Euro Tech Holdings Company Limited Reports Interim Results For The Six Months Ended June 30, 2018
HONG KONG, Dec. 21, 2018 /PRNewswire/ -- Euro Tech Holdings Company Limited (Nasdaq: CLWT) today reported its unaudited financial results for the six months ended June 30, 2018.
The Company's revenues for the six months ended June 30, 2018 ("1H 2018") were approximately US$9,516,000, an 9.29% increase as compared to approximately US$8,707,000 for the six months ended June 30, 2017 ("1H 2017"). Revenues from trading and manufacturing activities, and engineering activities increased by US$264,000 and US$545,000, respectively.
Gross profits decreased by 23% to approximately US$1,460,000 for 1H 2018 as compared to approximately US$1,895,000 for 1H 2017. The decrease was primarily due to the decrease in the gross profit margin % of contracts under the keen competitive market condition.
Selling and administrative expenses slightly decreased by approximately US$54,000 to US$2,437,000 for 1H 2018 as compared to approximately US$2,491,000 for 1H 2017.
The profit contribution from the affiliates, Zhejiang Tianlan Environmental Protection Technology Co. Ltd., ("Blue Sky") and Zhejiang Jia Huan Electronic Co. Ltd. ("Jia Huan"), decreased by approximately US$244,000 to negative contribution of US$12,000 for 1H 2018 as compared to profit contribution of approximately US$232,000 for 1H 2017. Jia Huan made a negative contribution of approximately US$146,000 in 1H 2018 as compared to profit contribution of approximately US$69,000 in 1H 2017. The profit contribution from Blue Sky is expected to drop continuously in the near future due to the economic downturn and the intensive competition of the environmental protection industry in China.
The net profit was approximately US$878,000 for 1H 2018, as compared to net loss of approximately US$92,000 for 1H 2017. This was primarily due to profit on disposal of investment in Jia Huan of approximately US$1,522,000. The Company declared and paid dividend of US$0.70 per share in 1H 2018. The economic slowdown in China resulting from the trade war between the United States and China will adversely affect the overall operating performance of the Company in the second half year of 2018 and the near future.
Despite the imminent economic slowdown in China, the Company has attended and participated in local and international trade shows in Bangladesh, Dubai and Guangzhou to promote Ballast Water Treatment Systems ("BWTS") and handheld ballast water checker in the past few months in order to look for more business opportunities outside China.
About BWTS
BWTS are an imminent requirement by The International Maritime Organization ("IMO") to prevent the biological unbalance caused by the estimated 12 billion tons of ballast water transported across the seas by ocean-going vessels when their ballast water tanks are emptied or refilled. In 2012, ballast water discharge standard became a law in the US. Any vessel constructed in December 2013 or later will need to comply when entering US waters, and existing vessels will follow shortly after. IMO's Ballast Water Management Convention entered into force for new-built vessels on September 8, 2017 after ratification by 52 States, representing 35.1441% of world merchant shipping tonnage. In July 2017, IMO decided that the phase-in period for ballast water system retrofits will start on 8 September 2019.
The company obtained type approval certificate from China's Classification Society for its 200, 300, 500, 750, 1200 and 1250 Cubic Meters per hour BWTS and Alternate Management Systems ('AMS") acceptance for its full range BWTS in 2016.
About AMS
AMS acceptance by the U.S. Coast Guard is a temporary designation given to BWTS approved by a foreign administration. It enables BWTS to be used on vessels for a period of up to 5 years, while the treatment system undergoes approval testing to U.S. Coast Guard standards.
About Blue Sky
Zhejiang Tianlan Environmental Protection Technology Co. Ltd., ("Blue Sky"), founded in 2000, is a fast growing company which provides a comprehensive service for design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted from various boilers and industrial furnaces of power plants, steel works and chemical plants. It has listed its shares on the New Third Board in the People's Republic of China ("PRC") since November 17, 2015 and suspended trading from August 15, 2017 to February 2, 2018. The New Third Board is a national over-the-counter market in the PRC regulated by China Securities Regulatory Commission, and managed by the National Equities Exchange and Quotations, which serves as a platform for the sale of existing shares or directed share placements for small and medium-sized enterprises.
About Jia Huan
Zhejiang Jia Huan Electronic Co. Ltd. in Zhejiang, China ("Jia Huan"), an established company, has been in business since 1969. 95% of Jia Huan's business is related to air pollution control and less than 5% is for water and wastewater treatment. Jia Huan designs and manufactures automatic control systems and electric voltage control equipment for electrostatic precipitators which are major air purification equipment for power plants, cement plants and incinerators to remove and collect dust and pollutants from the exhaust stacks. On March 5, 2018, we entered into an Equity Transfer Agreement to sell our 20% equity stake of Jia Huan for a purchase price of RMB31,312,500 to Ms. Jin Lijuan, the wife of the holder of the remaining 80% equity stake of Jia Huan. In accordance with the terms of the Agreement, all approvals and registrations with the relevant governmental authorities were obtained, the closing of the transaction has been completed, and the Purchaser has paid the Purchase Price to the Company, in full in May 2018.
Certain statements in this news release regarding the Company's expectations, estimates, present view of circumstances or events, and statements containing words such as estimates, anticipates, intends, or expects, or words of similar import, constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements indicate uncertainty and the Company can give no assurance with regard to actual outcomes. Specific risk factors may include, without limitation, having the Company's offices and operations situated in Hong Kong and mainland China, doing business in China, competing with Chinese manufactured products, competing with the Company's own suppliers, dependence on vendors, and lack of long term written agreements with suppliers and customers, development of new products, entering new markets, possible downturns in business conditions, increased competition, loss of significant customers, availability of qualified personnel, negotiating definitive agreements, new marketing efforts and the timely development of resources. See the "Risk Factor" discussions in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F for its fiscal year ended December 31, 2017.
EURO TECH HOLDINGS COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
As of As of
December
31, 2017
June 30, (Audited)
2018
(Unaudited)
US$'000 US$'000
Assets
Current assets:
Cash and cash equivalents 3,626 3,380
Restricted cash 642 1,072
Accounts receivable, net 3,314 3,808
Prepayments and other current assets 745 860
Inventories 481 496
Total current assets 8,808 9,616
Property, plant and equipment, net 746 734
Investments in affiliates 11,431 12,158
Goodwill 1,071 1,071
Deferred tax assets 165 158
Total assets 22,221 23,737
Liabilities and shareholders' equity
Current liabilities:
Accounts payable 3,291 3,680
Loans payable 361 97
Other payables and accrued expenses 2,123 2,721
Taxation payable 132 132
Total current liabilities 5,907 6,630
Commitments and contingencies
Shareholders' equity:
Ordinary share, 20,000,000 (As of December 31, 2017: 20,000,000) shares authorized; 2,229,609 (As of December 31, 2017: 2,229,609) shares issued and
outstanding 123 123
Additional paid-in capital 9,551 9,551
Treasury stock, 167,700 (As of December 31, 2017: 167,700) shares at cost (786) (786)
PRC statutory reserve 352 352
Accumulated other comprehensive income 818 918
Retained earnings 5,246 5,811
Equity attributable to shareholders of Euro Tech 15,304 15,969
Non-controlling interest 1,010 1,138
Total shareholders' equity 16,314 17,107
Total liabilities and shareholders' equity 22,221 23,737
EURO TECH HOLDINGS COMPANY LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
/(LOSS)
FOR THE
SIX MONTHS ENDED
JUNE 30, 2018
AND 2017
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
Revenues
Trading and
manufacturing 5,634 5,370
Engineering 3,882 3,337
Total revenues 9,516 8,707
Cost of revenues
Trading and
manufacturing (4,679) (4,128)
Engineering (3,377) (2,684)
Total cost of
revenues (8,056) (6,812)
Gross profit 1,460 1,895
Finance costs (6) (6)
Selling and
administrative
expenses (2,437) (2,491)
Operating loss (983) (602)
Interest income 11 2
Other
(losses)/income,
net (5) 99
Gain on disposal
of affiliate 1,522
Profit/(Loss)
before income
taxes and
equity in
profit of
affiliates 545 (501)
Income taxes 253 (21)
(12) 232
Equity in profit
of affiliates
Net profit/
(loss) 786 (290)
Less: net loss
attributable to
non-
controlling
interest 92 198
Net profit/
(loss)
attributable to
the Company 878 (92)
Other
comprehensive
loss
Net income/
(loss) 786 (290)
Foreign exchange
translation (8) (14)
Adjustments
Comprehensive
income/(loss) 778 (304)
Less:
Comprehensive
loss
attributable to
non-
controlling
interest 96 173
Comprehensive
income/(loss)
attributable to
the Company 874 (131)
Net income/
(loss) per
ordinary share
-Basic US$0.43 US$(0.04)
-Diluted US$0.43 US$(0.04)
Weighted average
number of
ordinary shares
outstanding
-Basic 2,061,909 2,061,909
-Diluted 2,061,909 2,061,909
Dividend per
share US$0.70 US$ -
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SOURCE Euro Tech Holdings Company Limited
