HONG KONG, Dec. 29 /PRNewswire-Asia-FirstCall/ -- Euro Tech Holdings Company Limited (Nasdaq: CLWT) today reported its unaudited financial results for the six months ended June 30, 2008.
The Company’s revenues for the six months ended June 30, 2008 were approximately $13,389,000, a 10% increase as compared to approximately $12,168,000 for the six months ended June 30, 2007. The increase was due to increase in engineering revenue contributed by our majority owned subsidiaries, PACT Engineering, despite further drop of sales from distribution of foreign suppliers’ products.
The net income for six months ended June 30, 2008 was approximately $4,000, as compared to $92,000 for the six months ended June 30, 2007. The principal reason for the decrease was a big increase in selling and administrative expenses of approximately $341,000 which was partially offset by contribution from Blue Sky, an affiliate of Euro Tech. The expenses increase was mainly because Pact Environmental Equipment Company Ltd. ("PACT Manufacturing") was still on start up stage and the additional expenses incurred for the Guangzhou branch of Euro Tech Shanghai Environmental Engineering Limited opened in early 2008. In order to trim overheads, and streamline our businesses, the latter was closed in November 2008. The severe cold weather in the first quarter and earthquake in the second quarter also had adverse impact on our results for the six months ended June 30, 2008 as these national disasters caused delay and postponement of sales orders.
Mr. T.C. Leung, Chairman and CEO of the company commented:
"There is a significant increase of sales orders and engineering contracts in the second half of 2008, especially towards the end of the year. In fact, it is a record year for both PACT Engineering and Blue Sky, despite the global financial crisis beginning from September, as environmental protection business is one of the ten major areas of China’s 4 trillion Yuan (about 570 billion US dollars) stimulus package to offset adverse economic conditions by boosting domestic demand. As a result, we have built up a cushion for the turbulent 2009.
On the other hand, even with the stimulus package, China cannot be immune from the imminent global economy slowdown due to the current global financial crisis, and has since reduced the economy growth rate for 2009 a few times. Amid all negative reports of redundancies and bankruptcies in nearly every corner of the world including China, our top priority, in the immediate future is to stay alive by trimming overheads, streamlining businesses, maintaining a sound financial strength and not taking risky orders and contracts with poor payment terms from potential customers hit by the current credit crunch. Until and unless the global financial situation rebounds or stabilizes, we believe, by taking these measures, we can weather the imminent economy slowdown and may even turn adversities into opportunities."
About PACT Engineering
Pact Asia Pacific Ltd. and Yixing Pact Environmental Technology Company Ltd. (collectively known as "PACT Engineering"), based in Shanghai, is a global provider of environmental solutions for industrial and municipal clients, focusing on water and wastewater treatment. Pact’s capabilities cover design, manufacturing, sourcing, installation and servicing of water/wastewater treatment, water desalination plants and equipment.
About Blue Sky
Zhejiang Tianlan Desulfurization and Dust-Removal Co. Ltd. in Zhejiang, China ("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.
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, 2007.
-- Financial Tables to Follow --
EURO TECH HOLDINGS COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
As of As of
June 30, December 31,
2008 2007
(Unaudited) (Audited)
US$’000 US$’000
Assets
Current assets:
Cash and cash equivalents 4,257 9,387
Restricted cash 366 332
Accounts receivable, net 6,728 4,968
Prepayments and other current assets 1,280 912
Inventories, net 2,334 2,012
Taxation recoverable 12 12
Total current assets 14,977 17,623
Property, plant and equipment, net 1,584 1,622
Investments in affiliates 7,864 5,046
Goodwill 1,060 1,060
Deferred tax assets 198 131
Total assets 25,683 25,482
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable 3,573 3,112
Other payables and accrued expenses 3,161 3,892
Taxation payable 511 520
Total current liabilities 7,245 7,524
Minority interest 1,753 1,545
Commitments and contingencies -- --
Shareholders’ equity:
Ordinary share, par value US$0.01 each,
20,000,000 (As of December 31, 2007:
20,000,000) shares authorized;
12,202,031 (As of December 31, 2007:
12,024,901) shares issued
and outstanding 122 120
Additional paid-in capital 9,279 9,229
Treasury stock, 340,651 (As of December
31, 2007: 340,651) shares at cost (237) (237)
PRC statutory reserve 165 165
Accumulated other comprehensive income 487 271
Retained earnings 6,869 6,865
Total shareholders’ equity 16,685 16,413
Total liabilities and shareholders’
equity 25,683 25,482
EURO TECH HOLDINGS COMPANY LIMITED
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
2008 2007
(Unaudited) (Unaudited)
US$’000 US$’000
Revenue 13,389 12,168
Cost of revenue (10,202) (9,095)
Gross profit 3,187 3,073
Selling and administrative expenses (3,330) (2,989)
Operating income (143) 84
Interest income 20 146
Other income, net 98 95
Income before income taxes, minority
interest and equity in profit of
affiliates (25) 325
Income taxes (7) (47)
Minority interest in profits of
subsidiaries (127) (186)
Equity in profit of affiliates 163 --
Net income 4 92
Net income per ordinary share
-- Basic US$0.0003 US$0.008
-- Diluted US$0.0003 US$0.008
Weighted average number of ordinary
shares outstanding
-- Basic 11,788,678 11,041,445
-- Diluted 12,216,740 12,091,122
CONTACT:
Euro Tech Holdings Company Limited, Hong Kong
T.C. Leung, Chairman and CEO, or
Jerry Wong, CFO
Tel: +852-2814-0311
Fax: +852-2873-4887
Website: http://www.euro-tech.com
PACT Engineering’s Website: http://www.pactchina.com
PACT Manufacturing’s Website: http://www.pact-mfg.com
Blue Sky’s Website: http://www.tianlan.cn
