HONG KONG, June 6, 2020 /PRNewswire/ — Euro Tech Holdings Company Limited (Nasdaq: CLWT) today reported financial results for the 12-month period ended December 31, 2019 (“Fiscal 2019”).
The Company’s revenues for Fiscal 2019 were approximately US$17,399,000, an approximate 13.5% decrease compared to approximately US$20,104,000 in the Company’s fiscal year ended December 31, 2018 (“Fiscal 2018”). Revenues from trading and manufacturing activities, and engineering activities decreased by US$1,893,000 and US$812,000, respectively.
Gross profits increased by 19.4% to approximately US$4,417,000 for Fiscal 2019 as compared to approximately US$3,699,000 for Fiscal 2018. The increase was primarily due to the drop in contracts of low profit margin.
Selling and administrative expenses increased by 2.1% to approximately US$4,853,000 for Fiscal 2019 as compared to approximately US$4,751,000 for Fiscal 2018 as a result of general inflation.
Operating loss decreased by 41.5% to approximately US$440,000 for Fiscal 2019 as compared to approximately US$1,059,000 for Fiscal 2018. This was primarily due to the increase in gross profits.
The profit contribution from the affiliates was approximately US$137,000 for Fiscal 2019, as compared to negative contribution of approximately (US$932,000) for Fiscal 2018. The result for Fiscal 2018 included a loss contribution from Zhejiang Tianlan Environmental Protection Technology Co. Ltd. (“Blue Sky”) of approximately (US$786,000) principally caused by a decrease in sales revenue as a result of the filing for bankruptcy liquidation of one of Blue Sky’s major customers.
The Company had net loss of approximately US$146,000 in Fiscal 2019, as compared to net income of approximately US$88,000 in Fiscal 2018. This was primarily due to there was a non-recurrent net gain on disposal of an affiliate of approximately US$1,522,000 in Fiscal 2018.
The Company’s operating results in Fiscal 2019 was adversely affected by the economic slowdown in China and Hong Kong resulting from the China-US escalating trade war and technology tensions, and the ongoing social unrest in Hong Kong. The outbreak of coronavirus since December 2019 also has further material adverse impact on the Company’s business, operating results and financial condition in year 2020.
The Company is still positive about the future Ballast Water Treatment Systems (“BWTS”) business from port services and commercial ships. The development of the ballast water port solution prototype is now completed and under system and operation tests in various ports. The 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. The Company is now embarking on promotion activities for port solution systems in China and South East Asia. The International Maritime Organization (“IMO”) convention stipulates that type approval for revised G8 requirements must be obtained for all BWTS installed on or after October 28, 2020. To comply with these requirements, the Company is going to start the land based test for our BWTS to obtain such type approval certification in China.
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. 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.
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 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.
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 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.
CONDENSED STATEMENTS OF OPERATIONS
(Dollar amounts in US$ thousands, except share and per share data)
Year Ended December 31,
Net (Loss) / Income Attributable to the
Net (Loss) / Income Per Ordinary Share –
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