Press releases

ZhongDe Waste Technology AG presents its audited full year results for fiscal year 2007: net profit more than doubled - order intake increased by 90% to €44.4 million

Hamburg, April 29, 2008

 

Revenues increase by 64% to €31.1 million in 2007

EBITDA for the full year 2007 rose by 56% compared to full year 2006

Substantial increase in order intake and order backlog

Net profit increased to €19.1 million in 2007, an increase of 138% compared to the previous year

Earnings per share rise by 137% in 2007 to €1.47 from €0.62 in 2006

Management Board and Supervisory Board will propose dividend of €0.15 per share

 

ZhongDe Waste Technology AG ("ZhongDe", "the Company", Ticker symbol "ZEF") today presents its audited results for the fiscal year 2007: ZhongDe`s sales rose strongly in the year under review, revenues increased by €12.1 million or 64% in 2007 to €31.1 million. This revenue growth was a direct reflection of the Company's shift in emphasis to focus on the rising demand for municipal waste incinerators which accounted for 70% of sales in 2007. Against the backdrop of buoyant Chinese GDP growth, the market for incinerators continued to boom.

 

Gross profit in 2007 increased substantially by €8.3 million or 62% to €21.6 million. This was reflected in EBITDA which rose by 56% in 2007 to €18.7 million versus €11.9 million in 2006 and EBIT which also rose by 56% to €18.6 million, a margin of 60%. The increase in revenues, gross profit margin, EBITDA and EBIT are in the same trend demonstrated two things: it showed that the Company healthily expanded its top line through the market exploration and that the capital expenditure and expense level have been kept well in check. Annual net profit increased to €19.1 million in 2007 (2006: €8.0 million) - more than doubling the profit for the period (change: 138%). The net profit margin rose by 19 basis points from 42% in 2006 to 61% in 2007. The increased and high net profit margin is a result of the full tax exempt status granted by the China government for the Company`s Chinese main operating subsidiary.

 

In 2007, ZhongDe`s gross profit margin remained strong at 69% (2006: 70%). The increase in percentage of sales in municipal waste incinerators, which is considered to be a lower margin sector between the two areas, did not drop significantly overall because the Company was able to bargain for higher margins in the municipal waste sector. The gross profit margin of medical incinerators has also seen an increase - achieving an average of 78% while for municipal waste incinerators 66% was achieved. Although an increasing focus in municipal waste incinerators may lower the Company`s margin, every effort is made to commit to this market and capture the growing momentum for the Company. Both the EBITDA and EBIT margins of the Company slightly declined from 63% in 2006 to 60% in 2007. This is mainly attributable to certain IPO expenses incurred during the second half of 2007. Aside from the above, the Company`s selling, distribution, administrative and R&D expenses all grew at the same level when compared to the previous year.

 

Order intake and backlog reflect a strong market demand. In the financial year 2007 order intake was at the highest ever at €44.4 million. This was a substantial rise of €21.0 million versus 2006, or 90%, directly linked to the strategic plan of focusing on municipal waste incinerators, especially models LCH-200, LCH 150 and LCH 100 which have higher disposal capacities. Revenues from the municipal sector rose by 528% to €21.7 million, and the corresponding profit for municipal incinerators went up by 576%. During the same period, revenues from medical incinerators, which has much lower average selling price per unit when compared to municipal incinerators, went down to €9.4 million or by 39%. This is in line with the strategy to stronger focus on the municipal waste sector, even though the Company will continue to profit from the future opportunities in the medical waste segment due to its established technology. As at 31 December 2007, ZhongDe's order backlog amounted to €20.5 million, exceeding the figure for 2006 by €12.9 million or 171%. This is in line with our expectations and reflects the surge in interest for advanced incinerator technology which can be attributed to the Chinese government's commitment to its environmental policies.

 

Furthermore, the Company achieved a strong rise in EPS resulting from the strong sales growth, continued tight cost controls and tax exemption for 2007. EPS amounted to € 1.47 in 2007, up from € 0.62 in 2006.

 

The Company`s net cash position as at 31 December 2007 was €83.8 million compared to €9.2 million as at 31 December 2006. This is directly attributable to the proceeds of the IPO which raised €75 million in July 2007.

 

The Company`s Management Board and Supervisory Board will propose at the Annual General Meeting of the Company, that, based on the net profit of €3,486,204.03 of ZhongDe Waste Technology AG in FY 2007 as reflected in the German statements, €1,950,000.00 (€0.15 per share) will be distributed among its shareholders and €1,536,204.03 will be carried forward to 2008. The Company`s AGM is scheduled for 22 July 2008 in Hamburg.

 

The Company's growth strategy, defined before the IPO, has been to enhance its solid market position for small to medium-sized municipal solid waste incinerators by selling equipment with larger processing capacities and implementing BOT (build - operate - transfer) projects. The strategy is continuing on track the solid progress made in 2007 is already in evidence in 2008 with the signing of the Datong project, which has an approximate contract value of 30 million, and also the Xinjiang BOT project where favourable terms have been negotiated.

 

CEO Mr. Zefeng Chen comments: "2007 was an exceptional year for ZhongDe. Pivotal to this success was clearly the successful listing of the Company on the Frankfurt Stock Exchange in July 2007. Importantly, the IPO helped us to establish ZhongDe as an international brand, strengthening our corporate image in the Chinese waste incinerator market and also enabled us to finance our expansion plans. Earnings continued to increase in a market experiencing huge growth in demand due to the Chinese government's environmental policies. The shift in the sales mix from 82% in the medical waste segment in 2006 to 70% in the municipal waste segment in 2007 is in line with our strategy to grow the business in the municipal waste sector. We expect our business environment to remain strong and the Company is set to make further progress over 2008."

 

For FY 2008 the management expects revenues to be above €50 million with a net profit margin of above 45%. With the newly signed and expected contribution of revenue of the large size equipment selling project (Datong project) and the further strategic objective to focus on larger projects, the gross margin of the Company is expected to converge slightly lower to 55%.

 

 

Key Financial Highlights

Key figures in k€ 2007 2006 Change

Order intake

44,351

23,358

+90%

Order backlog

20,494

7,573

+171%

Revenues

31,133

18,995

+64%

Gross profit

21,637

13,383

+62%

Gross profit margin

69%

70%

 

Cost of sales

9,496

5,611

+69%

EBITDA

18,685

11,942

+56%

EBITDA margin

60%

63%

 

EBIT

18,612

11,903

+56%

EBIT margin

60%

63%

 

Net profit

19,058

8,022

+138%

Net profit margin

61%

42%

 

Earnings per share

1.47

0.62

 

 

 

About ZhongDe Group

ZhongDe Group designs, manufactures and installs pyrolytic, grate and rotary kiln waste incinerators for the disposal of solid medical, municipal and industrial (including hazardous) waste. Since 1996, ZhongDe Group has installed approximately 180 waste incinerators in about 13 provinces, and more than 120 waste incinerators in the last three financial years alone. Its waste incinerators are principally constructed for operators of medical disposal centres in the hospital and healthcare industry, as well as for small and midsized Chinese cities in developed areas of the People's Republic of China. ZhongDe Group is one of the leading suppliers of small and midsized solid waste incinerators in China, supplying state-of-the-art products.

 

 

This document constitutes neither an offer to sell nor a solicitation to buy securities of ZhongDe Waste Technology AG. The securities have already been sold.

 

This document is not an offer of securities for sale in the United States of America. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The shares in ZhongDe Waste Technology AG have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and are not being and will not be offered or sold in the United States of America.

 

This document is directed at and/or for distribution in the U.K. only to (i) persons who have professional experience in matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth entities falling within article 49(2)(a) to (d) of the Order (all such persons being together referred to as "relevant persons"). This document is directed only at relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.

 

 

Contact

Matthias Link
Managing Director
Citigate Dewe Rogerson GmbH
Goethestraße 26-28
60313 Frankfurt am Main
Tel: 0049-69 90 500-150
Fax: 0049-69 90 500-102
E-Mail: matthias.link@citigatedr.de
Internet: www.citigatedr.de

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