 90,531 99,927 |
for the period from 1 January to 31 March 2015
| in k€ | Number of shares outstanding |
Share capital AG |
Own shares |
Capital reserves |
Chinese statutory reserves |
Retained earnings |
Foreign currency translation reserve (other compre hensive income) |
Total equity |
|---|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2014 |
12,600,000 | 13,000 | -4,608 | 62,914 | 8,062 | 1,237 | 22,349 | 102,954 |
| Total compre hensive income for the period |
0 | 0 | 0 | 0 | 0 | -2,259 | -2,656 | -4,915 |
| Balance as at 31 March 2014 |
12,600,000 | 13,000 | -4,608 | 62,914 | 8,062 | -1,022 | 19,693 | 98,039 |
| Total compre hensive income for the period |
0 | 0 | 0 | 0 | 0 | 1,308 | 13,552 | 14,860 |
| Appropriation of current year's income |
0 | 0 | 0 | 0 | 397 | -397 | 0 | 0 |
| Balance as at 1 January 2015 |
12,600,000 | 13,000 | -4,608 | 62,914 | 8,459 | -111 | 33,245 | 112,899 |
| Total compre hensive income for the period |
0 | 0 | 0 | 0 | 0 | -2,168 | 14,522 | 12,354 |
| Balance as at 31 March 2015 |
12,600,000 | 13,000 | -4,608 | 62,914 | 8,459 | -2,279 | 47,767 | 125,253 |
The ZhongDe Group designs, manufactures and installs incinerators for the disposal of solid medical, municipal (mixed household refuse) and industrial (including hazardous) waste. This involves a variety of incineration techniques: grate, pyrolytic and rotary kiln incineration as well as fluidized bed combustion. The ZhongDe Group waste incinerators are designed primarily for dedicated operators responsible for the disposal of medical waste produced by hospitals and the health industry, and also for small and medium-sized municipalities in developed areas of the People's Republic. Furthermore, as a general contractor of EPC projects, the ZhongDe Group is responsible for the design, engineering, procurement, construction and installation of waste incinerators with a power generation with the above mentioned techniques (energy-from-waste). In addition to the above EPC-role, the ZhongDe Group also produces and operates the energy-from-waste plants as an investor in BOT projects. The work and services required in connection with EPC and BOT projects are not carried out by the ZhongDe Group itself but by Chinese subcontractors. Generally, in the first quarter of the year, business activities are seasonally slow mainly due the Chinese Spring Festival when all workers are off for holidays.
ZhongDe Waste Technology AG ("the Company" or "ZhongDe AG") is the parent company of the ZhongDe Group. The condensed interim consolidated financial statements for the period 1 January to 31 March comprise all subsidiaries of ZhongDe Waste Technology AG. These subsidiaries are located in the People's Republic of China (PRC), except for the interim holding company Chung Hua Environmental Protection Assets (Holdings) Group Ltd., which is located in Hong Kong.
The condensed interim consolidated financial statements of the ZhongDe Group are prepared for the three months period ended 31 March 2015 with comparative financial statements as at 31 December 2014 and 31 March 2014.
The condensed interim consolidated financial statements were prepared in accordance with Section 37w German Securities Trading Act (WpHG), the International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB), its interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC) for condensed interim financial information effective within the European Union and the additional requirements of German commercial law pursuant to sec. 315a (1) of the German Commercial Code (HGB). Accordingly, these condensed first quarter consolidated financial statements do not include all of the information required in annual consolidated financial statements by IFRS.
With regard to the preparation of the condensed interim consolidated financial statements, in accordance with IAS 34 "Interim Financial Reporting", the Management Board is required to make estimates and judgments which influence the application of accounting policies within the Company and the reporting of assets and liabilities as well as income and expenses. Actual amounts may differ from these estimates. The condensed interim consolidated financial statements have been reviewed. In the opinion of ZhongDe Waste Technology AG's Management Board, the condensed first quarter consolidated financial statements for the period ended 31 March 2015 include all adjustments of a normal and recurring nature considered necessary for a fair presentation of results for interim periods.
Results of the period ended 31 March 2015 are not necessarily indicative for future results.
The condensed interim consolidated financial statements for the three month period from 1 January to 31 March 2015 are drawn up in Euro. Amounts are stated in thousands of Euros (k€) except where otherwise indicated. Due to the change of the EUR/RMB relation from 7.5358 as at 31 December 2014 to 6.6710 as at 31 March 2015 the financial statements as at 31 March 2015 are materially affected by foreign currency translation effects.
The financial statements of the individual consolidated companies are prepared as of the closing date for the Group financial statements. The condensed three months consolidated financial statements of ZhongDe AG and subsidiaries for the period from 1 January to 31 March 2015 were authorised for issue in accordance with a resolution of the Management Board on 27 May, 2015.
The accounting policies applied by the Group in the condensed interim consolidated financial statements generally correspond to the methods applied by ZhongDe Waste Technology AG in its consolidated financial statements for the year ending 31 December 2014. For further details, please refer to the consolidated financial statements available on the Company's website: www.zhongde-ag.com.
Non-recurring expenses that are incurred during the reporting period have been allocated as they would be at year-end.
In accordance with IFRIC 12 "Service Concession Arrangements", revenue relating to construction services under a service concession arrangement (BOT) is recognised based on the percentage of completion of the work. Revenue relating to operation services is recognised in accordance with IAS 18.
According to the general practice, in Q1 2014 income from trial runs was accounted in cost of sales. However after the IFRS-IC has put this issue on its agenda, the current technical discussion tends to prefer an accounting of trial runs in income insofar trial run revenues exceed trial run costs. As this accounting method results in more relevant information on the entity's performance, the former method of accounting for trial runs was changed and net income from trial runs was disclosed under other operating income since Q4 2014. Prior year's figures were reclassified accordingly. The change of the accounting method did not have any impact on the comprehensive income.
| Before restatement Q1 2014 | Reclassi | Restated Q1 2014 | ||||
|---|---|---|---|---|---|---|
| in k€ | in % | fication | in k€ | in % | ||
| Revenues | 1,072 | 100 | 0 | 1,072 | 100 | |
| Cost of sales | -916 | -85 | -186 | -1,102 | -103 | |
| Gross profit | 156 | 15 | -186 | -30 | -3 | |
| Other operating income | 0 | -0 | 186 | 186 | 17 | |
| Selling and distribution expenses | -119 | -11 | 0 | -119 ## | -11 | |
| Administrative expenses | -1,174 | -110 | 0 | -1,174 | -110 | |
| Research and development expenses | -38 | -4 | 0 | -38 | -4 | |
| Other operating expenses | -193 | -18 | 0 | -193 | -18 | |
| Loss from operations | -1,368 | -128 | 0 | -1,368 | -127 | |
| Finance income | 749 | 70 | 0 | 749 | 70 | |
| Finance costs | -1,436 | -134 | 0 | -1,436 | -134 | |
| Loss before income tax | -2,055 | -192 | 0 | -2,055 | -192 | |
| Income tax expenses | -204 | -19 | 0 | -204 | -19 | |
| Loss for the period | -2,259 | -211 | 0 | -2,259 | -211 |
The Group had to apply the following new standards, amendments to existing standards or new interpretations for the first time:
At the time of the preparation of the group condensed interim consolidated financial statements, the following standards and interpretations of the IASB as well as their changes and revisions had either not been endorsed by the European Union or were not compulsorily applicable in the first quarter 2015, and were therefore not applied by the ZhongDe Group:
Aside from additional or modified disclosure requirements ZhongDe Group currently expects from the first-time application of these standards, interpretations and amendments only marginal effect on the consolidated financial statements. The potential impact of the application of IFRS 15 is currently analysed.
The Group's operating activities are divided into three business segments: incinerators, which include municipal waste incinerators and medical waste incinerators, EPC (engineering, procurement and construction) projects, and BOT (build – operate – transfer) projects.
In the first quarter of 2015 only the BOT projects and the EPC projects contributed to gross profit and the recovery of the small and medium sized incinerator market is not in sight.
The Group is principally engaged in the design and manufacture of various incinerators in the PRC, where all of its customers are based. In addition, all assets attributable to the Group's operating activities are likewise located in the PRC. As such, no geographical segment analysis is necessary.
Revenues and the cost of sales of the services rendered in generating revenues are directly attributable to the business segments. Income and expenses which are not directly attributable to a business segment are recognised separately as unallocated income and expenses. Inter-segmental revenues are eliminated on consolidation.
The following table presents revenues and results regarding the Group's business segments for the first three months of 2015:
| BOT projects | EPC projects | Incinerators | Group | |||||
|---|---|---|---|---|---|---|---|---|
| Q1 | Q1 | Q1 | Q1 | Q1 | Q1 | Q1 | Q1 | |
| in k€ | 2015 | 2014 ¹⁾ | 2015 | 2014 ¹⁾ | 2015 | 2014 ¹⁾ | 2015 | 2014 ¹⁾ |
| Revenues | 4,910 | 543 | 658 | 529 | 0 | 0 | 5,568 | 1,072 |
| Intercompany revenues | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total revenue for reportable segments |
4,910 | 543 | 658 | 529 | 0 | 0 | 5,568 | 1,072 |
| Total gross profit from reportable segments |
(252) | (132) | 130 | 102 | 0 | 0 | (122) | (30) |
| Order intake | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Order backlog | 143,810 | 137,888 | 86,775 | 77,165 | 3,614 | 4,007 | 234,199 | 219,060 |
¹⁾ Restated.
| Development of | Average rate | Ending rate | ||||
|---|---|---|---|---|---|---|
| exchange rates (€ / foreign currency rate) |
ISO code | Q1 2015 | Q1 2014 | 31 Mar. 2015 | 31 Dec. 2014 | 31 Mar. 2014 |
| Chinese Yuan | CNY | 7.0231 | 8.3576 | 6.6710 | 8.1857 | 8.5754 |
| Hong Kong Dollar | HKD | 8.7339 | 10.6287 | 8.3422 | 10.3025 | 10.6973 |
The functional currency of the consolidated subsidiaries and ZhongDe Waste Technology AG is the RMB.
The following transactions took place between the Group and the related parties during the three-month period from 1 January to 31 March 2015:
| in k€ | Q1 2015 | Q1 2014 |
|---|---|---|
| Related parties | ||
| Rental, water and electricity fee | 0 | 33 |
The transactions with related parties were based on market prices.
Receivables from and liabilities to related companies as a result of related party transactions are disclosed in the table below:
| in k€ | 31 Mar. 2015 | 31 Mar. 2014 |
|---|---|---|
| Due from related parties | ||
| Other receivables | 16 | 12 |
| 16 | 12 | |
| Allowance for doubtful trade debts | 0 | 0 |
| 16 | 12 | |
| Due to related parties | ||
| Trade payables | 8 | 7 |
| 8 | 7 |
No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorization of the condensed consolidated financial statements.
Frankfurt/Main, 27 May 2015 ZhongDe Waste Technology AG
Zefeng Chen William Jiuhua Wang Chairman of the Executive Director of the Management Board (CEO) Management Board (CFO)
We have reviewed the condensed interim consolidated financial statements – comprising the condensed statement of financial position, the condensed interim statement of comprehensive income, the condensed interim statement of cash flows, the condensed interim statement of changes in equity and selected notes – and the interim group management report of ZhongDe Waste Technology AG, Frankfurt/Main, for the period from 1 January 2015 to 31 March 2015 which form part of the quarterly financial reporting in accordance with section 37x paragraph 3 in conjunction with section 37w paragraph 2 German Securities Trading Act (Wertpapierhandelsgesetz – WpHG). The preparation of the condensed interim consolidated financial statements in accordance with those IFRS applicable to interim financial reporting as adopted by the EU, and of the interim group management report in accordance with the requirements of the German Securities Trading Act applicable to interim group management reports, is the responsibility of the Company's management. Our responsibility is to issue a report on the condensed interim consolidated financial statements and on the interim group management report based on our review.
We conducted our review of the condensed interim consolidated financial statements and the interim group management report in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with a certain level of assurance, that the condensed interim consolidated financial statements have not been prepared, in material aspects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, and that the interim group management report has not been prepared, in material aspects, in accordance with the regulations of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company employees and analytical assessments and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot issue an auditor's report.
Based on our review, no matters have come to our attention that cause us to believe that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, or that the interim group management report has not been prepared, in material respects, in accordance with the regulations of the German Securities Trading Act applicable to interim group management reports."
Hamburg, 28 May 2015
Warth & Klein Grant Thornton AG Wirtschaftsprüfungsgesellschaft
Clemens von Oertzen Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German Public Auditor)
This interim report contains certain forward-looking statements. These statements may be identified by words such as "expects", "looks forward to", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "will", or words of similar meaning. Such statements are based on current assumptions, expectations and forecasts on future sector trends, on future legal and commercial developments, and on the future development of the ZhongDe Group. These assumptions, expectations and forecasts are no guarantee of future performance and are subject to change at any time, and are thus subject to certain risks and uncertainties. A variety of factors, many of which are beyond the ZhongDe Group's control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of the ZhongDe Group to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.
For us, particular uncertainties arise, among others, from: changes in general economic and business conditions, changes in the regulatory environment, the introduction of competing products or technologies by other companies, changes in business strategy, our analysis of the potential impact of such matters on our financial statements, as well as various other factors. More detailed information about our risk factors and key factors affecting our results and operations is contained in ZhongDe's Group Management Report 2014, which is available on the ZhongDe website: www.zhongdetech.com. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. ZhongDe does not intend or assume any obligation to update or revise these forward-looking statements in the light of developments which differ from those anticipated, unless otherwise required by law.
The English translation of this interim report is for convenience purposes only. The German version of this interim report is binding for legal purposes.
ZhongDe Waste Technology AG is listed on the Frankfurt Stock Exchange (German securities identification number ZDWT01, ISIN DE000ZDWT018, ticker symbol ZEF).
ZhongDe Waste Technology is a waste-to-energy company that designs, invests in, constructs and operates waste-to-energy plants, which generate electricity through the disposal of solid municipal, industrial (including hazardous) and medical waste. Since 1996, ZhongDe Group has completed approximately 200 waste disposal projects in about 13 provinces in China. ZhongDe is one of the most well-known players in the field of energy-from-waste EPC and BOT projects in China. As a general contractor of EPC projects, ZhongDe is responsible for the design, procurement, construction and installation of energy-from-waste plants applying different technologies, such as grate, fluidized bed, pyrolytic or rotary kiln. As an investor in BOT projects, ZhongDe also operates energy-from-waste plants.
The registered office of ZhongDe Waste Technology AG is located in Frankfurt, Germany. The Chinese headquarter is located in Beijing, China. ZhongDe's production facility is in Fuzhou, China.
| Date* | Event | |||
|---|---|---|---|---|
| 28 May | Interim report on the 1st quarter of 2015 |
|||
| 26 June | Annual General Meeting | |||
| 28 August | Interim report on the 1st half of 2015 |
|||
| 23 – 25 November |
German Equity Forum, Frankfurt/Main | |||
| 27 November | Interim report on the 3rd quarter of 2015 |
|||
| * All dates are provisional and may be subject to change. |
This interim report, recent publications, and additional information are all available on the internet at: www.zhongde-ag.com and www.zhongde-ag.de.
William Jiuhua Wang Executive Director and CFO Email: [email protected]
Ying Sun Messeturm 25th Floor Friedrich-Ebert-Anlage 49 60308 Frankfurt am Main Germany Tel.: +49 69 50 95 65 655 Fax: +49 69 50 95 65 567 Email: [email protected]
Herrengraben 1 20459 Hamburg Germany Tel.: +49 40 609186 0 Fax: +49 40 609186 60 Email: [email protected]
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