Euro Tech Holdings Company Limited Reports Interim Results For The Six Months Ended June 30, 2020
HONG KONG, Dec. 30, 2020 /PRNewswire/ -- Euro Tech Holdings Company Limited (Nasdaq: CLWT) today reported its unaudited financial results for the six months ended June 30, 2020.
The Company's net income for the six months ended June 30, 2020 ("1H 2020") was approximately US$869,000 as compared to net loss of approximately US$280,000 for the six months ended June 30, 2019 ("1H 2019"). This was attributed by the non-recurrent net gain on disposal of a property of approximately US$1,429,000.
The adverse impact of COVID-19 coupled with the China-US escalating trade war and technology tensions, and the ongoing social unrest in Hong Kong resulted in a 35.1% decrease of revenues from approximately US$8,815,000 for 1H 2019 to approximately US$5,718,000 for 1H 2020. Revenues from trading and manufacturing activities, and engineering activities decreased by US$1,426,000 and US$1,671,000, respectively.
Gross profits decreased by 20.5% to approximately US$1,619,000 for 1H 2020 as compared to approximately US$2,036,000 for 1H 2019. The decrease was primarily due to the drop in revenues.
Selling and administrative expenses decreased by approximately US$171,000 to US$2,341,000 for 1H 2020 as compared to approximately US$2,512,000 for 1H 2019, in spite of the severance pay of approximately US$117,000 related to the scale-down of its loss-making manufacturing operation. The decrease was principally due to tight control over expenses.
Operating loss increased by 52.5% to approximately US$726,000 for 1H 2020 as compared to approximately US$476,000 for 1H 2019. This was primarily due to the decrease in revenues.
The Company expects that its operating performance will continue to be negatively impacted by COVID-19. However, the Company is still positive about the future Ballast Water Treatment Systems ("BWTS") business from port services and commercial ships. The Company's first ballast water port solution system has recently been delivered to its Shanghai port client. As the first pioneer to commence on commercial ballast water port reception treatment service in the Asia Pacific region, the Company is currently working on a number of enquiries from China, Southeast Asia and Europe. To comply with the International Maritime Organization ("IMO") revised G8 requirements, the Company obtained a BWTS revised G8 test report already from a third party ballast water conformity assessment laboratory (with China National Accreditation Service qualification), and is now undergoing China Classification Society's internal procedure of issuing the revised G8 type approval certificate.
About BWTS
BWTS are an imminent requirement by 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 started 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.
The IMO convention stipulates that type approval for revised G8 requirements must be obtained for all BWTS installed on or after October 28, 2020.
The ballast water port solution system is a system installed in port to offer ballast water treatment services for ocean going ships without their own BWTS and for those with damaged BWTS.
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 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, 2019.
EURO TECH HOLDINGS COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
As of
As of
June 30, December 31,
2020 2019
(Unaudited) (Audited)
US$'000
US$'000
Assets
Current assets:
Cash and cash equivalents 5,015 5,991
Restricted cash 1,453 658
Accounts receivable, net 1,765 3,586
Prepayments and other current assets 1,495 748
Contract assets 62 441
Inventories 205 586
Total current assets 9,995 12,010
Property, plant and equipment, net 271 700
Interest in affiliate 7,677 7,720
Goodwill 1,071 1,071
Deferred tax assets 37 87
Operating right-of-use assets 310 406
Long-term investment 148 148
Restricted cash 126 71
Total non-current assets 9,640 10,203
Total assets 19,635 22,213
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Liabilities and shareholders' equity
Current liabilities:
Bank borrowings 565
Accounts payable 2,129 3,914
Contract liabilities 1,382 869
Other payables and accrued expenses 1,028 1,142
Current portion of operating lease
obligations 160 170
Total current liabilities 4,699 6,660
Non-current liabilities:
Operating lease obligations, net of
current maturities 130 216
Total liabilities 4,829 6,876
Commitments and contingencies
Shareholders' equity:
Ordinary share, 123 123
20,000,000 (2019: 20,000,000) shares
authorized;
3,260,559 (2019: 3,260,559) no par
value shares issued
Additional paid-in capital 9,588 9,561
Treasury stock, 167,700 shares at cost
as of June 30, 2020 and December 31,
2019, respectively (786) (786)
PRC statutory reserves 316 316
Accumulated other comprehensive income 907 899
Retained earnings 3,916 4,346
Total shareholders' equity
attributable to Euro Tech Holdings
Company Limited 14,064 14,459
Non-controlling interests 742 878
Total shareholders' equity 14,806 15,337
Total liabilities and shareholders'
equity 19,635 22,213
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EURO TECH HOLDINGS COMPANY LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
2020 2019
(Unaudited)
(Unaudited)
US$'000
US$'000
Revenues
Trading and manufacturing 3,927 5,353
Engineering 1,791 3,462
Total revenues 5,718 8,815
Cost of revenues
Trading and manufacturing (2,819) (4,123)
Engineering (1,280) (2,656)
Total cost of revenues (4,099) (6,779)
Gross profit 1,619 2,036
Finance costs (4)
Selling and administrative expenses (2,341) (2,512)
Operating loss (726) (476)
Interest income 16 47
Other income, net 46 9
Gain on disposal of property, plant and
equipment 1,429
Equity in income of affiliates 28 43
Income /(loss) before income taxes 793 (377)
Income taxes (expense) / credit (50) 1
Net income / (loss) 743 (376)
Net loss attributable to non-controlling
interests 126 96
Net income /(loss) attributable to Euro
Tech Holdings Company Limited's
shareholders 869 (280)
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Other comprehensive income /(loss)
Net income / (loss) 743 (376)
Foreign exchange translation (2) 5
Adjustments
Comprehensive income / (loss) 741 (371)
Comprehensive loss attributable to non-
controlling interests 136 97
Comprehensive income /(loss) attributable
to the Company 877 (274)
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Net income /(loss) per
ordinary share
attributable to Euro Tech
Holdings Company
Limited's shareholders
- Basic
$ US0.28
$ US(0.14)
$ US0.23
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- Diluted
$ US0.28
$ US(0.14)
$ US0.23
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Weighted average ordinary
shares outstanding
- Basic 3,092,859 2,061,909 2,061,909
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- Diluted 3,092,859 2,061,909 2,061,909
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Dividend per share
US$0.42
US$ -
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SOURCE Euro Tech Holdings Company Limited
