HONG KONG, May 13, 2021 /PRNewswire/ -- Euro Tech Holdings Company Limited (Nasdaq: CLWT) today reported financial results for the 12-month period ended December 31, 2020 ("Fiscal 2020").
The Company had net income of approximately US$769,000 in Fiscal 2020, as compared to net loss of approximately US$146,000 for the fiscal year ended December 31, 2019 ("Fiscal 2019"). This was attributed by the increase in profit contribution from the affiliate of approximately US$298,000 and the non-recurrent net gain on disposal of a property of approximately US$1,429,000.
The Company's revenues for Fiscal 2020 were approximately US$13,357,000, an approximate 23.2% decrease compared to approximately US$17,399,000 in Fiscal 2019. The decrease was principally caused by the adverse impact of COVID-19 and the China-US escalating trade situation and technology tensions.
Gross profits decreased by 16.6% to approximately US$3,685,000 for Fiscal 2020 as compared to approximately US$4,417,000 for Fiscal 2019. The decrease was primarily due to the drop in revenues. However, the gross margin percentage was increased from 25% in Fiscal 2019 to 28% in Fiscal 2020.
Selling and administrative expenses increased by 10.7% to approximately US$5,374,000 for Fiscal 2020 as compared to approximately US$4,853,000 for Fiscal 2019. The increase was principally due to the increase in research and development costs relating to BWTS of approximately US$458,000 for the IMO revised G8 requirements compliance and redundancy provision of approximately US$453,000 to scale down the loss making manufacturing operation. The normal selling and administrative expenses were decreased after exclusion of these non-recurrent expenses.
Operating loss increased by 41.5% to approximately US$1,701,000 for Fiscal 2020 as compared to approximately US$440,000 for Fiscal 2019. This was primarily due to the decrease in revenue, incurrence of non-recurrent research and development costs relating to BWTS and staff redundancy provision.
The Company is positive about the future Ballast Water Treatment Systems ("BWTS") business from port services and commercial ships. Apart from securing four sales contracts and many serious inquiries for port solutions in China in the last six months, the Company is at the final stage to close the deal to supply 8 sets of BWTS of various sizes to the ship owners in the Middle East and Southeast Asia. Based on current inquiries, Middle East may become the biggest market for the Company after China in the coming months.
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 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, and the company have been in compliance with such requirements.
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.
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, 2020.
CONDENSED STATEMENTS OF OPERATIONS
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Year Ended December 31,
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SELECTED BALANCE SHEET DATA
As of December 31,
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Total Euro Tech Shareholders' Equity
SOURCE Euro Tech Holdings Company Limited