HONG KONG, May 15, 2018 /PRNewswire/ — Euro Tech Holdings Company Limited (Nasdaq: CLWT) today reported financial results for the 12-month period ended December 31, 2017 ("Fiscal 2017").
The Company’s revenues for Fiscal 2017 were approximately $17,350,000, an approximate 22.8% decrease compared to approximately $22,478,000 in the Company’s fiscal year ended December 31, 2016 ("Fiscal 2016").
The Company had net profit of approximately US$473,000 in Fiscal 2017, an increase of 105% as compared to approximately US$231,000 in Fiscal 2016, despite the drop in revenues. This was primarily due to decrease in operating loss as a result of increase in gross margin % and decrease in selling and administrative expenses, decrease in income taxes expenses and contributions from affiliates, namely Zhejiang Tianlan Environmental Protection Technology Co. Ltd. ("Blue Sky"), and Zhejiang Jia Huan Electronic Co. Ltd. ("Jia Huan").
The Company is positive about the Ballast Water business as it has recently obtained the Certificate of Utility Model Patent for its handheld ballast water checker in China in addition to the type approval certificate from China’s Classification Society for its 200, 300, 500, 750, 1200 and 1250 Cubic Meters per hour Ballast Water Treatment Systems ("BWTS") and Alternate Management Systems ("AMS") acceptance for its full range BWTS. Moreover, the Company has received a PRC government grant of approximately US$425,000 to provide a BWTS for a R&D project for the ballast water treatment at ports.
About Blue Sky
Zhejiang Tianlan Environmental Protection Technology Co. Ltd., ("Blue Sky"), found 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. At the first 2018 General Meeting of Blue Sky’s shareholders held on January 25, 2018, it was resolved that Blue Sky should sell all of its shareholding in its wholly-owned subsidiary, Zhejiang Tianlan Environmental Engineering Limited (‘Blue Sky Engineering’) to two of Blue Sky’s shareholders, including the major shareholder. After the General Meeting, some shareholders and their representatives (including the Company) expressed opposition to the sale, based upon, among other things, the fact that Blue Sky Engineering holds an Engineering Design Qualification Certificate (Class A) (the "Engineering Certificate") in the PRC, and if disposed, Blue Sky would thereby be rendered unable to conduct any engineering design business. In light of such opposition, management of Blue Sky sought the views of its shareholders, who indicated preference for the termination of the disposal of Blue Sky Engineering. As a result, the secretary of Blue Sky’s board of directors has informed the Company that Blue Sky would consult the related professional parties and duly decide and resolve upon this matter in accordance with the law.
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. The completion of the transaction is subject to completion of all closing formalities, including the need to obtain approval and registration with the relevant governmental authorities.
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.
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.
Forward Looking Statements
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 mainland 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.
CONDENSED STATEMENTS OF OPERATIONS
(Dollar amounts in US$ thousands, except share and per share data)
Year Ended December 31,
Net Profit attributable to the Company
Net Income Per Share – Basic
Weighted Average Number of Ordinary Shares Outstanding – Basic
SELECTED BALANCE SHEET DATA
As of December 31,
Cash and Cash Equivalents
Total Current Assets
Total Current Liabilities
Total Euro Tech Shareholders’ Equity
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