Press releases

ZhongDe Waste Technology AG presents strong performance in H1 2007

Hamburg, August 28, 2007

 

H1 revenues increased by 99% to € 15 million

Order intake increased by 55% to € 18.9 million

EBITDA rose to 8.8 million and increased by 93 % compared to H1 2006

Net profit climbed to 8.8 million, an advance of 196%

Earnings per share increased by 196% to € 0.68 per share

Strong growth trend to continue in 2007

ZhongDe Waste Technology AG ("the Company") today announced its H1 2007 results which reflect the Company´s strong performance and prove its ability to take advantage of the favourable business environment it is operating in. This is further supported by the successful listing of the company on the Frankfurt Stock Exchange in the Prime Standard segment on July 6, 2007, in which net proceeds of € 72 million were raised.

 

The Company achieved revenues of € 15.0 million in the first half of 2007, compared to € 7.6 million in the same period of the previous year, an increase of 99 % primarily due to the strong performance in the municipal solid waste incinerator segment. In the first half of 2007, the Company focused its sales efforts on municipal solid waste incinerators as the sector is strongly supported by the Chinese government policy on environmental protection thus creating an extremely favourable environment. It became the Company´s principal revenue stream, accounting for 62 % of total sales. Total sales of municipal solid waste incinerators amounted to € 9.3 million in 2007; no such incinerators were sold in the first half of 2006. Sales of medical waste incinerators amounted to € 5.7 million in the first half of 2007, down 24 % on the result for the same period in the previous year.

 

Total order intake in the first half of 2007 amounted to € 18.9 million compared to € 12.2 million in the same period of the previous year, an increase of 55 %, and resulted in an order backlog of € 8.4 million (€ 6.0 million as at June 30, 2006). During the first half year of 2007 the Company received 16 new orders with a total contract value of € 15.8 million in the municipal solid waste incinerator sector and € 3.1 million in the medical waste incinerator sector. Five orders for municipal waste incinerators and three orders for medical waste incinerators were in the process of production as at June 30, 2006, and will be delivered in the second half of 2007.

 

EBITDA rose sharply from € 4.6 million in the first half of 2006 to € 8.8 million in the first half of 2007, an increase of 93 % which reflects the strong underlying sales performance, specifically of municipal waste incinerators and the tight control of operating costs. The EBITDA margin declined slightly from 60 % in the first half of 2006 to 59 % in the same period of the current year due to the shift in revenues from the medical waste incinerator segment where the gross margin actually improved from 69 % in the first half of 2006 to 77 % in the first half of 2007 to the solid waste incinerator segment where the margin averaged 61 % in the first half of the year.

 

The Company managed to maintain efficient cost control measures, whereby operating expenses increased in line with sales on a percentage basis to € 5.0 million in the first half of 2007 from € 2.4 million in the previous year period. Administrative expenses increased by 126 % due to expenses associated with the listing process.

 

As a result of the expansion into the municipal solid waste incinerator segment, an increased control of the operating costs and the tax exemption of the Company in 2007, the net profit climbed from € 3.0 million in the first half of 2006 to € 8.8 million in the first half of 2007, or by 196%. At the same time the net profit margin increased from 39 % in the first half of 2006 to 59 % in the first half of 2007.

 

Earnings per share, on a fully diluted basis, rose from € 0.23 in the first half of 2006 to € 0.68 in the first half of 2007, an increase of 196 %.

 

The Company has repaid all of its bank loans and, with a positive net cash position, posted net interest income of € 39,000 in the first half year of 2007, compared to an interest expense of € 20,000 in the same period last year.

 

The Company´s growth strategy is to establish a solid foundation in the marketplace for small to midsized municipal solid waste incinerators by selling equipment with larger processing capacities and also by implementing BOT ("Build – Operate – Transfer") projects. ZhongDe Waste Technology AG announced on August 9, 2007 that ZhongDe Group has signed binding agreements for a BOT project in Xihua Henan, and a BOO project ("Build – Operate – Own") in Feicheng Shandong. The successful signing of these two contracts represents the implementation of its key strategy, that of expanding the value chain into the operation of waste incineration plants and thus that of generating recurring revenues, thereby strengthening its market position in the municipal waste disposal segment.

 

The major portion of the proceeds generated by the Initial Public Offering, which went ahead in July 2007 in the Prime Standard of the Frankfurt Stock exchange, will be used to operate waste incinerators for and with municipalities in conjunction with the production and marketing of by-products such as steam, hot water, bricks, and electricity. The implementation of the two signed projects will commence shortly, now that ZhongDe has negotiated better conditions than initially discussed. Further negotiation of four additional BOT projects in Changzhi, Guilin, Jian´ou and Wuxiang, for which non-binding letters of intent had been signed prior to the Initial Public Offering, are on schedule and are likely to be finalized in the second half of 2007. These projects are expected to have a positive effect on the Company´s revenues and results in 2008.

 

The Company intends to continue to put strong emphasis on the realization of larger-sized municipal solid waste incinerators and is currently in discussions on various projects.

 

CEO Zefeng Chen comments: "The first half 2007 results show that we have managed to establish ourselves as a leading waste solution provider in the municipal segment. We are therefore confident that we can continue to take advantage of the favourable business environment. For the financial year 2007 we expect further strong earnings development for which the existing order backlog, the pending BOT projects together with an increasing brand awareness of our technology in the solid waste disposal market are a strong indication."

 

 

Key Financial Highlights

Income statement and operational data k€ H1 2007 H1 2006 % change

Order intake

18,945

12,228

+55

Order backlog

8,356

6,004

+39

Revenues

15,017

7,559

+99

Gross profit

10,057

5,206

+93

Gross profit margin

67%

69%

 


EBITDA

8,788

4,555

+93

EBITDA margin

59%

60%

 


EBIT

8,764

4,535

+93

EBIT margin

58%

60%

 


Net profit

8,809

2,980

+196

Net profit margin

59%

39%

 


Earnings per share – basic*

0.88

0.30

 


Earnings per share – diluted**

0.68

0.23

 


* based on 10,000,000 shares

** based on 13,000,000 shares following capital increase at time of listing

 

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 more than 170 waste incinerators in about 13 provinces and in the last three financial years alone 112 waste incinerators. Its waste incinerators are principally constructed for operators of medical disposal centers in the hospital and healthcare industry as well as for small and mid-sized Chinese cities in developed areas of the People´s Republic of China. The Management Board of ZhongDe Group believes that ZhongDe Group is one of the leading suppliers of small and mid-sized solid waste incinerators in China. The trading of the shares (German Securities Identification Number ZDWT01, ISIN DE000ZDWT018 and ticker symbol ZEF) commenced on the Prime Standard segment of the Frankfurt Stock Exchange on July 6, 2007.

 

 

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
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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