HONG KONG, Dec. 29, 2014 /PRNewswire/ — Euro Tech Holdings Company Limited (Nasdaq: CLWT) today reported its unaudited financial results for the six months ended June 30, 2014.
The Company’s revenues for the six months ended June 30, 2014 ("1H 2014") were approximately US$9,863,000, a 4.9% increase as compared to approximately US$9,400,000 for the six months ended June 30, 2013 ("1H 2013"). This increase was primarily attributable to the increase in revenues from trading and manufacturing activities.
Gross profits decreased by 9.1% to approximately US$2,358,000 for 1H 2014 as compared to approximately US$2,593,000 for 1H 2013. The decrease was mainly due to the decrease in gross margin from engineering activities as a result of keen price competition under the current economic conditions.
Selling and administrative expenses increased by approximately US$107,000 to US$2,871,000 for 1H 2014 as compared to approximately US$2,764,000 for 1H 2013. The increase was primarily due to the increase of approximately US$146,000 in development costs of for Ballast Water Treatment Systems ("BWTS") to approximately US$283,000 for 1H 2014 as compared to approximately US$137,000 for 1H 2013.
The net loss decreased by US$4,000 to approximately US$142,000 for 1H 2014, as compared to net loss of approximately US$146,000 for 1H 2013. This was primarily due to increase in profit contribution of approximately US$161,000 from the affiliates. If the development costs for BWTS were excluded, it was a breakeven position.
Although Euro Tech has obtained type approval certificate from China’s Classification Society for its 300 Cubic Meters per hour BWTS, the Company still has a lot to do now. It has to apply an Alternate Management Systems ("AMS") acceptance required by U.S. Coast Guard enabling the BWTS to be used on vessels entering U.S. territorial waters. While marketing the 300 Cubic Meters per hour BWTS directly and through its distributors, the Company realizes it has to develop other ranges of BWTS, namely 1,000, 750 and 500 Cubic Meters per hour BWTS to meet different requirements of its potential customers now.
Despite the economy slowdown in China, Euro Tech is positive about the BWTS business potential, and the progress of seeking foreign partners and strategic partners for cooperation to work on BWTS business and wastewater treatment contracts inside and outside China
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. The market potential for retrofits and new installations of BWTS in these old and new ocean-going vessels is enormous.
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.
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, 2013.
EURO TECH HOLDINGS COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Accounts receivable, net
Prepayments and other current assets
Total current assets
Property, plant and equipment, net
Investments in affiliates
Deferred tax assets
Liabilities and shareholders’ equity
Other payables and accrued expenses
Total current liabilities
Commitments and contingencies
Ordinary share, 20,000,000 (As of December 31, 2013: 20,000,000) shares authorized; 2,229,609 (As of December 31, 2013: 2,229,609) shares issued and outstanding
Additional paid-in capital
Treasury stock, 160,386 (As of December 31, 2013: 160,386) shares at cost
PRC statutory reserve
Accumulated other comprehensive income
Equity attributable to owners of Euro Tech
Total shareholders’ equity
Total liabilities and shareholders’ equity
EURO TECH HOLDINGS COMPANY LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME
Trading and manufacturing
Cost of revenues
Trading and manufacturing
Total cost of revenues
Selling and administrative expenses
Other income, net
Loss before income taxes and equity in profit of affiliates
Equity in profit of affiliates
Less: net loss/(income) attributable to non-controlling interest
Net loss attributable to the Company
Other comprehensive loss
Foreign exchange translation
Less: Comprehensive loss/(income) attributable to non-controlling interest
Comprehensive loss attributable to the Company
Net loss per ordinary share
Weighted average number of ordinary shares outstanding
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