 ZhongDe Waste Technology AGFrankfurtHalbjahresabschluss zum 30.06.2018Half-Year Report 2018
1 KEY FIGURESOperational Datascroll
1)
Based on exchange rate at the end of the period. Cash Flow Datascroll
Balance Sheet Datascroll
1)
Current assets less current liabilities 2 INTERIM GROUP MANAGEMENT REPORTMacroeconomic EnvironmentIn 2018, the Chinese economy was generally stable with growing momentum, the development
quality and returns were steadily raised, sustainable and healthy economic development
and overall social stability were maintained. According to preliminary estimation, the gross domestic product (GDP) in 2018 was
90,030.9 billion yuan, up by 6.6 percent over the previous year. Of this total, the
value added of the primary industry was 6,473.4 billion yuan, up by 3.5 percent, that
of the secondary industry was 36,600.1 billion yuan, up by 5.8 percent and that of
the tertiary industry was 46,957.5 billion yuan, up by 7.6 percent. In 2018, the per capita disposable income nationwide was 28,228 yuan, an increase
of 8.7 percent. The national per capita consumption expenditure was 19,853 yuan, up
by 8.4 percent. The total value of imports and exports of goods in 2018 reached 30,505.0 billion yuan,
up by 9.7 percent over the previous year. Of this total, the value of goods exported
was 16,417.7 billion yuan, up by 7.1 percent; the value of goods imported was 14,087.4
billion yuan, up by 12.9 percent. The surplus of trade in goods reached 2,330.3 billion
yuan, down by 521.7 billion yuan over the previous year. At the end of 2018, China's
foreign exchange reserves reached 3,072.7 billion US dollars, 67.2 billion US dollars
less compared with that at the end of 2017. In 2018, the fixed assets investment (excluding by rural households) in ecological
protection and treatment of environmental pollution went up by 43.0 percent compared
with 2017. The business revenue of the strategic emerging service industries went
up by 14.6 percent compared with the previous year. In 2018, the investment in high
technology industries increased by 14.9 percent over the previous year; the investment
in industrial technological transformation increased by 12.8 percent. By the end of 2018, the installed power generation capacity was 1,899.67 million kilowatts,
up by 6.5 percent over that at the end of 2017. Preliminary estimation indicated that
the total energy consumption in 2018 amounted to 4.64 billion tons of standard coal
equivalent, up by 3.3 percent over 2017. The carbon dioxide emission per 10,000 yuan
worth of GDP was cut by 4.0 percent. Source from:http://www.stats.gov.cn/english/PressRelease/201902/t20190228 1651335.html Sector TrendIn 2018, ecological conservation was incorporated into the CPC Constitution which
was highly emphasized in national overall planning. "Building beautiful China" has
become one of our national goals to realize the modernization. With the support of national policies and the development of green environmental protection
concepts, China's energy consumption structure has undergone tremendous changes. The
proportion of clean energy consumption has been increasing, and the importance of
renewable energy has become increasingly prominent. On October 8 of 2018, the International Energy Agency (IEA) released the "2018 Renewable
Energy: 2018-2023 Market Analysis and Forecast" report, which showed that renewable
energy will keep the robust growth in the next five years, accounting for 40% of consumption
growth for global energy. Although solar and wind energy have attracted countless
eyeballs, the IEA believes that from 2018 to 2023, biomass energy will become the
world's fastest growing renewable resource. And it is estimated that China will surpass
the EU to become the world's largest consumer of renewable energy by 2023. Source from: http://huanbao.bjx.com.cn/news/20190301/966115.shtml Results of Operationsscroll
During the second quarter of 2018, revenues of k€ 14 were generated, representing
a decrease of 99.9% compared to the same period in 2017. In the first half year, the
revenues reached k€ 277, representing a decrease of 99.3% compared to the same period
in 2017. This development was due to the fact that there was no material progress
in the existing EPC projects. The gross profit for the Q2 2018 amounted to k€3 compared to € -14.4 million for Q2
2017. In the first half year the gross profit amounted to k€ 55 compared to € 0.4
million in the same period in 2017. In Q2 2018 administrative expenses decreased by € 0.2 million to € 0.5 million compared
to Q2 2017. Accordingly, EBITDA increased to € -0.6 million in Q2 2018 compared to € -0.8 million
for the same period of 2017. In the first half year 2018 EBITDA remained stable at
€ -1.9 million compared with the first half year 2017. In Q2 2018 EBIT went up to € -0.6 million compared to € -0.8 million in Q2 2017. In
the first half year 2018 EBIT remained stable at € -1.9 million compared with the
first half year 2017. Finance income and finance costs (net) Q2 2018 amounted to k€ 6 compared to € 0.1
million in Q2 2017. The finance income represents mainly the exchange rate gains.
Finance income and finance costs (net) for the first half year 2018 amounted to k€
13 compared to € 0.2 million in the first half year 2017. Accordingly, net loss decreased to € -0.6 million compared to € -0.7 million for the
three-month period ended June 2018 compared to the same period in 2017. In the first
half year 2018 net loss went up to € -1.9 million compared to € -1.7 million in the
first half year 2017. scroll
1)
Current assets / current liabilities As at 30 June 2018, shareholders' equity decreased by 2.8% to € 114.1 million compared
to 31 December 2017 due to the negative result for the first half year of 2018 and
foreign currency translation effects. Total assets decreased by 1.5% compared to 31
December 2017. The cash position as at 30 June 2018 amounted to € 0.7 million, compared to € 0.4
million as at 31 December 2017. In 2016, ZhongDe sold its wholly owned subsidiary Chung Hua Environment Protection
(Holding) Group Ltd., Hong Kong ("Chung Hua"). Chung Hua and its subsidiaries are
the entities where the BOT projects in China were managed. The current assets include
receivables from this sale. We expect to receive the remaining receivables from Chung
Hua amounting to € 105 million over the next few years. Furthermore, the EPC projects
of Dingzhou and Wuhai as well as new expected EPC projects will contribute cash inflow. Current status of waste-to-energy projects
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| EPC projects under construction | Dingzhou | Wuhai |
| Daily capacity (tons/day) | 600 | 1,000 |
| PoC as at 30 Jun. 2018 | 78.0% | 22.0% |
| PoC as at 31 Dec. 2017 | 78.0% | 22.0% |
| Estimated time of completion | 2019 | 2019 |
EPC Projects
Dingzhou EPC project
At the end of Q2 2018, the percentage of completion of the project in Dingzhou was
78%, only the power access system and the secondary electrical wiring work have not
yet been finalized. The construction progress was postponed due to the financial stress
of the project owner. It is expected to enter normal operation in 2019.
Wuhai EPC project
At the end of Q2 2018, the percentage of completion of the project in Wuhai was 22%.
All civil works for the main plant, the office building, the complex building and
the other key units have been finished. Over 80% of the secondary structure, masonry
and plastering work of the main building and the attached house have been completed.
The equipment has been completely ordered and partly been installed. The project progress
was delayed due to the financial stress of the project owner. It is expected to enter
trial operation and to be completed during the year 2019.
Order Development
| in k€ | EPC | Total |
| Order Backlog as at 1 Jan. 2018 | 60,552 | 60,552 |
| Order intake in HY1 2018 | 0 | 0 |
| Revenues in HY1 2018 | 277 | 277 |
| Currency translation differences | 3 | 3 |
| Order Backlog as at 30 Jun. 2018 | 60,278 | 60,278 |
During the first half year of 2018 no new order intake was recorded. Order backlog
increased by 0.1% to € 60.3 million in first half year of 2018 compared to 31 December
2017 due to the foreign currency translation differences.
Business Segments Overview
| in k€ | Q2 2018 | Q2 2017 | Change % | HY1 2018 | HY1 2017 | Change % |
| EPC | ||||||
| Revenues (PoC) | 14 | 2,541 | -99.4 | 277 | 2,773 | -90.0 |
| Gross profit | 3 | 323 | -99.1 | 55 | 350 | -84.3 |
| Other (commodity trading; prior years: incinerators) | ||||||
| Revenues | 0 | 12,184 | -100.0 | 0 | 39,120 | -100.0 |
| Gross profit | 0 | 42 | -100.0 | 0 | 95 | -100.0 |
| Total Revenues | 14 | 14,725 | -99.9 | 277 | 41,893 | -99.3 |
| Total Gross Profit | 3 | 365 | -99.2 | 55 | 445 | -87.6 |
EPC projects
Two EPC projects contributed with k€ 14 to consolidated revenues in Q2 2018 (€ 2.5
million in Q2 2017).
Net Worth
| in k€ | 30 Jun. 2018 | 31 Dec. 2017 | Change % |
| Non-current assets | 89 | 46 | 93.5 |
| Current assets | 132,236 | 130,856 | 1.1 |
| Equity | 114,081 | 114,659 | -0.5 |
| Liabilities | 18,244 | 16,243 | 12.3 |
| Balance sheet total | 132,325 | 130,902 | 1.1 |
The balance sheet total amounted to € 132.3 million as of 30 June 2018 increasing
by 1.1% compared to 31 December 2017, while equity went down by € 0.6 million or 0.5%
to € 114.2 million. Consequently, the Company's equity ratio decreased to 86.2% as
at 30 June 2018 compared to 87.6% as at 31 December 2017. The current assets mainly
include receivables from the sale of Chung Hua in 2016.
Cash Flow
| in k€ | Q2 2018 | Q2 2017 | Change % | HY1 2018 | HY1 2017 | Change % |
| Cash flow used in (-) / generated from (+) operating activities | -76 | 85 | n.m. | -12,237 | -1,104 | <-100 |
| Cash flow used in investing activities | -50 | -1 | <-100 | -50 | -22 | <-100 |
| Cash flow generated from financing activities | 0 | 0 | 0.0 | 0 | 0 | 0.0 |
In Q2 2018 the cash flow used in operating activities decreased to k€ 76 thousand
compare to k€ 85 in Q2 2017 and decreased to € 12.2 million in H1 2018.
Opportunities and Risks
For the information on opportunities and risks, please refer to our Risk Report in
the Group Management Report as at 31 December 2016. Please note that these expectations
are subject to uncertainty even if currently we do not have any information as to
any other developments. There were no significant changes in opportunities and risks
compared to 31 December 2016.
Outlook
After disposal of BOT projects at the end of 2016, ZhongDe is focusing on developing
new EPC projects in waste-to-energy industry. Currently our marketing department exploits
the market in Hebei, Shanxi, Gansu, Henan and Fujian province and several projects
are under negotiation. The management is confident that more EPC contracts will be
concluded. Nevertheless, the final closing of new contracts always depends on conditions
which are not within the sole decision of the management and therefore cannot be forecasted
with absolute certainty.
The revenues in full year 2018 are to be generated mostly from the existing EPC project
in Dingzhou and Wuhai. It is expected to have a revenue decrease in 2018 compared
with the results of 2017 due to the delayed project progress. The acceleration of
the project completion is highly depending on the improvement of the financing ability
of the project owner. Regarding the earnings situation, the management board expects
a net loss for the full year. Earnings are not expected to improve in the second half
of 2018 due to the delayed projects.
The further business development of ZhongDe in 2019 and onwards is dependent on new
EPC projects and the financing of these projects. In order to enhance our ability
to win new EPC projects the company has set up close cooperations with some big state-owned
companies, who have better access to the waste-to-energy projects in China than other
market player. In addition, the management is seeking new business opportunities in
environmental protection industry, which can contribute to the revenues to the company.
However, due to the uncertainty relating to the success in the new EPC projects and
new business areas, results for 2019 can currently not be forecasted.
3 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2018
3.1 Condensed Six-Month Consolidated Statement of Profit or Loss and Comprehensive Income
| in k€ | Q2 2018 | Q2 2017 | HY1 2018 | HY1 2017 |
| Revenues | 14 | 14,725 | 277 | 41,893 |
| Cost of sales | -11 | -14,360 | -222 | -41,448 |
| Gross profit | 3 | 365 | 55 | 445 |
| Other operating income | 0 | 0 | 0 | 0 |
| Selling and distribution expenses | 0 | -353 | 0 | -1,118 |
| Administrative expenses | -459 | -653 | -1,685 | -895 |
| Research and development expenses | 0 | 0 | 0 | 0 |
| Other operating expenses | -150 | -198 | -261 | -337 |
| Loss from operations | -606 | -839 | -1,891 | -1,904 |
| Finance income | 15 | 118 | 34 | 161 |
| Finance costs | -9 | 0 | -21 | -1 |
| Loss before income tax | -600 | -721 | -1,878 | -1,744 |
| Income tax expenses | 0 | 0 | 0 | 0 |
| Loss for the period | -600 | -721 | -1,878 | -1,744 |
| Items that may be reclassified subsequently to profit or loss: | ||||
| Foreign exchange differences | 307 | -5,913 | 1,910 | -6,652 |
| Items that will not be reclassified subsequently to profit or loss: | ||||
| Foreign exchange differences | 8 | -96 | 19 | -108 |
| Other comprehensive income | 315 | 6,009 | 1,929 | -6,760 |
| Total comprehensive income | -285 | -6,730 | 51 | -8,504 |
| Loss attributable to owners of the parent | -600 | -721 | -1,878 | -1,744 |
| Total comprehensive income attributable to owners of the parent | -285 | -6,730 | 51 | -8,504 |
| Earnings per share (in €) (diluted and undiluted) | -0.05 | -0.06 | -0.15 | -0.14 |
| Weighted average shares outstanding (diluted and undiluted) | 12,600,000 | 12,600,000 | 12,600,000 | 12,600,000 |
3.2 Condensed Interim Consolidated Statement of Financial Position
as at 30 June 2018
Assets
| in k€ | 30 Jun. 2018 | 31 Dec. 2017 | 30 Jun. 2017 |
| Non-current assets | |||
| Intangible assets | 0 | 0 | 0 |
| Property, plant and equipment | 89 | 46 | 37 |
| Receivables from BOT | 0 | 0 | 0 |
| Deferred tax assets | 0 | 0 | 0 |
| 89 | 46 | 37 | |
| Current assets | |||
| Inventories | 0 | 0 | 0 |
| Trade receivables | 42,048 | 41,577 | 42,675 |
| Other receivables and prepayments | 80,939 | 88,844 | 84,033 |
| Amounts due from related parties and companies | 0 | 0 | 0 |
| Contract asset | 8,556 | 0 | 0 |
| Other financial assets | 0 | 0 | 15,500 |
| Cash and cash equivalents | 693 | 435 | 170 |
| 132,236 | 130,856 | 142,378 | |
| Total Assets | 132,325 | 130,902 | 142,415 |
Liabilities and Equity
| in k€ | 30 Jun. 2018 | 31 Dec. 2017 | 30 Jun. 2017 |
| 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 | 0 | 0 | 0 |
| Retained earnings | 53,152 | 55,658 | 55,029 |
| Foreign currency translation reserve | -10,377 | -12,305 | -8,563 |
| Total Equity | 114,081 | 114,659 | 117,772 |
| Liabilities | |||
| Long-term liabilities | |||
| Long-term loans | 0 | 0 | 0 |
| Deferred tax liabilities | 0 | 0 | 0 |
| 0 | 0 | 0 | |
| Current liabilities | |||
| Trade payables | 214 | 5,857 | 4,045 |
| Other payables and prepayments | 569 | 10,098 | 20,307 |
| Provisions | 292 | 288 | 291 |
| Amounts due to related parties and companies | 0 | 0 | 0 |
| Tax liabilities | 0 | 0 | 0 |
| Contract liability | 17,169 | 0 | 0 |
| Other financial liabilities | 0 | 0 | 0 |
| 18,244 | 16,243 | 24,643 | |
| Total Liabilities | 18,244 | 16,243 | 24,643 |
| Total Liabilities and Equity | 132,325 | 130,902 | 142,415 |
3.3 Condensed Six-Month Consolidated Statement of Cash Flows
for the period from 1 January to 30 June 2018
| in k€ | HY1 2018 | HY1 2017 |
| Loss before income tax | -1,878 | -1,744 |
| Adjustments for: | ||
| Amortization of intangible assets | 0 | 0 |
| Allowance for doubtful trade and other receivables | 0 | 1,118 |
| Depreciation of property, plant and equipment | 8 | 3 |
| Write off of inventories | 0 | 0 |
| Interest income / exchange gains | -34 | -161 |
| Interest expense / exchange losses | 21 | 1 |
| Operating cash flows before working capital changes | -1,883 | -783 |
| Working capital changes: | ||
| (-) Increase) / (+) decrease in: | ||
| Inventories | 0 | 0 |
| Trade receivables | 747 | -41,801 |
| PoC receivables from BOT projects | 0 | 0 |
| Other receivables and prepayments | -11,058 | 40,721 |
| Amounts due from related parties | 0 | 0 |
| (+) Increase) / (-) decrease in: | ||
| Trade payables | -2,364 | -981 |
| Other payables, provisions and accruals | 2,666 | 1,939 |
| Amounts due to related parties | 0 | 0 |
| Cash used in operations | -11,892 | -905 |
| Interest received | 34 | 161 |
| Interest paid | -21 | -1 |
| Income tax paid | -358 | -359 |
| Net cash used in operating activities | -12,237 | -1,104 |
| Cash flow from investing activities | ||
| Proceeds from disposal of consolidated companies | 0 | 0 |
| Proceeds from disposal of intangible assets | 0 | 0 |
| Purchase of property, plant, equipment and intangible assets | -50 | -22 |
| Cash flow used in (-) / generated from (+) investing activities | -50 | -22 |
| Cash flow from financing activities | ||
| Bank loans obtained | 0 | 0 |
| Bank loans repaid | 0 | 0 |
| Cash repayments of financial assets (BOT projects) | 0 | 0 |
| Cash flow used in financing activities | 0 | 0 |
| Net decrease before income tax | -12,287 | -1,126 |
| Cash and cash equivalents at beginning of period | 438 | 1,324 |
| Foreign exchange differences | 12,542 | -28 |
| Cash and cash equivalents at end of period | 693 | 170 |
3.4 Condensed Six-Month Consolidated Statement of Changes in Equity
for the period from 1 January to 30 June 2018
| in k€ | Number of shares outstanding |
Share capital AG |
Own shares |
Capital reserves |
Chinese statutory reserves |
Retained earnings |
| Balance as at 1 Jan. 2017 | 12,600,000 | 13,000 | -4,608 | 62,914 | 0 | 56,773 |
| Total comprehensive income for the period | 0 | 0 | 0 | 0 | 0 | -1,744 |
| Balance as at 30 Jun. 2017 | 12,600,000 | 13,000 | -4,608 | 62,914 | 0 | 55,029 |
| Total comprehensive income for the period | 0 | 0 | 0 | 0 | 0 | 0 |
| Balance as at 1 Jan. 2018 | 12,600,000 | 13,000 | -4,608 | 62,914 | 0 | 55,029 |
| Total comprehensive income for the period | 0 | 0 | 0 | 0 | 0 | -1,877 |
| Balance as at 30 Jun. 2018 | 12,600,000 | 13,000 | -4,608 | 62,914 | 0 | 53,152 |
| in k€ | Foreign currency translation reserve (other comprehensive income) |
Total equity |
| Balance as at 1 Jan. 2017 | -1,803 | 126,276 |
| Total comprehensive income for the period | -6,760 | -8,504 |
| Balance as at 30 Jun. 2017 | -8,563 | 117,772 |
| Total comprehensive income for the period | 0 | 0 |
| Balance as at 1 Jan. 2018 | -8,563 | 117,772 |
| Total comprehensive income for the period | -1,814 | -3,691 |
| Balance as at 30 Jun. 2018 | -10,377 | 114,081 |
3.5 Selected Notes to the Condensed Interim Consolidated Financial Statements
Business of the ZhongDe Group
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 (waste-to-energy). The
work and services required in connection with EPC projects are not carried out by
the ZhongDe Group itself but by Chinese subcontractors.
General
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 30 June 2018 comprise ZhongDe Waste Technology AG and its
subsidiary ZhongDe (China) Environmental Protection Co. Ltd. The subsidiary is located
in the People's Republic of China (PRC).
Basis of preparation
The condensed six-month consolidated financial statements of the ZhongDe Group are
prepared for the period ended 30 June 2018 with comparative financial statements as
at 31 December 2017 and 30 June 2017.
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
section 315a (1) of the German Commercial Code (HGB). Accordingly, these condensed
six-month 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 six-month consolidated financial statements for
the period ended 30 June 2018 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 30 June 2018 are not necessarily indicative for future
results.
The condensed six-month consolidated financial statements for the period from 1 January
to 30 June 2018 are drawn up in Euro. Amounts are stated in thousands of Euros (k€)
except where otherwise indicated.
The financial statements of the individual consolidated companies are prepared as
of the closing date for the Group financial statements. The condensed six months consolidated
financial statements of ZhongDe AG and subsidiaries for the period from 1 January
to 30 June 2018 were authorised for issue in accordance with a resolution of the Management
Board on 08 March, 2019.
Significant accounting policies
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
2016. 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.
Standards, amendments and interpretations to existing standards applied for the first time in the reporting period
The Group had to apply the following new standards, amendments to existing standards
or new interpretations for the first time:
| Title | Content | Material effect on ZhongDe Group |
| IFRS 9: Financial Instruments | Rules for recognition, measurement, derecognition, and accounting for financial assets and financial liabilities | none |
| IFRS 15: Revenue from Contracts with Customers | New framework to recognize and measure revenue, as well as relevant disclosure | See explanation |
| IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration | Clarified the date of transaction for the purpose of determining the exchange rate | none |
IFRS 15 Revenue from Contracts with Customers applies to all revenue arising from
contracts with customers; it supersedes IAS 11 Construction Contracts, IAS 18 Revenue
and related Interpretations, unless those contracts are in the scope of other standards.
The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services.
The Company recognises revenue in accordance with that core principle by applying
the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the Contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
The standard requires entities to exercise judgment, taking into consideration all
of the relevant facts and circumstances when applying each step of the method to contracts
with their customers.
IFRS 15 also includes a cohesive set of disclosure requirements that would result
in an entity providing users of financial statements with comprehensive information
about the nature, amount, timing and uncertainty of revenue and cash flows arising
from the entity's contracts with customers. Specifically, it requires an entity to
provide information about:
(a) revenue recognized from contracts with customers, including the disaggregation
of revenue into appropriate categories;
(b) contract balances, including the opening and closing balances of receivables,
contract assets and contract liabilities;
(c) performance obligations, including when the entity typically satisfies its performance
obligations and the transaction price that is allocated to the remaining performance
obligations in a contract;
(d) significant judgments, and changes in judgments, made in applying the requirements
to those contracts; and
(e) assets recognized from the costs to obtain or fulfill a contract with a customer.
The Company adopted IFRS 15 with expedient retrospective method after considering
relevant factors: The comparative information for each of the primary financial statements
would be presented as the same in previous period; The cumulative adjustment to the
opening balance of retained profits (or other components of equity) as at 1 January
2018, would be not material and thus not adjusted retrospectively in the consolidated
statement of changes in equity for the six months ended 30 June 2018.
The new standard affects mainly the reclassification of certain items in the financial
statements: amounts due from customers for contract works are reclassified into contract
assets, while amounts due to customers for contract works, such as advances from customers,
provisions for quality guarantee and other liability are reclassified into contract
liabilities. Generally, there is no substantial impact on our condensed interim financial
statements for applying the new standard.
Published but not yet applied standards, amendments and interpretations
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 six months of 2018, and were therefore not applied
by the ZhongDeGroup.
| Title | IASB Effective Date | Endorsed by the EU on | EU Effective Date | Expected material effect on ZhongDe Group |
| IFRS 14: Regulatory Deferral Accounts | January 1, 2016 | (not endorsed by the EU) | (not applicable) | none |
| IFRS 16: Leases | January 1, 2019 | October 31, 2017 | January 1, 2019 | see explaination |
| Amendments to IFRS 9: Prepayment Featureswith Negative Compensation | January 1, 2019 | March 22, 2018 | January 1, 2019 | none |
| IFRS 17 Insurance Contracts | January 1, 2021 | (to be determined) | (to be determined) | none |
| IFRIC 23 Uncertainty over Income Tax Treatments | January 1, 2019 | (October 23, 2018) | (January 1, 2019) | none |
| Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures | January 1, 2019 | (February 8, 2019) | (January 1, 2019) | none |
| Annual Improvements to IFRS Standards 2015-2017 Cycle | January 1, 2019 | (expected in 2019) | (to be determined) | none |
| Amendments to IAS 19: Plan Amendment, Curtailment or Settlement | January 1, 2019 | (March 13, 2019) | (January 1, 2019) | none |
| Amendments to References to the Conceptual Framework in IFRS Standards | January 1, 2020 | (expected in 2019) | (to be determined) | none |
| Amendments to IAS 1 and IAS 8: Definition of Material | January 1, 2020 | (expected in 2019) | (to be determined) | none |
| Amendment to IFRS 3 Business Combinations | January 1, 2020 | (expected in 2019) | (to be determined) | none |
The aforementioned standards and interpretations are to be applied in the Consolidated
Financial Statements of the ZhongDe Group from the 2019 financial year or later. ZhongDe
generally does not early adopt new standards but applies them from the compulsory
application date onwards.
IFRS 16 specifies the recognition, measurement, presentation and disclosure of leases.
The standard provides a single lessee accounting model, requiring lessees to recognise
assets and liabilities for all leases unless the lease term is 12 months or less or
the underlying asset has a low value. Lessors continue to classify leases as operating
or finance, with IFRS 16's approach to lessor accounting substantially unchanged from
its predecessor, IAS 17.The application of IFRS 16 will require that ZhongDe as lessee
for a couple of leasing contracts will have to capitalise the leased assets formerly
been treated as operating lease under IAS 17, when the lease term is longer than 12
months unless such bearers are immaterial. As a result, the fixed assets and financial
liabilities will increase, other operating expense will decrease while depreciation
and interest expense will increase as well. ZhongDe is currently evaluating the impact
the standard will have on the consolidated financial statements.
Aside from additional or modified disclosure requirements ZhongDe Group currently
expects only marginal effect on the consolidated financial statements from the first-time
application of the other standards, interpretations and amendments.
Segment analysis and information
A. Business segments
In the first half year of 2018 mainly the EPC projects contributed to gross profit.
B. Business by region
The Group is principally engaged in EPC-projects 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.
C. Allocation basis
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 six months of 2018:
| BOT projects | EPC projects | Other (commodity trading; prior years: incinerators) | ||||
| in k€ | HY1 2018 | 2017 | HY1 2018 | HY1 2017 | HY1 2018 | HY1 2017 |
| Total revenue for reportable segments | 0 | 0 | 277 | 2,773 | 0 | 39,120 |
| Total gross profit from reportable segments | 0 | 0 | 55 | 350 | 0 | 95 |
| Order intake | 0 | 0 | 0 | 0 | 0 | 0 |
| Order backlog | 0 | 0 | 60,278 | 58,678 | 0 | 1,588 |
| Group | ||
| in k€ | HY1 2018 | HY1 2017 |
| Total revenue for reportable segments | 277 | 41,893 |
| Total gross profit from reportable segments | 55 | 445 |
| Order intake | 0 | 0 |
| Order backlog | 60,278 | 60,266 |
Functional and presentation currency
| Development of exchange rates (€ / foreign currency rate) | ISO code | Average rate | Ending rate | |||
| HY1 2018 | HY1 2017 | 30 Jun. 2018 | 31 Dec. 2017 | 30 Jun. 2017 | ||
| Chinese Yuan | CNY | 7.7086 | 7.4448 | 7.7170 | 7.3202 | 7.7385 |
The functional currency of the consolidated subsidiaries and ZhongDe Waste Technology
AG is the RMB.
Related Party Information
No transactions between the Group and related parties during the six-month period
from 1 January to 30 June 2018 were noted.
Subsequent Events
The progress of the Dingzhou EPC project was speeding up in the second half year of
2018. In November 2018. The power access system was completed and successfully connected
to the state grid. The project settlement will take place within a short period of
time. The Dingzhou plant is expected to be transferred to the owner in the second
half of 2019.
According to the project owner, the EPC project in Wuhai is expected to receive the
bank financing in June 2019. The project is expected to be completed at the end of
2019.
Frankfurt/Main, 27 March 2019
ZhongDe Waste Technology AG
Zefeng Chen
Chairman of the
Management Board (CEO)
4 RESPONSIBILITY STATEMENT
To the best of our knowledge, and in accordance with the applicable reporting principles
for interim financial reporting, the interim consolidated financial statements from
1 January to 30 June 2018 give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group. The interim management report of the Group
includes a fair review of the development and performance of the business and the
position of the Group, together with a description of the material opportunities and
risks associated with the expected development of the Group for the remaining months
of the financial year.
Frankfurt/Main, 27 March 2019
ZhongDe Waste Technology AG
Management Board
Zefeng Chen
Chairman of the
Management Board (CEO)
5 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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 2016, which is available on the ZhongDe website: www.zhongde-ag.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.
6 ABOUT ZHONGDE WASTE TECHNOLOGY AG
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
waste-to-energy projects in China. As a general contractor of EPC projects, ZhongDe
is responsible for the design, procurement, construction and installation of waste-to-energy
plants applying different technologies, such as grate, fluidized bed, pyrolytic or
rotary kiln.
The registered office of ZhongDe Waste Technology AG is located in Frankfurt, Germany.
The Chinese headquarter is located in Beijing, China.
7 CONTACT INFORMATION
This interim report, recent publications, and additional information are all available
on the internet at: www.zhongde-ag.com and www.zhongde-ag.de.
ZhongDe Waste Technology AG
Ying Sun
Investor Relations
Barckhausstrasse 1,
60325 Frankfurt/Main
Germany
Tel.: +49 (0) 69 2475689 - 630
Fax: +49 (0) 69 2475689 - 900
Email: ying.sun@zhongde-ag.de