Cover
Cover - shares | 12 Months Ended | |
Dec. 31, 2021 | May 06, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | EURO TECH HOLDINGS COMPANY LIMITED | |
Entity Central Index Key | 0001026662 | |
Document Type | 20-F/A | |
Amendment Flag | true | |
Entity Voluntary Filers | No | |
Current Fiscal Year End Date | --12-31 | |
Entity Well Known Seasoned Issuer | No | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Dec. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 7,732,132 | |
Document Annual Report | true | |
Document Transition Report | false | |
Entity File Number | 000-22113 | |
Entity Incorporation State Country Code | D8 | |
Entity Address Address Line 2 | Gee Chang Hong Centre | |
Entity Address City Or Town | 65 Wong Chuk Hang Road | |
Entity Address Country | HK | |
Entity Address Postal Zip Code | true | |
Auditor Name | Union Power HK CPA Limited | |
Auditor Location | Hong Kong | |
Auditor Firm Id | 3004 | |
Security 12b Title | Ordinary Shares, no par value | |
Trading Symbol | CLWT | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes | |
Document Shell Company Report | false | |
Document Registration Statement | false | |
Entity Other Identification Type | David YL Leung | |
Document Accounting Standard | U.S. GAAP | |
Entity Address Address Line 1 | Unit D, 18/F. | |
Amendment Description | Amendment | |
Business Contact [Member] | ||
Document Information Line Items | ||
Phone Fax Number Description | 852-28734887 | |
Entity Address Address Line 2 | Gee Chang Hong Centre | |
Entity Address City Or Town | 65 Wong Chuk Hang Road | |
Entity Address Country | HK | |
Entity Address Address Line 1 | Unit D, 18/F. | |
Contact Personnel Name | David YL Leung |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Current assets: | ||||
Cash and cash equivalents | $ 5,269,000 | $ 3,519,000 | ||
Restricted cash | 1,411,000 | 1,672,000 | ||
Accounts receivable, net | 3,631,000 | 3,199,000 | ||
Prepayments and other current assets | 572,000 | 1,514,000 | ||
Contract assets, net | 74,000 | 202,000 | ||
Inventories | 547,000 | 342,000 | ||
Total current assets | 11,504,000 | 10,448,000 | ||
Property, plant and equipment, net | 215,000 | 259,000 | ||
Investments in affiliates | 8,077,000 | 8,084,000 | ||
Goodwill | 1,071,000 | 1,071,000 | ||
Operating right-of-use assets | 238,000 | 233,000 | ||
Deferred tax assets | 145,000 | 0 | ||
Total non-current assets | 9,746,000 | 9,647,000 | ||
Total assets | 21,250,000 | 20,095,000 | ||
Current liabilities: | ||||
Bank borrowings | 376,000 | 361,000 | ||
Accounts payable | 3,151,000 | 2,394,000 | ||
Contract liabilities | 1,076,000 | 1,063,000 | ||
Other payables and accrued expenses | 1,585,000 | 1,593,000 | ||
Current portion of long-term operating lease obligations | 175,000 | 118,000 | ||
Income tax payable | 42,000 | 4,000 | ||
Total current liabilities | 6,405,000 | 5,533,000 | ||
Non-current liabilities: | ||||
Deferred tax liabilities | 3,000 | 5,000 | ||
Long-term operating lease obligations, net of current maturities | 41,000 | 94,000 | ||
Total non-current liabilities | 44,000 | 99,000 | ||
Total liabilities | 6,449,000 | 5,632,000 | ||
Shareholders' equity: | ||||
Ordinary share, 20,000,000 shares authorized as of December 31, 2021 and 2020, respectively 7,899,832 no par value shares issued as of December 31, 2021 and 2020 | 123,000 | 123,000 | ||
Additional paid-in capital | 9,670,000 | 9,615,000 | ||
Treasury stock, 167,700 shares at cost as of December 31, 2021 and 2020, respectively | (786,000) | (786,000) | ||
PRC statutory reserves | 316,000 | 316,000 | ||
Accumulated other comprehensive income | 787,000 | 851,000 | ||
Retained earnings | 3,774,000 | 3,816,000 | ||
Total shareholders' equity attributable to entity | 13,884,000 | 13,935,000 | ||
Non-controlling interest | 917,000 | 528,000 | ||
Total shareholders' equity | 14,801,000 | 14,463,000 | ||
Total liabilities and shareholders' equity | 21,250,000 | 20,095,000 | ||
Long-term investments | $ 5,540,000 | $ 5,540,000 | ||
ZHEJIANG TIANLAN | ||||
Current assets: | ||||
Accounts receivable, net | ¥ | ¥ 106,022 | ¥ 118,621 | ||
Prepayments and other current assets | ¥ | 33,498 | 28,387 | ||
Contract assets, net | ¥ | 72,310 | 94,494 | ||
Inventories | ¥ | 3,386 | 2,389 | ||
Total current assets | ¥ | 270,192 | 294,860 | ||
Property, plant and equipment, net | ¥ | 74,063 | 79,257 | ||
Deferred tax assets | ¥ | 14,305 | 13,639 | ||
Total non-current assets | ¥ | 96,430 | 100,163 | ||
Total assets | ¥ | 366,622 | 395,023 | ||
Current liabilities: | ||||
Bank borrowings | ¥ | 13,518 | 20,029 | ||
Accounts payable | ¥ | 93,962 | 97,795 | ||
Contract liabilities | ¥ | 37,481 | 47,135 | ||
Other payables and accrued expenses | ¥ | 18,428 | 17,747 | ||
Total current liabilities | ¥ | 170,113 | 197,875 | ||
Non-current liabilities: | ||||
Total non-current liabilities | ¥ | 3,889 | 4,894 | ||
Total liabilities | ¥ | 174,002 | 202,769 | ||
Shareholders' equity: | ||||
PRC statutory reserves | ¥ | 16,582 | 15,670 | ||
Retained earnings | ¥ | 52,409 | 55,248 | ||
Total shareholders' equity attributable to entity | ¥ | 187,324 | 189,251 | ||
Non-controlling interest | ¥ | 5,296 | 3,003 | ||
Total shareholders' equity | ¥ | 192,620 | 192,254 | ||
Total liabilities and shareholders' equity | ¥ | 366,622 | 395,023 | ||
Cash | ¥ | 54,976 | 50,969 | ||
Intangible assets, net | ¥ | 1,865 | 2,120 | ||
Land use right, net | ¥ | 4,997 | 5,147 | ||
Long-term investments | ¥ | 1,200 | 0 | ||
Other taxes payable | ¥ | 6,724 | 15,169 | ||
Deferred government grant | ¥ | 3,889 | 4,894 | ||
Share capital 82,572,000 no par value shares authorised, issued and outstanding, as of December 31, 2021 and 2020, respectively | ¥ | 82,572 | 82,572 | ||
Capital reserve | ¥ | ¥ 35,761 | ¥ 35,761 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Common stock, authorized | 20,000,000 | 20,000,000 |
Common stock, issued | 7,899,832 | 7,899,832 |
Common stock, no par value | $ 0 | $ 0 |
Treasury stock, shares | 167,700 | 167,700 |
Common stock, outstanding | 7,732,132 | 7,732,132 |
ZHEJIANG TIANLAN | ||
Common stock, authorized | 82,572,000 | 82,572,000 |
Common stock, issued | 82,572,000 | 82,572,000 |
Common stock, outstanding | 82,572,000 | 82,572,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 USD ($) $ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | Dec. 31, 2019 USD ($) $ / shares shares | Dec. 31, 2019 CNY (¥) ¥ / shares shares | |
Revenues | ||||||
Trading and manufacturing | $ 9,619 | $ 9,476 | $ 11,877 | |||
Engineering | 11,769 | 3,881 | 5,522 | |||
Total revenues | 21,388 | 13,357 | 17,399 | |||
Cost of revenues | ||||||
Trading and manufacturing | (6,938) | (7,048) | (9,285) | |||
Engineering | (8,755) | (2,624) | (3,697) | |||
Total cost of revenues | (15,693) | (9,672) | (12,982) | |||
Gross profit | 5,695 | 3,685 | 4,417 | |||
Finance costs | (3) | (12) | (4) | |||
Selling and administrative expenses | (4,911) | (5,374) | (4,853) | |||
Gain / (loss) on disposal of property, plant and equipment | (10) | 1,429 | (5) | |||
Operating (loss) / income | 771 | (272) | (445) | |||
Interest income | 23 | 28 | 83 | |||
Other income | 127 | 307 | 52 | |||
Equity in income / (loss) of affiliates | 355 | 435 | 137 | |||
Net income / (loss) before income taxes | 1,276 | 498 | (173) | |||
Income taxes (expense) / credit | 90 | (96) | (37) | |||
Net income / (loss) | 1,366 | 402 | (210) | |||
Net loss / (income) attributable to non-controlling interests | (377) | 367 | 64 | |||
Net (loss) / income attributable to entity shareholders | 989 | 769 | (146) | |||
Other comprehensive (loss) / income | ||||||
Net income / (loss) | 1,366 | 402 | (210) | |||
Foreign exchange translation adjustments | (52) | (31) | (8) | |||
Comprehensive (loss) / income | 1,314 | 371 | (218) | |||
Comprehensive loss attributable to non-controlling interests | (389) | 350 | 78 | |||
Comprehensive (loss) / income attributable to the Company | $ 925 | $ 721 | $ (140) | |||
Net income / (loss) per ordinary share attributable to entity | ||||||
- Basic | $ / shares | $ 0.13 | $ 0.10 | $ (0.02) | |||
- Diluted | $ / shares | $ 0.13 | $ 0.10 | $ (0.02) | |||
Weighted average number of ordinary shares outstanding | ||||||
- Basic | shares | 7,732,132,000 | 7,732,132,000 | 7,732,132,000 | 7,732,132,000 | 7,732,132,000 | 7,732,132,000 |
- Diluted | shares | 7,732,132,000 | 7,732,132,000 | 7,732,132,000 | 7,732,132,000 | 7,732,132,000 | 7,732,132,000 |
ZHEJIANG TIANLAN | ||||||
Revenues | ||||||
Total revenues | ¥ | ¥ 330,841 | ¥ 304,710 | ¥ 277,581 | |||
Cost of revenues | ||||||
Total cost of revenues | ¥ | (275,455) | (261,478) | (227,632) | |||
Gross profit | ¥ | 55,386 | 43,232 | 49,949 | |||
Operating (loss) / income | ¥ | 3,225 | (17,161) | 6,210 | |||
Interest income | ¥ | 46 | 30 | 50 | |||
Other income | ¥ | 11,594 | 39,646 | 6,276 | |||
Net income / (loss) before income taxes | ¥ | 12,880 | 15,358 | 4,654 | |||
Income taxes (expense) / credit | ¥ | 698 | (1,858) | (296) | |||
Net income / (loss) | ¥ | 13,578 | 13,500 | 4,358 | |||
Net loss / (income) attributable to non-controlling interests | ¥ | 2,293 | (2,032) | (484) | |||
Net (loss) / income attributable to entity shareholders | ¥ | 11,285 | 15,532 | 4,842 | |||
Weighted average number of ordinary shares outstanding | ||||||
Selling and administrative expenses | ¥ | 52,161 | 60,393 | 43,739 | |||
Interest expense | ¥ | 747 | 1,676 | 2,258 | |||
Other losses | ¥ | ¥ (1,238) | ¥ (5,481) | ¥ (5,624) | |||
Net income per ordinary share attributable to Zhejiang Tianlan Environmental Protection Technology Company Limited's shareholders | ¥ / shares | ¥ 0.14 | ¥ 0.19 | ¥ 0.06 | |||
Weighted average ordinary shares outstanding | shares | 82,572,000 | 82,572,000 | 82,572,000 | 82,572,000 | 82,572,000 | 82,572,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS | 12 Months Ended | |||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | |
Cash flows from operating activities: | ||||||
Net income / (loss) | $ | $ 989,000 | $ 769,000 | $ (146,000) | |||
Adjustments to reconcile net income / (loss) to net cash (used in) / provided by operating activities: | ||||||
Depreciation | $ | 38,000 | 49,000 | 69,000 | |||
Loss / (gain) on disposal of property, plant and equipment | $ | 10,000 | (1,429,000) | 5,000 | |||
Stock-based compensation expense | $ | 55,000 | 54,000 | 10,000 | |||
Non-controlling interests in income / (loss) of subsidiaries | $ | 377,000 | (367,000) | (64,000) | |||
Equity in profit of affiliates | $ | (355,000) | (435,000) | (137,000) | |||
Deferred tax (credit) / expenses | $ | (145,000) | 92,000 | 37,000 | |||
Changes in non-current assets and liabilities: | ||||||
Long-term operating lease obligations | $ | (53,000) | (122,000) | 216,000 | |||
Operating lease right-of-use assets | $ | (5,000) | 173,000 | (406,000) | |||
Decrease / (increase) in current assets: | ||||||
Accounts receivable, net | $ | (432,000) | 387,000 | 1,503,000 | |||
Prepayments and other current assets | $ | 942,000 | (766,000) | (201,000) | |||
Contract assets | $ | 128,000 | 239,000 | 458,000 | |||
Inventories | $ | (205,000) | 244,000 | (185,000) | |||
Increase / (decrease) in current liabilities: | ||||||
Accounts payable | $ | 757,000 | (1,520,000) | (986,000) | |||
Other payables and accrued expenses | $ | (8,000) | 451,000 | (108,000) | |||
Contract liabilities | $ | 13,000 | 194,000 | (501,000) | |||
Income tax payable | $ | 38,000 | 4,000 | 0 | |||
Net cash provided by / (used) in operating activities | $ | 2,201,000 | (2,035,000) | (266,000) | |||
Cash flows from investing activities: | ||||||
Purchase of property, plant and equipment | $ | (4,000) | (11,000) | (21,000) | |||
Proceeds from sale of property, plant and equipment | $ | 0 | 1,835,000 | 0 | |||
Dividend received from affiliates | $ | 362,000 | 71,000 | 0 | |||
Proceeds from sale of long-term investment | $ | 0 | 148,000 | 0 | |||
Purchase of long-term investment | $ | 0 | 0 | (148,000) | |||
Net cash provided by / (used in) investing activities | $ | 358,000 | 2,043,000 | (169,000) | |||
Cash flows from financing activities: | ||||||
Dividend paid | $ | (1,031,000) | (1,299,000) | ||||
Proceeds from bank borrowings | $ | 782,000 | 804,000 | 565,000 | |||
Repayments to bank borrowings | $ | (767,000) | (1,008,000) | ||||
Net cash (used in) / provided by financing activities | $ | (1,016,000) | (1,503,000) | 565,000 | |||
Effect of exchange rate changes on cash and cash equivalents | $ | (54,000) | (34,000) | (7,000) | |||
Net increase / (decrease) in cash and cash equivalents and restricted cash | $ | 1,489,000 | (1,529,000) | 123,000 | |||
Cash, cash equivalents and restricted cash at beginning of year | $ | 5,191,000 | 6,720,000 | 6,597,000 | |||
Cash, cash equivalents and restricted cash at end of year | $ | 6,680,000 | 5,191,000 | 6,720,000 | |||
Cash breakdown | ||||||
Cash and cash equivalents | $ | 5,269,000 | 3,519,000 | 5,591,000 | |||
Restricted cash | $ | 1,411,000 | 1,672,000 | 729,000 | |||
Cash and Cash Equivalents, at Carrying Value, Total | $ | 6,680,000 | 5,191,000 | 6,720,000 | |||
Supplemental disclosure of consolidated cash flow information: | ||||||
Cash paid during the period for income taxes | $ | 20,000 | 0 | 0 | |||
Cash paid during the period for interest | $ | 3,000 | 12,000 | 4,000 | |||
Operating leases (disclosed in accompanying Note 3) | $ | 0 | 0 | 0 | |||
Non-cash items: | ||||||
Right-of-use assets obtained in exchange for new operating lease obligations | $ | $ 0 | $ 0 | $ 460,000 | |||
ZHEJIANG TIANLAN | ||||||
Cash flows from operating activities: | ||||||
Net income / (loss) | ¥ 11,285,000 | ¥ 15,532,000 | ¥ 4,842,000 | |||
Adjustments to reconcile net income / (loss) to net cash (used in) / provided by operating activities: | ||||||
Depreciation | 6,466,000 | 6,359,000 | 6,556,000 | |||
Loss / (gain) on disposal of property, plant and equipment | (39,000) | (39,000) | ||||
Decrease / (increase) in current assets: | ||||||
Accounts receivable, net | 12,782,000 | 26,620,000 | 11,432,000 | |||
Prepayments and other current assets | (5,111,000) | 24,472,000 | (6,369,000) | |||
Contract assets | 20,946,000 | (14,932,000) | 20,033,000 | |||
Inventories | (997,000) | 3,366,000 | 6,208,000 | |||
Increase / (decrease) in current liabilities: | ||||||
Accounts payable | (3,833,000) | 8,423,000 | (17,272,000) | |||
Other payables and accrued expenses | 681,000 | 10,164,000 | (8,795,000) | |||
Contract liabilities | (9,654,000) | (8,763,000) | 14,852,000 | |||
Net cash provided by / (used) in operating activities | 26,163,000 | 57,356,000 | 36,081,000 | |||
Cash flows from investing activities: | ||||||
Purchase of property, plant and equipment | (1,381,000) | (577,000) | (1,584,000) | |||
Proceeds from sale of property, plant and equipment | 148,000 | 50,000 | ||||
Purchase of long-term investment | (1,200,000) | |||||
Net cash provided by / (used in) investing activities | (2,433,000) | (6,595,000) | (1,824,000) | |||
Cash flows from financing activities: | ||||||
Dividend paid | (13,223,000) | (4,606,000) | ||||
Proceeds from bank borrowings | 13,500,000 | 30,000,000 | 44,841,000 | |||
Repayments to bank borrowings | (20,000,000) | (36,800,000) | (63,000,000) | |||
Net cash (used in) / provided by financing activities | (19,723,000) | (11,406,000) | (47,827,000) | |||
Net increase / (decrease) in cash and cash equivalents and restricted cash | 4,007,000 | 39,355,000 | (13,570,000) | |||
Cash, cash equivalents and restricted cash at beginning of year | 50,969,000 | 11,614,000 | 25,184,000 | |||
Cash, cash equivalents and restricted cash at end of year | 54,976,000 | 50,969,000 | 11,614,000 | |||
Supplemental disclosure of consolidated cash flow information: | ||||||
Cash paid during the period for income taxes | 5,237,000 | |||||
Cash paid during the period for interest | 680,000 | 1,716,000 | 2,258,000 | |||
Non-cash items: | ||||||
Net income / (loss) | 13,578,000 | 13,500,000 | 4,358,000 | |||
Amortization of intangible asset | 255,000 | 142,000 | 152,000 | |||
Amortization of land use right | 150,000 | 159,000 | 149,000 | |||
Bad debts written off | 0 | 0 | 5,383,000 | |||
Impairment loss on contract assets | 1,238,000 | 1,399,000 | 0 | |||
Impairment loss on long-term investments | 0 | 1,340,000 | 0 | |||
Impairment loss on property, plant and equipment | 0 | 2,742,000 | 0 | |||
Increase in allowance for doubtful accounts | 2,437,000 | |||||
Investment loss | 241,000 | |||||
Proceeds from deferred government grant | 2,349,000 | |||||
Property, plant and equipment written off | 14,000 | |||||
Reversal of allowance for doubtful accounts | (183,000) | (6,463,000) | 0 | |||
Deferred government grant | (1,005,000) | 2,545,000 | ||||
Deferred tax (liabilities) / assets | (666,000) | 331,000 | 268,000 | |||
Short-term investments | 800,000 | |||||
Other taxes payable | (8,596,000) | 5,638,000 | (1,577,000) | |||
Current portion of long-term finance lease obligations | (11,263,000) | |||||
Tax refund / (paid) | ¥ 151,000 | (9,223,000) | (4,299,000) | |||
Proceeds from investment | 295,000 | |||||
Proceeds from sale of partial shareholding in a subsidiary | 137,000 | 510,000 | ||||
Purchase of intangible assets | 1,350,000 | |||||
Purchase of short-term investments | (800,000) | |||||
Purchase of subsidiary | ¥ (5,100,000) | |||||
Payment of principal obligations under long-term finance lease | ¥ (29,668,000) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Ordinary Share | Additional Paid-In Capital | Treasury Stock | Accumulated other comprehensive loss | PRC Statutory Reserves | Retained Earnings | Non-controlling Interests |
Balance, shares at Dec. 31, 2018 | 7,899,832 | |||||||
Balance, amount at Dec. 31, 2018 | $ 15,545 | $ 123 | $ 9,551 | $ (786) | $ 893 | $ 316 | $ 4,492 | $ 956 |
Net loss | (210) | 0 | 0 | 0 | 0 | 0 | (146) | (64) |
Foreign currency translation adjustments | (8) | 0 | 0 | 0 | 6 | 0 | 0 | (14) |
Stock-based compensation expense | 10 | 0 | 10 | 0 | 0 | 0 | 0 | 0 |
Balance, amount at Dec. 31, 2019 | 15,337 | $ 123 | 9,561 | (786) | 899 | 316 | 4,346 | 878 |
Balance, shares at Dec. 31, 2019 | 7,899,832 | |||||||
Net loss | 402 | $ 0 | 0 | 0 | 0 | 0 | 769 | (367) |
Stock-based compensation expense | 54 | 0 | 54 | 0 | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments | (31) | 0 | 0 | 0 | (48) | 0 | 0 | 17 |
Dividend paid | (1,299) | (1,299) | ||||||
Balance, amount at Dec. 31, 2020 | 14,463 | $ 123 | 9,615 | (786) | 851 | 316 | 3,816 | 528 |
Balance, shares at Dec. 31, 2020 | 7,899,832 | |||||||
Net loss | 1,366 | $ 0 | 0 | 0 | 0 | 0 | 989 | 377 |
Stock-based compensation expense | 55 | 0 | 55 | 0 | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments | (52) | 0 | 0 | 0 | (64) | 0 | 0 | 12 |
Dividend paid | (1,031) | (1,031) | ||||||
Balance, amount at Dec. 31, 2021 | $ 14,801 | $ 123 | $ 9,670 | $ (786) | $ 787 | $ 316 | $ 3,774 | $ 917 |
Balance, shares at Dec. 31, 2021 | 7,899,832,000 |
ZHEJIANG TIANLAN CONSOLIDATED S
ZHEJIANG TIANLAN CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY ¥ in Thousands, $ in Thousands | USD ($) | CNY (¥) | Zhejiang Tianlan PRC Statutory Reserve CNY (¥) | Zhejiang Tianlan Retain Earnings CNY (¥) | Zhejiang Tianlan Non Controling Interests CNY (¥) | Zhejiang Tianlan Shares Capital CNY (¥) | Zhejiang Tianlan Capital Reserve CNY (¥) |
Balance, amount at Dec. 31, 2018 | ¥ 178,002 | ¥ 13,903 | ¥ 42,099 | ¥ 3,862 | ¥ 82,572 | ¥ 35,566 | |
Net income / (loss) | 4,358 | 0 | 4,842 | (484) | 0 | 0 | |
Appropriation of reserves | 0 | 518 | (518) | 0 | 0 | 0 | |
Others | 509 | 0 | 0 | 565 | 0 | (56) | |
Balance, amount at Dec. 31, 2019 | 182,869 | 14,421 | 46,423 | 3,943 | 82,572 | 35,510 | |
Net income / (loss) | 13,500 | 0 | 15,532 | (2,032) | 0 | 0 | |
Appropriation of reserves | 0 | 1,685 | (1,685) | 0 | 0 | 0 | |
Others | (4,422) | (436) | (3,968) | (269) | 0 | 251 | |
Dividend paid | (2,890) | (2,890) | |||||
Consolidation of companies under common control | 7,558 | 0 | 1,836 | 2,122 | 0 | 3,600 | |
Ordinary shares injected by shareholders | (761) | 0 | 0 | (761) | 0 | 0 | |
Utilization of reserve | (3,600) | 0 | 0 | 0 | 0 | (3,600) | |
Balance, amount at Dec. 31, 2020 | 192,254 | 15,670 | 55,248 | 3,003 | 82,572 | 35,761 | |
Balance, amount at Dec. 31, 2020 | $ | $ 13,935 | ||||||
Net income / (loss) | 13,578 | 0 | 11,285 | 2,293 | 0 | 0 | |
Appropriation of reserves | 0 | 912 | (912) | 0 | 0 | 0 | |
Dividend paid | (13,212) | (13,212) | |||||
Balance, amount at Dec. 31, 2021 | ¥ 192,620 | ¥ 16,582 | ¥ 52,409 | ¥ 5,296 | ¥ 82,572 | ¥ 35,761 |
Organization and business
Organization and business | 12 Months Ended |
Dec. 31, 2021 | |
Organization and business | 1 Organization and business Euro Tech Holdings Company Limited (the “Company”) was incorporated in the British Virgin Islands on September 30, 1996. Euro Tech (Far East) Limited (“Far East”) is the principal operating subsidiary of the Company. It is principally engaged in the marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems in Hong Kong and in the People’s Republic of China (the “PRC”). The Group’s principal subsidiaries at December 31, 2021 and 2020 are set out below. Name of entity Ownership interest held by the Group Place of incorporation and principal place of operation Principal activities 2021 2020 Euro Tech (Far East) Limited 100 % 100 % Hong Kong Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Euro Tech Trading (Shanghai) Limited 100 % 100 % The PRC Inactive Shanghai Euro Tech Limited 100 % 100 % The PRC Manufacturing of analytical and testing equipment Shanghai Euro Tech Environmental Engineering Company Limited - 100 % The PRC Inactive Euro Tech (China) Limited - - Hong Kong Inactive This company was dissolved on July 2, 2021. This company was deregistered on April 3, 2020. The Group’s principal subsidiaries at December 31, 2021 and 2020 are set out below (Cont’d). Name of entity Ownership interest held by the Group Place of incorporation and principal place of operation Principal activities 2021 2020 Yixing Pact Environmental Technology Co., Ltd. 58 % 58 % The PRC Design, manufacturing and operation of water and waste water treatment machinery and equipment Pact Asia Pacific Limited 58 % 58 % The British Virgin Islands Selling of environmental protection equipment, undertaking environment protection projects and providing relevant technology advice, training and services Affiliate: Zhejiang Tianlan Environmental Protection Technology Co. Ltd. (“Blue Sky”) 19.4 %* 19.4 %* The PRC Design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted * The Group’s interest in Blue Sky has been counted for as an affiliate using the equity method as the Group has representation on both the Board and Executive Committee of Blue Sky, and the ability to participate in the decision-making process and exercise significant influence. |
ZHEJIANG TIANLAN | |
Organization and business | 1 Organization and business Zhejiang Tianlan Environmental Protection Technology Company Limited (the “Company”) was incorporated in Hangzhou City, Zhejiang Province, the People's Republic of China (“PRC”) on May 18, 2000. The Company is a limited liability company limited by shares with an operating period up to long term. The Company 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 since 2000. The Company has listed its shares on the New Third Board in the PRC since November 17, 2015 and suspended trading from August 15, 2017 and resumed trading on February 2, 2018 and suspended trading from November 24, 2020 and resumed trading on January 6, 2021. The Group’s principal subsidiaries at December 31, 2021 and 2020 are set out below. Name of entity Ownership interest held by the Group Place of incorporation and principal place of operation Principal activities 2021 2020 Zhejiang Tianlan Environmental Protection Engineering Company Limited 100 %* 100 %* PRC Design, general contract, installation and operating management of environmental protection projects Hangzhou Tianlan Environmental Protection Equipment Company Limited 51 % 51 % PRC Manufacturing and installation services of environmental protection equipment Hangzhou Tianlan Pure Environmental Protection Technology Company Limited 38.25 % 38.25 % PRC Manufacturing of environmental protection equipment Hangzhou Tiancan Environmental Technology Company Limited 80 % 80 % PRC Manufacturing of environmental protection equipment * This company was acquired in August 2020. The outbreak of COVID-19 worldwide and the various public health measures put in place in many countries to prevent the spread of COVID-19 have disrupted the overall business of the Group at different levels of time and regions in 2020. After the Chinese new year in February 2020, the Group’s domestic businesses were affected by the lock-down of various cities implemented in PRC, resulting in the forced suspension of some local operations until the gradual resumption of work beginning from late March to early April 2020. Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Group’s consolidated financial position, results of its operations, the specific impact is not readily determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2021 | |
Summary of significant accounting policies | 2 Summary of significant accounting policies (a) Basis of presentation The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). (b) Basis of consolidation The accompanying consolidated financial statements include the results of operations of the Company and its subsidiaries. Significant intercompany transactions and balances have been eliminated. (c) Subsidiaries Subsidiaries are all entities over which the Group has control; has the power to appoint or remove the majority of the members of the board of directors; has the right to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. (d) Investments in affiliates We account for our interest in an investment using the equity method of accounting per Accounting Standards Codification (“ASC”) No. 323, “Investments - Equity Method and Joint Ventures” if we are not the primary beneficiary of a VIE or do not have a controlling interest. The investment is recorded at cost and the carrying amount is adjusted periodically to recognize our proportionate share of income or loss, additional contributions made and dividends and capital distributions received. We record the effect of any impairment or other than temporary decrease in the value of the investment. In the event a partially owned equity affiliate were to incur a loss and our cumulative proportionate share of the loss exceeded the carrying amount of the equity method investment, application of the equity method would be suspended and our proportionate share of further losses would not be recognized unless we committed to provide further financial support to the affiliate. We would resume application of the equity method once the affiliate became profitable and our proportionate share of the affiliate’s earnings equals our cumulative proportionate share of losses that were not recognized during the period the application of the equity method was suspended. (e) Revenue recognition Our revenue is derived from long-term contracts for customers in our engineering segment, as well as short-term contracts for customers in our trading and manufacturing segment. Accounting treatment for these contracts in accordance with Accounting Standards Update (“ASU”) 2014-09 (Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customer), is as follows: Performance obligations satisfied over time (Engineering services) Recognition of performance obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Engineering service projects typically span between several days to over 5 years. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, is not distinct. Some contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the project life cycle (engineering). Revenues are recognized as our obligations are satisfied over time, by reference to the progress towards complete satisfaction of that performance obligation. If the Group expects the reference to progress certificates issued by the customers, with additional adjustments where necessary, depicts the Group’s performance in transferring control of goods or services promised to customers for individual projects, the Group satisfies the performance obligation over time and therefore, recognizes revenue over time in accordance with the output method for measuring progress. Under output method, revenue recognition is based on the stage of completion of the contracts, provided that the stage of contract completion and the gross billing value of contracting work can be measured reliably. The stage of completion of a contract is established by reference to the construction works certified by customers. Remaining performance obligations (“RPOs”) RPOs represent the amount of revenues we expect to recognize in the future from our contract commitments on projects and are hereafter referred to as “Backlog”. Backlog includes the entire expected revenue values for subsidiary we consolidate. Backlog may not be indicative of future operating results, and projects included in Backlog may be canceled, modified or otherwise altered by customers. The Group had the following backlog: 2021 2020 US$’000 US$’000 Engineering segment 5,400 11,581 Unrecognized contract revenue which is expected to be recognized in next 12 months is approximately US$5,400,000 (2020: US$11,581,000). (e) Revenue recognition (Cont’d) Performance obligations satisfied over time (Engineering services) (Cont’d) Variable consideration Contract modifications through change orders, claims and incentives are routine in the performance of the Group’s contracts to account for changes in the contract specifications or requirements. In most instances, contract modifications are not distinct from the existing contract due to the significant integration service provided in the contract and are accounted for as a modification of the existing contract and performance obligation. Either the Group or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Change orders that are unapproved as to both price and scope are evaluated as claims. The Group considers claims to be amounts in excess of approved contract prices that the Group seeks to collect from its customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs. The Group estimates variable consideration for a performance obligation at the most likely amount to which the Group expects to be entitled (or the most likely amount the Group expects to incur in the case of liquidated damages), utilizing estimation methods that best predict the amount of consideration to which the Group will be entitled (or will be incurred in the case of liquidated damages). The Group includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Group’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of its anticipated performance and all information (historical, current and forecasted) that is reasonably available to the Group. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected in transaction price (or excluded from transaction price in the case of liquidated damages) are not resolved in the Group’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. Performance obligations satisfied at a point-in-time (Trading and manufacturing ) Revenue for our trading and manufacturing contracts is recognized at a point in time. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been delivered to the point of receipt by customer. (e) Revenue recognition (Cont’d) Classification of contract assets and liabilities For revenue recognized associated with its contracts with customers over time, for which the Group has an enforceable right to receive compensation. Many of our contracts contain specific provisions that determine when the Group can bill for its work performed under these contracts. Any revenue earned on a contract that has not yet been billed to the customer is recorded as a contract asset on the Group’s consolidated balance sheets. The Group’s consolidated balance sheets present contract liabilities that contain deferred revenue that represent any costs incurred on contracts in process for which revenue has not yet been recognized. Rental income Rental income from operating leases is recognized in consolidated statements of operations and comprehensive income /(loss) on a straight-line basis over the term of the relevant lease. (f) Research and development costs Research and development costs (“R&D” costs) are expensed as incurred. The R&D costs amounted to approximately US$61,000, US$497,000 and US$35,000 for the years ended December 31, 2021, 2020 and 2019 respectively and were included in “Selling and administrative expenses” (g) Advertising and promotional expenses Advertising and promotional expenses (“A&P” expenses) are expensed as incurred. The A&P expenses amounted to approximately US$7,000, US$7,000 and US$13,000 for the years ended December 31, 2021, 2020 and 2019 respectively and were included in “Selling and administrative expenses” (h) Income taxes The Group follows the liability method of accounting for income tax. Under this method, deferred tax assets and liabilities are recorded for future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the underlying assets or liabilities are recovered or settled. The Group also evaluates whether the recorded deferred tax assets and valuation allowances can be realized and, when necessary, reduces the amounts to what is expected to be realized. The accounting guidance on accounting for uncertainty in income taxes also addresses derecognition, classification, interest and penalties on income taxes, and accounting in interim periods. The Group does not believe it has any uncertain tax positions through the periods ended December 31, 2021, 2020 and 2019 respectively which would have a material impact on the Group’s consolidated financial statements. Interest and penalties related to uncertain income tax positions are included in income tax expense on the Group’s consolidated statements of operations and comprehensive income / (loss). Interest and penalties actually incurred are charged to interest expense and the other income, respectively if applicable. The Group files tax returns in Hong Kong and the PRC. The tax returns for 2021, 2020 and 2019 are subject to examination by Hong Kong and PRC taxing authorities, commencing with the first year filed. (i) Cash and cash equivalents Cash and cash equivalents consist of cash on hand, and bank deposits with original maturities of three months or less, all of which are unrestricted as to withdrawal. There were no cash equivalents as of December 31, 2021 and 2020. (j) Restricted cash Restricted cash represents cash deposits retained with banks in the PRC for issuance of performance bonds and guarantees to the customers and cash deposited by the Group into separate accounts and designated as collateral for standby letters of credit in the same amount in accordance with contractual agreements. (k) Accounts receivable and allowance for doubtful accounts The Group does not charge interest to its customers and carries its customer receivables at their face amounts, less an allowance for doubtful accounts. As is common practice in the industry, the Group classifies all accounts receivable as current assets. The Group grants trade credit, on a non-collateralized basis, to its customers and is subject to potential credit risk related to changes in business and overall economic activity. The Group analyzes specific accounts receivable balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the event that a customer balance is deemed to be uncollectible, the account balance is written-off against the allowance for doubtful accounts. (l) Inventories Inventories are measured using the first-in, first-out method and are stated at the lower of cost or net realizable value. Cost of finished goods comprise direct material, direct production costs and an allocated portion of production overhead costs based on normal operating capacity. Allowance is made for obsolete, slow moving or defective items, where appropriate. (m) Property, p lant and e quipment Property, plant and equipment is carried at cost. Major modifications or refurbishments which extend the useful life of the assets are capitalized and depreciated over the adjusted remaining useful life of the assets. Upon retirement or disposition of property, plant and equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is recognized in consolidated income from operations. The cost of maintenance and repairs is charged to expense as incurred. Property, plant and equipment is reviewed for impairment and tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value of property, plant and equipment exceeds its fair value, an impairment charge would be recorded in the consolidated statement of operations. Depreciation of property, plant and equipment are computed using the straight-line method over the assets’ estimated useful lives as follows: Office premises 47 to 51 years Leasehold improvements over terms of the leases or the useful lives whichever is less Furniture, fixtures and office equipment 3 to 5 years Motor vehicles 4 years Testing equipment 3 years (n) Long-term investment The Group has elected to apply the measurement alternative to equity securities without readily determinable fair values. As such, the Group’s non-marketable equity securities are measured at cost, less any impairment, and are adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the investee. (o) Leases arrangements In the ordinary course of business, the Group enters into a variety of operating lease arrangements. Operating right-of-use leases are included in operating lease right-of-use assets, current portion of long-term operating lease obligations and long-term operating lease obligations, net of current maturities on the Group’s consolidated balance sheets, as appropriate. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Group’s leases do not provide an implicit rate to calculate present value, the Group determines this rate by estimating the Group’s incremental borrowing rate, utilizing the borrowing rates associated with the Group’s various debt instruments. The operating lease right-of-use asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. (p) G oodwill Goodwill is not amortized. The Group performs either a qualitative or quantitative assessment to review goodwill for impairment on an annual basis. This assessment is performed at the beginning of the fourth quarter, or when circumstances change, such as a significant adverse change in the business climate or the decision to sell a business, both of which would indicate that impairment may have occurred. A qualitative assessment considers financial, industry, segment and macroeconomic factors, if the qualitative assessment indicates a potential for impairment, a quantitative assessment is performed to determine if impairment exists. The quantitative assessment begins with a comparison of the fair value of the reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss would be recognized in an amount equal to that excess, limited to the total amount of the goodwill allocated to the reporting unit. If the carrying value of goodwill exceeds its implied fair value, an impairment charge would be recorded in the consolidated statements of operations and comprehensive income / (loss). As a result of the annual qualitative review process in 2021 and 2020, the Group determined it was not necessary to perform a quantitative assessment. (q) F oreign currency translation The assets and liabilities of the Group’s subsidiaries denominated in currencies other than U.S. dollars are translated into U.S. dollars using the applicable exchange rates at the consolidated balance sheet date. For consolidated statements of operations and comprehensive income/(loss)’ items, amounts denominated in currencies other than U.S. dollars were translated into U.S. dollars using the average exchange rate during the period. Equity accounts were translated at their historical exchange rates. Net gains and losses resulting from translation of foreign currency on consolidated financial statements are included in the consolidated statements of stockholders’ equity as accumulated other comprehensive income. Foreign currency transaction gains and losses are reflected in the consolidated statements of operations and comprehensive income / (loss). (r) Comprehensive income / (loss) We account for comprehensive income in accordance with ASC No. 220, “Comprehensive Income”, which specifies the computation, presentation and disclosure requirements for comprehensive income / (loss). Comprehensive income / (loss) consists of net income / (loss) and foreign currency translation adjustments, primarily from fluctuations in foreign currency exchange rates of our foreign subsidiaries with a functional currency other than the U.S. dollar. (s) Ordinary s hare On November 22, 2011, the Company filed Amended and Restated Memorandum and Articles of Association with the Registry of Corporate Affairs of the BVI Financial Services Commission that on November 29, 2011 became effective as of the filing date to amend the Company’s ordinary shares of US$0.01 par value capital stock to no par value capital stock. Treasury stock is accounted for using the cost method. When treasury stock is reissued, the value is computed and recorded using a weighted-average basis. On October 8, 2019, the Company had stock split in the form of bonus shares at the rate of one ordinary share for every two ordinary shares held, creating 1,030,950 new shares of common stock. On March 3, 2021, the Company had stock split in the form of bonus shares at the rate of two ordinary shares for every three ordinary shares held, creating 2,061,900 new shares of common stock. The effect of the above stock splits have been reflected retroactively in the financial statements and net income per ordinary share computations. (t) Net income per ordinary share The Group computes net income per ordinary share using the treasury stock method. Under the treasury stock method, basic earnings per share attributable to Euro Tech Holdings Company Limited are computed by dividing net income attributable to Euro Tech Holdings Company Limited by the weighted average number of ordinary shares outstanding during the period. The Group reports both basic earnings per share, which is based on the weighted average number of ordinary shares outstanding, and diluted earnings per share, which is based on the weighted average number of ordinary shares outstanding and all dilutive potential ordinary shares outstanding. Outstanding stock options are the only dilutive potential shares of the Company. (u) Stock-based compensation The Group determines compensation expense for stock-based awards based on the estimated fair values at the grant date and recognizes the related compensation expense over the vesting period. The Group uses the straight-line amortization method to recognize compensation expense related to stock-based awards that have only service conditions. This method recognizes stock compensation expense on a straight-line basis over the requisite service period for the entire award. (v) Use of estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting estimates of the Group require a higher degree of judgment than others in their application. These include the recognition of revenue and earnings from engineering contracts over time, the valuation of goodwill, and contract assets and contract liabilities. Management continually evaluates all of its estimates and judgments based on available information and experience; however, actual results could differ from these estimates. (w) Related p arties Related parties are affiliates of the Group; entities for which investments are accounted for by the equity method by the Group; trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; principal owners of the Group; its management; members of the immediate families of principal owners of the Group and its management; and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Another party also is a related party if it can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. (x) Segment i nformation The Group reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Group’s reportable segments. The Group categorises its operations into two business segments: Trading and manufacturing, and Engineering. (y) Concentration Financial instruments that potentially subject the Group to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable, net. The Group maintains substantially all of its cash and cash equivalent balances with large financial institutions which are believed to be high quality institutions. The Group is subject to a concentration of risk because it derives a significant portion of its revenues from a few customers. The Group’s top customers accounting for more than 5% of the Group’s revenue generated approximately 15%, 23%, and 34% of consolidated revenues for the years ended December 31, 2021, 2020 and 2019, respectively. The Group grants trade credit under contractual payment terms, generally without collateral, to its customers, which include high credit quality electric utilities, general contractors, owners and managers of industrial properties and government departments. (y) Concentration (Cont’d) Consequently, the Group is subject to potential credit risk related to changes in business and economic factors. At December 31, 2021, three (2020: three) of the Group’s customers individually exceeded 10.0% of accounts receivable, net. The Group believes the terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk. (z) Finance costs Interest relating to loans repaid is expensed in the period the repayment occurs. (aa) Warranties The suppliers of the Group offer a standard one-year warranty to end customers of the Group. The Group only provides labour service to repair or replace parts. The Group does not maintain a general warranty reserve because historically labour costs for such repair or replacement have been de minimis. (ab) Shipping and handling costs Amounts billed to customers related to shipping and handling are classified as revenues, and the Group’s shipping and handling costs are included in cost of revenues. (ac) Statutory reserves The Group is required to make appropriation to reserve funds, comprising the statutory reserve fund and statutory staff welfare fund, based on after-tax net income determined with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory reserve fund is required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve fund is equal to 50% of the entities’ registered capital. (ad) Fair value measurements The Group uses the three-tier hierarchy of fair value measurement, which prioritizes the inputs used in measuring fair value based upon their degree of availability in external active markets. These tiers include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of December 31, 2021 and 2020, the Group determined that the carrying values of cash and cash equivalents, restricted cash, accounts receivable, net, prepayments and other current assets, contract assets, bank borrowings, accounts payable, contract liabilities, other payables and accrued expenses approximate their fair values because of the short-term nature of these instruments. (ae) Recent accounting pronouncements Changes to GAAP are typically established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s ASC. The Group considers the applicability and impact of all ASUs. The Group, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Group or may have minimal impact on its consolidated financial statements. Recently adopted accounting pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities. The Group adopted this ASU in January 2021 and there was no effect on the consolidated financial statements or disclosures. In January 2020, the FASB issued ASU 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815),” an amendment clarifying the interaction between accounting standards related to equity securities, equity method investments, and certain derivative instruments. The Group adopted this guidance in January 2021 and there was no effect on the consolidated financial statements or disclosures. Recently issued accounting pronouncements not yet adopted In October 2020, the FASB issued ASU 2020-10, “Codification Improvements,” this ASU affects a wide variety of Topics in the Codification. They apply to all reporting entities within the scope of the affected accounting guidance. More specifically, this ASU, among other things, contains amendments that improve the consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50). Many of the amendments arose because the FASB provided an option to give certain information either on the face of the financial statements or in the notes to financial statements and that option only was included in the Other Presentation Matters Section (Section 45) of the Codification. The option to disclose information in the notes to financial statements should have been codified in the Disclosure Section as well as the Other Presentation Matters Section (or other Section of the Codification in which the option to disclose in the notes to financial statements appears). Those amendments are not expected to change current practice. The amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early application of the amendments is permitted for and varies based on the entity. The amendments should be applied retrospectively and at the beginning of the period that includes the adoption date. The Group is currently evaluating the impact of the new guidance on its consolidated financial statements. (af) Reclassification Certain reclassifications have been made to prior year amounts to conform with the current year presentation. (ag) Non-controlling interests For entities that are consolidated, but not 100% owned, a portion of the income or loss and equity is allocated to owners other than the Group. The aggregate of the income or loss and corresponding equity that is not owned by the Group is included within non-controlling interests in the consolidated financial statements. Non-controlling interests is presented as a separate component of equity in the consolidated balance sheets. Net income includes the net income attributable to the holders of non-controlling interests in the consolidated statements of operations and comprehensive income / (loss). Profits and losses are allocated to non-controlling interests in proportion to their relative ownership interests regardless of their basis. ( ah ) Impairment of long lived assets Long-lived assets such as property, plant and equipment with finite lives are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. There was no impairment of long lived assets during 2021, 2020 and 2019, respectively. (ai) Effect of the Restatement on the Consolidated Financial Statements for the year ended December 31, 2021 Subsequent to the issuance of the Company’s consolidated financial statements for the year ended December 31, 2021 on May 13, 2022, certain errors were identified, (i) (loss) / gain on disposal of property, plant and equipment not included in operating income / (loss) (ii) bonus share issuances were not accounted for and disclosed as stock splits in the consolidated statements of shareholders' equity, earnings per share computations for all periods presented The impact of the restatement on the December 31, 2021 financial statements is reflected in the following tables: CONSOLIDATED BALANCE SHEETS December 31, 2021 As Previously Reported As Restated US$’000 US$’000 Ordinary share 5,322,459 no par value shares issued as of December 31, 2021 (2020: 3,260,559) 7,899,832 no par value shares issued as of December 31, 2021 and 2020 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS) December 31 As Previously Reported As Restated US$’000 US$’000 Operating income / (los |
ZHEJIANG TIANLAN | |
Summary of significant accounting policies | 2 Summary of significant accounting policies (a) Basis of presentation The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). (b) Basis of consolidation The accompanying consolidated financial statements include the results of operations of the Company and its subsidiaries. Significant intercompany transactions and balances have been eliminated. (c) Subsidiaries Subsidiaries are all entities over which the Group has control; has the power to appoint or remove the majority of the members of the board of directors; has the right to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. (d) Revenue recognition Our revenue is derived from long-term contracts for customers, as well as short-term contracts for customers. Accounting treatment for these contracts in accordance with Accounting Standards Update (“ASU”) 2014-09 (Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers), is as follows: The Group estimates variable consideration for a performance obligation at the most likely amount to which the Group expects to be entitled (or the most likely amount the Group expects to incur in the case of liquidated damages), utilizing estimation methods that best predict the amount of consideration to which the Group will be entitled (or will incur in the case of liquidated damages). The Group includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Group’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of its anticipated performance and all information (historical, current and forecasted) that is reasonably available to the Group. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected in transaction price (or excluded from transaction price in the case of liquidated damages) are not resolved in the Group’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. Performance obligations satisfied at a point-in-time (Sales of equipment ) Revenue for our sales contracts is recognized at a point in time. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been delivered to the point of receipt by customer. (e) Research and development costs Research and development costs (“R&D” costs) are expensed as incurred. The R&D costs amounted to approximately 23,419,000, RMB28,589,000 and RMB19,018,000 for the years ended December 31, 2021, 2020 and 2019 respectively and were included in “Selling and administrative expenses” in the Group’s consolidated statements of operations. (f) Income tax The Group follows the liability method of accounting for income tax. Under this method, deferred tax assets and liabilities are recorded for future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the underlying assets or liabilities are recovered or settled. The Group also evaluates whether the recorded deferred tax assets and valuation allowances can be realized and, when necessary, reduces the amounts to what is expected to be realized. The accounting guidance on accounting for uncertainty in income taxes also addresses derecognition, classification, interest and penalties on income taxes, and accounting in interim periods. The Group does not believe it has any uncertain tax positions through the periods ended December 31, 2021, 2020 and 2019 respectively which would have a material impact on the Group’s consolidated financial statements. The Group files tax returns in the PRC. The tax returns for 2021, 2020 and 2019 are subject to examination by the PRC taxing authorities, commencing with the first year filed. (g) Cash and cash equivalents Cash and cash equivalents consist of bank deposits with original maturities of three months or less, all of which are unrestricted as to withdrawal and uninsured. There were no cash equivalents as of December 31, 2021 and 2020. (h) Accounts receivable and allowance for doubtful accounts The Group does not charge interest to its customers and carries its customer receivables at their face amounts, less an allowance for doubtful accounts. As is common practice in the industry, the Group classifies all accounts receivable as current assets. The Group grants trade credit, on a non-collateralized basis, to its customers and is subject to potential credit risk related to changes in business and overall economic activity. The Group analyzes specific accounts receivable balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the event that a customer balance is deemed to be uncollectible, the account balance is written-off against the allowance for doubtful accounts. (i) Classification of contract assets, net and liabilities For revenue recognized associated with its contracts with customers over time, for which the Group has an enforceable right to receive compensation. Many of our contracts contain specific provisions that determine when the Group can bill for its work performed under these contracts. Any revenue earned on a contract that has not yet been billed to the customer is recorded as a contract asset on the Group’s consolidated balance sheets. The Group’s consolidated balance sheets present contract liabilities that contain deferred revenue that represent any costs incurred on contracts in process for which revenue has not yet been recognized. (j) Inventories Inventories are measured using the weighted average method and are stated at the lower of cost or net realizable value. Cost of finished goods comprise direct material, direct production costs and an allocated portion of production overhead costs based on normal operating capacity. (k) Property, plant and equipment and land use right, net Property, plant and equipment is carried at cost. Major modifications or refurbishments which extend the useful life of the assets are capitalized and depreciated over the adjusted remaining useful life of the assets. Upon retirement or disposition of property, plant and equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is recognized in consolidated income from operations. The cost of maintenance and repairs is charged to expense as incurred. Property, plant and equipment is reviewed for impairment and tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value of property, plant and equipment exceeds its fair value, an impairment charge would be recorded in the consolidated statement of operations. (o) Leases arrangements The Group adopted ASU No. 2016-02, Leases (Topic 842). The Group leases certain equipment under finance leases. The economic substance of the leases is a financing transaction for acquisition of the equipment. Accordingly, the right-of-use assets for these leases are included on the Group’s consolidated balance sheets in property, plant and equipment, net of accumulated depreciation, amortization and impairment losses, with a corresponding amount recorded in current portion of long-term finance lease obligations. The finance lease assets are amortized over the life of the lease or, if shorter, the life of the leased asset, on a straight-line basis and included in depreciation expense. The financing component associated with finance lease obligations is included in interest expense. Generally, for the Group’s finance leases an implicit rate to calculate present value is provided in the lease agreement, however if a rate in not provided the Group determines this rate by estimating the Group’s incremental borrowing rate, utilizing the borrowing rates associated with the Group’s various debt instruments. The Group determines if an arrangement is a lease at inception. Lease liabilities are the Group’s obligation to make lease payments arising from a lease and are measured on a discounted basis. (p) Share capital Paid in capital refers to the registered capital paid up by the shareholders of the Company. At December 31, 2021, there were 82,572,000 shares (2020: 82,572,000 shares) issued. (q) Use of estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting estimates of the Group require a higher degree of judgment than others in their application. These include the recognition of revenue and earnings from contracts over time, contract assets, net and contract liabilities. Management continually evaluates all of its estimates and judgments based on available information and experience; however, actual results could differ from these estimates. (r) Related parties Entities are considered to be related to the Group if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Group. Related parties also include principal owners of the Group, its management, members of the immediate families of principal owners of the Group and its management and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. (s) Net income per ordinary share The Group computes net income per ordinary share using the treasury stock method. Under the treasury stock method, basic earnings per share attributable to Zhejiang Tianlan Environmental Protection Technology Company Limited are computed by dividing net income attributable to Zhejiang Tianlan Environmental Protection Technology Company Limited by the weighted average number of ordinary shares outstanding during the period. (t) Warranties The suppliers of the Group offer a standard one-year warranty to end customer of the Group. The Group only provides labour service to repair or replace parts. The Group does not maintain a general warranty reserve because historically labour costs for such repair or replacement have been de minimis. (u) Shipping and handling costs Amounts billed to customers related to shipping and handling are classified as revenues, and the Group’s shipping and handling costs are included in cost of revenues. (v) Finance costs Interest relating to loans repaid is expensed in the period the repayment occurs. (w) Concentrations Financial instruments that potentially subject the Group to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable, net. The Group maintains substantially all of its cash and cash equivalent balances with large financial institutions which are believed to be high quality institutions. The Group is subject to a concentration of risk because it derives a significant portion of its revenues from a few customers. The Group’s top five customers accounted for approximately 35%, 39%, and 40% of consolidated revenues for the years ended December 31, 2021, 2020 and 2019, respectively. For the years ended December 31, 2021, 2020 and 2019, one customer accounted for 16%, 16% and 17% of annual revenues, respectively. The Group grants trade credit under contractual payment terms, generally without collateral, to its customers, which include high credit quality electric utilities, general contractors, owners and managers of industrial properties. Consequently, the Group is subject to potential credit risk related to changes in business and economic factors. At December 31, 2021 and 2020, none of the Group’s customers individually exceeded 10.0% of accounts receivable. The Group believes the terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk. (x) Statutory reserve The Group is required to make appropriation to reserve, comprising the PRC statutory reserve, based on after-tax net income determined with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the PRC statutory reserve are required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. (y) Fair value measurements The Group uses the three-tier hierarchy of fair value measurement, which prioritizes the inputs used in measuring fair value based upon their degree of availability in external active markets. These tiers include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of December 31, 2021 and 2020, the Group determined that the carrying values of cash, and cash equivalents, accounts receivable, net, prepayments and other current assets, contract assets, bank borrowings, accounts payable, other payables and accrued expenses and contract liabilities approximate their fair values because of the short-term nature of these instruments. (z) Short-term and long-term investments The Group has elected to apply the measurement alternative to equity securities without readily determinable fair values. As such, the Group’s non-marketable equity securities are measured at cost, less any impairment, and are adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the investee. (aa) Recent accounting pronouncements Changes to GAAP are typically established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s ASC. The Group considers the applicability and impact of all ASUs. The Group, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Group or may have minimal impact on its consolidated financial statements. Recently adopted accounting pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial instruments, including trade receivables and off-balance sheet credit exposures. Under this guidance, an entity is required to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. This ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. (ab) Non-controlling interests For entities that are consolidated, but not 100% owned, a portion of the income or loss and equity is allocated to owners other than the Group. The aggregate of the income or loss and corresponding equity that is not owned by the Group is included within non-controlling interests in the consolidated financial statements. Non-controlling interests is presented as a separate component of equity in the consolidated balance sheets. Net income includes the net income attributable to the holders of non-controlling interests in the consolidated statements of operations and comprehensive income / (loss). Profits and losses are allocated to non-controlling interests in proportion to their relative ownership interests regardless of their basis. |
Lease obligations
Lease obligations | 12 Months Ended |
Dec. 31, 2021 | |
Lease obligations | 3 Lease obligations The Group has operating leases primarily for office space. The Group’s leases have remaining lease terms of several months to two years. The components of lease expense are as follows: Years ended December 31, 2021 2020 US$’000 US$’000 Operating lease cost 243 257 Short-term lease cost 62 64 Total lease cost 305 321 Supplemental consolidated cash flow information related to leases is as follows: Years ended December 31, 2021 2020 US$’000 US$’000 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 196 195 Right-of-use assets obtained in exchange for lease obligations (noncash): Operating leases - - Supplemental consolidated balance sheet information related to leases is as follows: December 31, 2021 2020 US$’000 US$’000 Operating leases Operating lease right-of-use assets 238 233 Current portion of long-term operating lease obligations 175 118 Long-term operating lease obligations, net of current maturities 41 94 216 212 Total operating lease liabilities Weighted average remaining lease term Operating leases 23 months 16 months Weighted average discount rate Operating leases 5 % 5 % Maturities of lease liabilities are as follows: Operating leases US$’000 Year ending December 31, 2022 181 2023 42 Total lease payments 223 Less: imputed interest (7 ) Total 216 |
ZHEJIANG TIANLAN | |
Lease obligations | 3 Lease obligations The Group has finance leases primarily for equipment. The components of lease expense are as follows: Years ended December 31, 2021 2020 RMB ’000 RMB ’000 Finance lease cost: Amortization of right-of-use assets - 5,837 Interest on lease liabilities included under cost of revenue and selling and administrative expenses - 1,244 Total finance lease cost - 7,081 Supplemental consolidated cash flow information related to leases is as follows: Years ended December 31, 2021 2020 RMB ’000 RMB ’000 Cash paid for amounts included in the measurement of lease liabilities: Finance cash flows from finance leases - 11,263 Right-of-use assets obtained in exchange for lease obligations (noncash): Finance leases - - Supplemental consolidated balance sheet information related to leases is as follows: December 31, 2021 2020 RMB ’000 RMB ’000 Finance leases Property, plant and equipment, at cost - - Accumulated depreciation and impairment losses - - Property, plant and equipment, net - - Current maturities of long-term debt - - Total finance lease liabilities - - Weighted average remaining lease term Finance leases - - Weighted average discount rate Finance leases 5.9 % 5.9 % |
Accounts receivable, net
Accounts receivable, net | 12 Months Ended |
Dec. 31, 2021 | |
Accounts receivable, net | 4 Accounts r eceivable, net Accounts receivable, net consisted of the following at December 31: 2021 2020 US$’000 US$’000 Contract receivables 3,661 3,229 Less: allowance for doubtful accounts (30 ) (30 ) 3,631 3,199 The roll-forward of activity in the allowance for doubtful accounts was as follows for the years ended December 31: 2021 2020 US$’000 US$’000 Balance at beginning of period 30 36 Less : reversal in allowances - (6 ) Balance at end of period 30 30 The following is an aging analysis of accounts receivable, net at December 31: 2021 2020 US$’000 US$’000 Current 1,441 2,014 Past due 1-30 days 1,570 85 31-60 days 495 202 61-90 days 108 41 Greater than or equal to 91 days 17 857 2,190 1,185 3,631 3,199 |
ZHEJIANG TIANLAN | |
Accounts receivable, net | 4 Accounts receivable, net Accounts receivable, net consisted of the following at December 31: 2021 2020 RMB’000 RMB’000 Contract receivables 148,889 160,803 Less: allowance for doubtful accounts (42,867 ) (42,182 ) 106,022 118,621 The roll-forward of activity in the allowance for doubtful accounts was as follows for the years ended December 31: 2021 2020 RMB’000 RMB’000 Balance at beginning of period 42,182 26,484 Add: provision for allowances 868 22,161 Less: Reversal of provision for doubtful accounts (183 ) (6,463 ) Balance at end of period 42,867 42,182 The following is an aging analysis of accounts receivable, net at December 31: 2021 2020 RMB’000 RMB’000 Within 1 year 82,534 76,590 1 year - 2 years 12,144 31,389 2 years - 3 years 5,111 6,128 3 years - 4 years 5,141 3,678 4 years - 5 years 1,092 836 106,022 118,621 At December 31, 2021, the accounts receivable, net pledged as security for the Company’s bank loans and third party loans amounted to RMB Nil (2020: RMB Nil). |
Prepayments and other current a
Prepayments and other current assets | 12 Months Ended |
Dec. 31, 2021 | |
Prepayments and other current assets | 5 Prepayments and other current assets Prepayment and other current assets mainly represent deposits paid for purchases and services, rental and utilities deposits, and prepaid expenses. December 31, 2021 2020 US$’000 US$’000 Deposits paid 243 838 Prepayments 104 168 Other receivables 222 250 Other tax recoverable 3 258 572 1,514 |
ZHEJIANG TIANLAN | |
Prepayments and other current assets | 5 Prepayments and other current assets Prepayments and other current assets mainly represent deposits paid for bidding projects, purchases, services and finance leases and prepaid expenses. December 31, 2021 2020 RMB’000 RMB’000 Prepayments 22,717 16,632 Deposits paid for bidding projects and temporary payments 7,030 10,448 Other current assets 3,751 1,307 33,498 28,387 |
Contract assets and liabilities
Contract assets and liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Contract assets and liabilities | 6 Contract assets and liabilities Contracts with customers usually stipulate the timing of payment, which is defined by the terms found within the various contracts under which work was performed during the period. Therefore, contract assets and liabilities are created when the timing of costs incurred on work performed does not coincide with the billing terms. The Group’s consolidated balance sheets present contract assets which contains earned unbilled revenue associated with contract work that has been completed but not paid by customers, that are generally due once the job is completed and approved. Contract assets consisted of the following at December 31: 2021 2020 US$’000 US$’000 Unbilled revenue 74 202 The Group’s consolidated balance sheets present contract liabilities which contains deferred revenue (previously identified as billings in excess of costs and estimated earnings on uncompleted contracts). Contract liabilities consisted of the following at December 31: 2021 2020 US$’000 US$’000 Deferred revenue 1,076 1,063 The following table provides information about contract assets and contract liabilities from contracts with customers: December 31, 2021 2020 US$’000 US$’000 Contract assets 74 202 Contract liabilities (1,076 ) (1,063 ) Net contract liabilities (1,002 ) (861 ) The difference between the opening and closing balances of the Group’s contract assets and contract liabilities primarily results from the timing of the Group’s billings in relation to its performance of work. The amounts of revenue recognized in the period that were included in the opening contract liability balances were US$79,000 and US$1,214,000 for the years ended December 31, 2021 and 2020, respectively. The revenue consists primarily of work performed on previous billings to customers. The net liabilities position for contracts in process consisted of the following at December 31: 2021 2020 US$’000 US$’000 Costs incurred in contracts in process 169 1,904 Estimated earnings 59 - Cost and estimated earnings on uncompleted contracts 228 1,904 Less: billings to date (1,230 ) (2,765 ) (1,002 ) (861 ) The net liabilities position for contracts in process is included within the contract asset and contract liability in the accompanying consolidated balance sheets as follows at December 31: 2021 2020 US$’000 US$’000 Unbilled revenue 74 202 Deferred revenue (1,076 ) (1,063 ) (1,002 ) (861 ) Disaggregated revenue from contracts Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Revenue Trading and manufacturing (revenue recognized at point in time) 9,619 9,476 11,877 Engineering (revenue recognized over time) 11,769 3,881 5,522 21,388 13,357 17,399 |
ZHEJIANG TIANLAN | |
Contract assets and liabilities | 6 Contract assets, net and liabilities Contracts with customers usually stipulate the timing of payment, which is defined by the terms found within the various contracts under which work was performed during the period. Therefore, contract assets and liabilities are created when the timing of costs incurred on work performed does not coincide with the billing terms. The Group’s consolidated balance sheets present contract assets, net which contains earned unbilled revenue associated with contract work that has been completed but not paid by customers, that are generally due once the job is completed and approved. Contract assets, net consisted of the following at December 31: 2021 2020 RMB’000 RMB’000 Unbilled revenue 72,310 94,494 The Group’s consolidated balance sheets present contract liabilities which contain deferred revenue (previously identified as billings in excess of costs and estimated earnings on uncompleted contracts). Contract liabilities consisted of the following at December 31: 2021 2020 RMB’000 RMB’000 Deferred revenue 37,481 47,135 The following table provides information about contract assets, net and contract liabilities from contracts with customers at December 31: 2021 2020 RMB’000 RMB’000 Contract assets 72,310 94,494 Contract liabilities (37,481 ) (47,135 ) Net contract assets 34,829 47,359 The difference between the opening and closing balances of the Group’s contract assets, net and contract liabilities primarily results from the timing of the Group’s billings in relation to its performance of work. The net asset position for contracts in process consisted of the following at December 31: 2021 2020 RMB’000 RMB’000 Estimated earnings on uncompleted contracts 503,434 406,064 Less: billings to date (468,605 ) (358,705 ) 34,829 47,359 Contract assets, net consisted of the following at December 31: 2021 2020 RMB’000 RMB’000 Gross contract assets 81,198 102,144 Less: allowance for doubtful accounts (8,888 ) (7,650 ) 72,310 94,494 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2021 | |
Inventories | 7 Inventories December 31, 2021 2020 US$’000 US$’000 Raw materials 89 63 Work in progress 20 20 Finished goods 438 259 547 342 Management continuously reviews obsolete and slow moving inventories and assesses the inventory valuation to determine if the write-down of inventories is deemed appropriate. For the years ended December 31, 2021, and 2020, write-down of inventories amounted to US$55,000 and US$13,000, respectively, which were charged to cost of revenue in consolidated statements of operations and comprehensive income / (loss). |
ZHEJIANG TIANLAN | |
Inventories | 7 Inventories December 31, 2021 2020 RMB’000 RMB’000 Raw materials 2,381 341 Finished goods 1,005 2,048 3,386 2,389 |
Short-term and long-term invest
Short-term and long-term investments | 12 Months Ended |
Dec. 31, 2021 | |
ZHEJIANG TIANLAN | |
Short-term and long-term investments | 8 Short-term and l ong-term investments The Group's short-term investments consist of wealth management products and long-term investments consist of minority ownership interests in Chongqing Zhongtian Haizhi Ecological Environment Technology Co., Ltd (2020: Nil) limited liability company, generally from private equity arrangements. These investments are carried under the equity method of accounting, with changes in the carrying value reported as realized gains or losses in the consolidated financial statements. |
Property, plant and equipment,
Property, plant and equipment, net | 12 Months Ended |
Dec. 31, 2021 | |
Property, plant and equipment | 8 Property, plant and equipment, net December 31, 2021 2020 US$’000 US$’000 Office premises* 673 673 Leasehold improvements 125 157 Furniture, fixtures and office equipment 439 557 Motor vehicles 175 175 Testing equipment 37 37 1,449 1,599 Less: Accumulated depreciation (1,234 ) (1,340 ) 215 259 Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Depreciation charge 38 49 69 * Far East earns rental income from a property in Beijing, PRC for which it does not hold the title. Far East is investigating various ways in which to obtain the title but has not formulated a specific plan as of the date of issuance of these consolidated financial statements. The net book value of the property at December 31, 2021 is approximately US$88,000 (2020: US$92,000). |
ZHEJIANG TIANLAN | |
Property, plant and equipment | 9 Property, plant and equipment December 31, 2021 2020 RMB’000 RMB’000 Building and leasehold improvements 167,874 167,874 Furniture, fixtures and office equipment 3,694 3,658 Motor vehicles 4,647 4,808 Plant and machineries 10,097 9,399 Total 186,312 185,739 Less: Accumulated depreciation and amortization (76,008 ) (70,241 ) Accumulated impairment losses (36,241 ) (36,241 ) Total (112,249 ) (106,482 ) Net 74,063 79,257 Year ended December 31, 2021 2020 2019 RMB’000 RMB’000 RMB’000 Depreciation charge 6,466 6,359 6,556 At December 31, 2021, the net book value of property, plant and equipment pledged as security for the Company’s bank loans and third party loans amounted to approximately RMB1,524,000 (2020: RMB34,403,000). |
Intangible assets, net
Intangible assets, net | 12 Months Ended |
Dec. 31, 2021 | |
ZHEJIANG TIANLAN | |
Intangible assets, net | 10 Intangible assets, net December 31, 2021 2020 RMB’000 RMB’000 Amortizable i ntangible a ssets Gross carrying amount Patents 3,750 3,750 Others 165 165 3,915 3,915 Less: Accumulated amortization (2,050 ) (1,795 ) Net carrying amount 1,865 2,120 Year ended December 31, 2021 2020 2019 RMB’000 RMB’000 RMB’000 Amortization expense 255 142 152 At December 31, 2021, estimated future intangible assets amortization expense for each of the next five years and thereafter was as follows: Future amortization expense RMB’000 2022 255 2023 255 2024 255 2025 255 2026 255 Thereafter 590 Total 1,865 At December 31, 2020, estimated future intangible assets amortization expense for each of the next five years and thereafter was as follows: Future amortization expense RMB’000 2021 142 2022 142 2023 142 2024 142 2025 142 Thereafter 1,410 Total 2,120 |
Land use right, net
Land use right, net | 12 Months Ended |
Dec. 31, 2021 | |
ZHEJIANG TIANLAN | |
Land use right, net | 11 Land use right, net December 31, 2021 2020 RMB’000 RMB’000 Gross carrying amount Land use right 7,361 7,361 Less: Accumulated amortization (2,364 ) (2,214 ) Net carrying amount 4,997 5,147 Year ended December 31, 2021 2020 2019 RMB’000 RMB’000 RMB’000 Amortization expense 150 159 149 At December 31, 2021, the land use right pledged as security for the Company’s bank loans and third party’s loans amounted to approximately RMB 1,463,000 (2020: RMB4,463,000). As December 31, 2021, estimated future land use right amortization expense for each of the next five years and thereafter was as follows: Future amortization expense RMB’000 2022 150 2023 150 2024 150 2025 150 2026 150 Thereafter 4,247 Total 4,997 As December 31, 2020, estimated future land use right amortization expense for each of the next five years and thereafter was as follows: Future amortization expense RMB’000 2021 159 2022 159 2023 159 2024 159 2025 159 Thereafter 4,352 Total 5,147 |
Bank borrowings
Bank borrowings | 12 Months Ended |
Dec. 31, 2021 | |
ZHEJIANG TIANLAN | |
Bank borrowings | 12 Bank borrowings December 31, 2021 2020 RMB’000 RMB’000 Bank loans borrowed by the Company (note i) 8,511 10,014 Bank loans borrowed by subsidiaries of the Company (note ii) 5,007 10,015 13,518 20,029 (i) The bank loans are denominated in Renminbi and are repayable within 1 year. The bank loans borrowed by the Company as of December 31, 2021 bears interest at fixed rates of 4.35% to 5% (2020: 4.79%) per annum. Interest paid during the year ended December 31, 2021 was approximately RMB253,000 (2020: RMB1,377,000 and 2019: RMB1,991,000). (ii) The bank loans are denominated in Renminbi and are repayable within 1 year. The bank loans borrowed by subsidiaries of the Company as of December 31, 2021 bears interest at a fixed rate ranging from 4.35% to 5% (2020: a fixed rate ranging from 4.5% to 4.79%) per annum and are secured by the subsidiary’s office premises and leasehold improvements and land use right. Interest paid during the year ended December 31, 2021 was approximately RMB427,000 (2020: RMB287,000 and 2019: RMB246,000). |
Investments in affiliates
Investments in affiliates | 12 Months Ended |
Dec. 31, 2021 | |
Investments in affiliates | |
Investments in affiliates | 9 Investments in affiliates Investments in affiliates are accounted for using the equity method of accounting. December 31, 2021 2020 Zhejiang Tianlan Environmental Protection Technology Co. Ltd. Interest held 19.4 % 19.4 % US$’000 US$’000 Long-term investment, at cost, less impairment 5,540 5,540 Share of undistributed profits 2,537 2,544 8,077 8,084 Far East is holding 19.4% (2020: 19.4%) equity interests in Blue Sky, a company incorporated in the PRC, with total cost of investment of US$5,540,000. Blue Sky provides a comprehensive service for design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted from various boilers and industrial furnaces of power plants, steel works and chemical plants since 2000. Blue Sky has listed its shares on the New Third Board in the PRC since November 17, 2015 and suspended trading from August 15, 2017 and resumed trading on February 2, 2018 and suspended trading from November 24, 2020 and resumed trading on January 6, 2021. The Group’s interest in Blue Sky has been counted for as an affiliate using the equity method as the Group has representation on both the Board and Executive Committee of Blue Sky, and the ability to participate in the decision-making process and exercise significant influence. A summary of the financial information of the affiliate, Blue Sky, is set forth below: December 31, 2021 2020 Balance Sheet: US$’000 US$’000 Current assets 42,510 44,918 Non-current assets 15,172 15,258 Total assets 57,682 60,176 Total liabilities (27,376 ) (30,889 ) Total shareholders’ equity 30,306 29,287 Year ended December 31, 2021 2020 Operating results: US$’000 US$’000 Net sales 51,280 43,933 Operating income 1,997 2,214 Net income 2,105 1,946 |
Other payables and accrued expe
Other payables and accrued expenses | 12 Months Ended |
Dec. 31, 2021 | |
Other payables and accrued expenses | 10 Other payables and accrued expenses Other payables and accrued expenses mainly represent deposits received from customers and accruals for operating expenses. December 31, 2021 2020 US$’000 US$’000 Dividend payables 86 84 Deposits received from customers 6 - Rental deposit received 3 4 Accruals for operating expenses 1,360 1,500 Other tax payables 130 5 1,585 1,593 |
ZHEJIANG TIANLAN | |
Other payables and accrued expenses | 13 Other payables and accrued expenses December 31, 2021 2020 RMB’000 RMB’000 Accrued expenses 8,315 7,629 Output VAT 5,468 6,529 Deposits received and temporary receipts 4,645 3,589 18,428 17,747 |
Other taxes payable
Other taxes payable | 12 Months Ended |
Dec. 31, 2020 | |
ZHEJIANG TIANLAN | |
Other taxes payable | 14 Other taxes payable Other taxes payable mainly comprise Valued-Added Tax (“VAT”). The Group is subject to output VAT levied at the rate of 3% to 13 % (2020: 3% to 13%) of the revenue from sales of equipment. The input VAT paid on purchases of materials and other direct inputs can be used to offset the output VAT levied on operating revenue to determine the net VAT payable or recoverable. |
Capital reserve
Capital reserve | 12 Months Ended |
Dec. 31, 2021 | |
ZHEJIANG TIANLAN | |
Capital reserve | 15 Capital reserve Capital reserve represents capital contributions from shareholders in excess of the paid-in capital amount and capitalization of gain on disposal of subsidiaries to the shareholders in previous years. |
Ordinary share
Ordinary share | 12 Months Ended |
Dec. 31, 2021 | |
Ordinary share | |
Ordinary share | 11 Ordinary share On October 8, 2019, the Company had stock split in the form of bonus shares at the rate of one ordinary share for every two ordinary shares held, creating 1,030,950 new shares of common stock. During the year ended December 31, 2020, there was no movement with the Company’s issued ordinary shares and outstanding shares. On March 3, 2021, the Company had stock split in the form of bonus shares at the rate of two ordinary shares for every three ordinary shares held, creating 2,061,900 new shares of common stock. On January 24, 2022, the Company had stock split in the form of bonus shares at the rate of one ordinary shares for every two ordinary shares held, creating 2,577,373 new shares of common stock, as described in Note 24 to the consolidated financial statements. Number of outstanding shares at year end of: 2021 2020 Shares issued 7,899,832 * 7,899,832 * Less: shares under treasury stock (167,700 ) (167,700 ) 7,732,132 7,732,132 * Retroactively restated for effect of the stock splits effected in the form of bonus shares |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill | |
Goodwill | 12 Goodwill Reporting units - The Group’s reporting units consist of its trading and manufacturing and engineering segments. Goodwill is not amortized, but instead is reviewed for impairment at least annually during the fourth quarter of each year at the reporting level, absent any interim indicators of impairment or other factors requiring an assessment. Annual impairment assessment - For our 2021 and 2020 annual impairment test we performed a qualitative assessment, using information as of December 31, 2021 and 2020, respectively. Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. We determined there were no factors indicating the need to perform a quantitative goodwill impairment test and concluded that it is more likely than not the fair value of our reporting units is greater than their carrying value and thus there was no impairment to goodwill. As of December 31, 2019, the Group completed the annual impairment test by comparing the carrying amount of the net assets, including goodwill, with the fair value of Yixing Pact Environmental Technology Co., Ltd and Pact Asia Pacific Limited as of December 31, 2019 In addition to our annual review, we assess the impairment of goodwill whenever events or changes in circumstances indicate that the carrying value of a reporting unit may be greater than fair value. Factors that could trigger an interim impairment review include, but are not limited to, significant adverse changes in the business climate which may be indicated by a decline in our market capitalization or decline in operating results. No impairments were recorded to our goodwill during the years ended December 31, 2021, 2020 and 2019. No material events or changes occurred between the testing date and year end to trigger a subsequent impairment review. At December 31, 2021 and 2020, we had goodwill for our engineering segment with a carrying amount of US$1,071,000 and US$1,071,000, respectively. |
PRC statutory reserves
PRC statutory reserves | 12 Months Ended |
Dec. 31, 2021 | |
PRC statutory reserves | |
PRC statutory reserves | 13 PRC statutory reserves Under the relevant PRC laws and regulations, the PRC subsidiaries are required to appropriate a certain percentage of their respective net income to two statutory funds i.e. the statutory reserve fund and the statutory staff welfare fund. The PRC subsidiaries can also appropriate certain amount of its net income to the enterprise expansion fund. (i) Statutory reserve fund Pursuant to applicable PRC laws and regulations, the PRC subsidiaries are required to allocate at least 10% of its net income to the statutory reserve fund until such fund reaches 50% of its registered capital. The statutory reserve fund can be utilised upon the approval by the relevant authorities, to offset accumulated losses or to increase its registered capital, provided that such fund be maintained at a minimum of 25% of its registered capital. Under the PRC laws and regulations, the PRC subsidiaries are restricted in their ability to transfer certain of its net assets in the form of dividend payments, loans or advances. The amounts restricted include paid-in capital and statutory reserves, as determined pursuant to PRC generally accepted accounting principles, totaling US$2,452,000 as at December 31, 2021 (2020: US$3,174,000 and 2019: US$3,174,000). (ii) Statutory staff welfare fund Pursuant to applicable PRC laws and regulations, the PRC subsidiaries are required to allocate a certain amount of its net income to the statutory staff welfare fund determined by it. The statutory staff welfare fund can only be used to provide staff welfare facilities and other collective benefits to its employees. This fund is non-distributable other than upon liquidation of the PRC subsidiaries. The balances as at December 31, 2021 and 2020 include in statutory reserves were US$12,000. (iii) Enterprise expansion fund The enterprise expansion fund shall only be used to make up losses, expand the PRC subsidiaries’ production operations, or increase the capital of the subsidiaries. The enterprise expansion fund can be utilised upon approval by relevant authorities, to convert into registered capital and issue bonus capital to existing investors, provided that such fund be maintained at a minimum of 25% of its registered capital. The balances as at December 31, 2021 and 2020 include in statutory reserves were US$408,000. |
Other income, net
Other income, net | 12 Months Ended |
Dec. 31, 2021 | |
Other income, net | 14 Other income, net Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Exchange gain / (loss), Other income, net 77 101 (30 ) Rental income 50 59 82 Government subsidies – Employment Support Scheme * - 147 - 127 307 52 * The amount represents salaries and wage subsidies granted under Anti-Epidemic Fund by the Government of the Hong Kong Special Administrative Region for the use of paying wages of employees from June to November 2020. |
ZHEJIANG TIANLAN | |
Other income, net | 16 Other income and other losses Other income Year ended December 31, 2021 2020 2019 RMB ’000 RMB ’000 RMB’000 Compensation income - 22,548 - Gain on disposal of property, plant and equipment 39 - 39 Investment income 531 266 - Amounts waived by payees 3,061 4,535 280 Reversal of allowance for doubtful accounts 183 6,463 - Subsidy income from PRC government 7,780 5,834 5,957 11,594 39,646 6,276 Other losses Year ended December 31, 2021 2020 2019 RMB ’000 RMB ’000 RMB’000 Bad debts written off - - 5,383 Impairment loss on contract assets 1,238 1,399 - Impairment loss on long-term investments - 1,340 - Impairment loss on property, plant and equipment - 2,742 - Investment loss - - 241 1,238 5,481 5,624 |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income taxes | 15 Income taxes No income tax arose in the United States of America by the Group for the years ended December 31, 2021, 2021 and 2020. The Company and Pact Asia Pacific Limited are exempt from taxation in the British Virgin Islands (“BVI”). Far East and Euro Tech (China) Limited provided for Hong Kong profits tax at a rate of 8.25% on assessable profits up to US$256,000; and 16.5% on any part of assessable profits over US$256,000 in year 2021 and 2020 (2019: 16.5%) on the basis of their income for financial reporting purposes, adjusting for income and expense items which are not assessable or deductible for profits tax purposes. Euro Tech Trading (Shanghai) Limited (“ETTS”), a subsidiary of Far East, provides for PRC Enterprise Income Tax (“EIT”) at a rate of 25% (2020 and 2019: 25%), after offsetting losses brought forward, if any, on the basis of its income for financial reporting purposes, adjusting for income and expense items which are not assessable or deductible for PRC Enterprise Income Tax purposes. As of December 31, 2021, ETTS had an assessable loss carried forward of US$18,000 as agreed by the local tax authority to offset its profit for the forth coming years (2020: US$604,778 and 2019: US$518,328). Such loss will expire in 5 years. Shanghai Euro Tech Limited (“SET”), a subsidiary of Far East, provides for PRC Enterprise Income Tax at a rate of 25% (2020 and 2019: 25%), after offsetting losses brought forward, if any, on the basis of its income for financial reporting purposes, adjusting for income and expense items which are not assessable or deductible for PRC Enterprise Income Tax purposes. As of December 31, 2021, SET had an assessable loss carried forward of US$678,000 as agreed by the local tax authority to offset its profit for the forth coming years (2020: US$658,733 and 2019: US$444,192). Such loss will expire in 5 years. Shanghai Euro Tech Environmental Engineering Company Limited (“SETEE”), a subsidiary of Far East, provides for PRC Enterprise Income Tax at a rate of 25% (2020 and 2019: 25%), after offsetting losses brought forward, if any, on the basis of its income for financial reporting purposes, adjusting for income and expense items which are not assessable or deductible for PRC Enterprise Income Tax purposes. As of December 31, 2021, SETEE had an assessable loss carried forward of US$Nil as agreed by the local tax authority to offset its profit for the forth coming years (2019: US$34,032 and 2018: US$380,591). Yixing Pact Environmental Technology Co. Ltd. (“Yixing”), a subsidiary of Far East, provides for PRC Enterprise Income Tax at a rate of 25% (2020 and 2019: 25%), after offsetting losses brought forward, if any, on the basis of its income for financial reporting purposes, adjusting for income and expense items which are not assessable or deductible for PRC Enterprise Income Tax purposes. As of December 31, 2021, Yixing had an assessable loss carried forward of US$1,759,000 as agreed by the local tax authority to offset its profit for the forth coming years (2020: US$2,304,828 and 2019: US$1,664,275). Such loss will expire in 5 years. Under the New Enterprise Income Tax Law and the implementation rules, profits of the PRC subsidiaries earned on or after January 1, 2008 and distributed by the PRC subsidiaries to foreign holding company are subject to a withholding tax at a rate of 10% unless reduced by tax treaty. Aggregate undistributed earnings of Far East’s subsidiaries located in the PRC that are available for distribution to Far East of approximately US$0.6 million at December 31, 2021 (2020: US$0.6 million and 2019: US$0.6 million) are intended to be reinvested, and accordingly, no deferred taxation has been made for the PRC dividend withholding taxes that would be payable upon the distribution of those amounts to Far East. Distributions made out of pre January 1, 2008 retained earnings will not be subject to the withholding tax. The Company and its subsidiaries are based in Hong Kong and PRC and file Hong Kong profits tax return and PRC EIT return, respectively. The components of the (provision) / credit for income taxes (expense) / credit were as follows: Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Current taxes (expense ) Hong Kong profits tax and the PRC EIT (57 ) (4 ) - Income tax expense (57 ) (4 ) - Deferred tax credit / (expenses) Hong Kong and the PRC 147 (92 ) (37 ) Total deferred tax credit / (expenses) 147 (92 ) (37 ) Total credit / (expense) 90 (96 ) (37 ) The items comprising the difference between income taxes computed at the Hong Kong profits tax and PRC EIT statutory tax rates in effect for 2021, 2020 and 2019 and our effective tax rates were as follows: Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Income / (loss) before income taxes 1,276 498 (173 ) Computed tax using respective companies’ statutory tax rates 158 133 69 Change in valuation allowances 349 48 30 Under-provision for income taxes in prior years (12 ) - (5 ) Non-deductible expenses (405 ) (277 ) (131 ) Income taxes credit / (expense) at effective tax rate 90 (96 ) (37 ) The components of deferred tax assets / (liabilities) are as follows: December 31, 2021 2020 US$’000 US$’000 Tax losses 614 901 Temporary differences (3 ) (5 ) Less: Valuation allowances (469 ) (901 ) Net deferred tax assets / (liabilities) 142 (5 ) Uncertain tax positions As a result of the Group’s analysis, management has determined that the Group does not have any material uncertain tax positions. |
ZHEJIANG TIANLAN | |
Income taxes | 17 Income tax (credit)/expense According to relevant PRC tax laws and regulations, entities incorporated in the PRC are subject to Enterprise Income Tax (“EIT”) at a statutory rate of 25% or reduced national EIT rates of 15% for certain High and New Technology Enterprises (“HNTE”) on PRC taxable income. Zhejiang Tianlan Environmental Protection Technology Company Limited and Hangzhou Tianlan Environmental Protection Equipment Company Limited are classified as HNTE which enjoy a preferential tax rate of 15%. During the years ended December 31, 2021 and 2020, the PRC tax laws and regulations have launched a tax reduction scheme for small enterprises, Hangzhou Tianlan Pure Environmental Protection Technology Company Limited, Hangzhou Tiancan Environmental Technology Company Limited, Zhejiang Tianlan Environmental Engineering and Design Company Limited and Zhejiang Tianlan Environmental Protection Engineering Company Limited The Company and its subsidiaries are based in the PRC and file an EIT return. The components of the provision for income tax expense/(credit) were as follows: Year ended December 31, 2021 2020 2019 RMB ’000 RMB ’000 RMB ’000 Current tax (credit)/expense PRC EIT (32 ) 757 28 Income tax (credit)/expense (32 ) 757 28 Deferred tax (credit)/expense (666 ) 1,101 268 Total deferred tax (credit)/expense (666 ) 1,101 268 Total (credit)/expense (698 ) 1,858 296 The items comprising the difference between income tax computed at the EIT statutory rates in effect for 2021, 2020 and 2019 and our effective tax rates were as follows: Year ended December 31, 2021 2020 2019 RMB ’000 RMB ’000 RMB ’000 Income before income tax 12,880 15,358 4,654 Computed tax using respective companies’ statutory tax rates 1,932 2,304 642 (Over)-provision for income tax in prior years (39 ) (48 ) - Temporary differences 401 182 202 Tax effect of expenses not deductible for tax purposes 286 2,306 693 Tax effect of special deduction for research and development costs (3,263 ) (3,001 ) (2,103 ) Others (15 ) 115 862 Income taxes (credit)/expense at effective tax rate (698 ) 1,858 296 The components of deferred tax assets are as follows: December 31, 2021 2020 RMB’000 RMB’000 Allowance for doubtful accounts 6,188 6,184 Deferred government grant 583 750 Impairment losses on assets 6,940 6,705 Tax losses 594 - Total deferred tax assets 14,305 13,639 Uncertain tax positions As a result of the Group’s analysis, management has determined that the Group does not have any material uncertain tax positions. |
Net income per ordinary share
Net income per ordinary share | 12 Months Ended |
Dec. 31, 2021 | |
Net income per ordinary share | |
Net income per ordinary share | 16 Net income per ordinary share The calculation of the basic and diluted net income per ordinary share is based on the following data: December 31, 2021 2020 2019 Number of shares Weighted average number of ordinary shares for the purposes of basic and diluted net income per share 7,732,132 7,732,132 7,732,132 |
Stock options
Stock options | 12 Months Ended |
Dec. 31, 2021 | |
Stock options | |
Stock options | 17 Stock options 2019 Stock Option and Incentive Plan In April 2019, the Board of Directors approved the adoption of the 2019 Stock Option and Incentive Plan (the “Plan”). The Plan was also subsequently approved under a resolution of the Company's shareholders. The Plan provides for the granting of up to 300,000 (500,000 after bonus shares adjustment) Ordinary Shares (the “Share Limit”), in the form of options to Officers, Directors and Key Employees who perform services which contribute to the successful performance of the Company and its subsidiaries. In addition, the Plan provides that, on the first day of each fiscal year commencing on January 1, 2020, the Share Limit shall automatically be increased by that number of shares equal to 5% of the number of Ordinary Shares outstanding as of such date. The Board of Directors or a committee (the “Committee”) appointed by the Board of Directors administers the Plan. Appropriate adjustment in the maximum number of Ordinary Shares issuable pursuant to this Plan, the maximum number of Ordinary Shares with respect to which options may be granted within any 12-month period to any participant during the duration of this Plan, the number of shares subject to options granted under this Plan, and the exercise price with respect to options, shall be made to give effect to any increase or decrease in the number of issued Ordinary Shares resulting from a subdivision or consolidation of shares whether through reorganization, recapitalization, division of shares, reverse share split, spin-off, split-off, spin-out, or other distribution of assets to shareholders, issue of bonus shares or combination of shares, assumption and conversion of outstanding options due to an acquisition by the Company of the shares, stock or assets of any other company or corporation, other increase or decrease in the number of such shares outstanding effected, without receipt of consideration by the Company, or any other occurrence for which the Committee determines an adjustment is appropriate. The purchase price per share of the Ordinary Shares to be paid upon the exercise of the option must be at least 100% of the fair market value of an Ordinary Shares on the date on which the option was granted. Under the Plan, if the Ordinary Shares are principally traded on a national securities exchange or the Nasdaq Global Market or Capital Market at the time of grant, the Company is required to use, at fair market value, the average of the closing prices of the Ordinary Shares for the ten consecutive trading days immediately before the date of grant. If the Ordinary Shares are traded on a national securities exchange or the Nasdaq Stock Global Market or Capital Market, but no closing prices are reported for such ten-day period, or if the Ordinary Shares are principally traded in the over-the-counter market, the Company is required to use, as fair market value, the average of the mean between the bid and asked prices reported for the Company’s Ordinary Shares at the close of trading during such ten-day period before the date of grant. If the Ordinary Shares are traded neither on a national securities exchange, one of the Nasdaq’s Markets nor in the over-the-counter market or if bid and asked prices are otherwise not available, the fair market value of the Ordinary Shares on the date of grant will be determined in good faith by the Committee or the Board of Directors, as the case may be. 2019 Stock o ption and i ncentive p lan (Cont’d) The Board of Directors or the Committee, as the case may be, determines, at the time of grant, when each option granted under the Plan will become exercisable. Notwithstanding the foregoing, all options held by a key employee of the Company or its subsidiaries become immediately exercisable, whether or not exercisable at the time, upon the death or disability, and shall be exercisable within twelve (12) months after the date of death or disability, but in no event later than the expiration date of such Options. No option is to be exercisable more than ten years from the date the option is granted. Payment of Exercise Price for Options. Under the Plans, payment for shares purchased upon exercise of an option may be made by any of the following methods, subject to certain requirements: (i) in cash, (ii) in Ordinary Shares which have been held by the participant for not less than six months prior to the exercise of the option, valued at its Fair Market Value (as defined) on the date of exercise, (iii) in cash by a broker-dealer to whom the holder of the option has submitted an exercise notice consisting of a fully endorsed option, or (iv) by such other medium of payment as the Board or the Committee, as applicable, in its sole discretion, shall authorize, or by any combination of (i), (ii), or (iii), at the sole discretion of the Board or the Committee, as applicable, or in any manner provided in the option agreement, except by directing the Company to withhold Ordinary Shares otherwise issuable upon the exercise of the Option in payment of the exercise price. Transfer of Options. Under the Plans, an option may not be sold, assigned or otherwise transferred except to: · the spouse or lineal descendant of a plan participant; · the trustee of a trust for the primary benefit of a plan participant’s spouse or lineal descendant; · a partnership of which a plan participant and lineal descendants are the only partners; or · a tax exempt organization. These assignments are only permitted if the assigning option holder does not receive any compensation in connection with the assignment and the assignment is expressly approved by the Board or Committee, as the case may be. 2019 Stock o ption and i ncentive p lan (Cont’d) The Company indemnifies the members of any Committee and its delegates and the Chief Executive Officer against (a) the reasonable expenses (as such expenses are incurred), including attorneys’ fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding (or in connection with any appeal therein), to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any option granted under the Plan; and (b) all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee member or delegatee, as applicable, is liable for gross negligence or gross misconduct in the performance of his or her duties; provided that within 60 days after institution of any such action, suit or proceeding a Committee member or delegatee shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. The Board may terminate, suspend, or amend the Plan at any time without the authorization of shareholders to the extent allowed by law or the rules of any market on which the Company’s shares are then listed or quoted. During the year ended December 31, 2019, the Company granted such options to its officers, directors and employees, which allow them to purchase up to 51,000 ordinary shares. The exercise price of all options granted is US$2.60 per share. The stock options granted are exercisable on January 1, 2022 and terminate on April 18, 2029. The Company estimate the fair value of the options granted under the Binomial pricing model at US$2.324 per share. Changes in outstanding options under various plans mentioned above were as follows: Year ended December 31, 2021 2020 2019 Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price US$ US$ US$ Outstanding, beginning of year 51,000 2.60 51,000 2.60 - - Granted - - - - 51,000 2.60 Bonus shares adjustment 34,000 (1.04 ) - - - - Outstanding, end of year 85,000 1.56 51,000 2.60 51,000 2.60 Exercisable, end of year - - - - - - As of December 31, 2021, 2020 and 2019, there was no unrecognized stock-based compensation expense related to unvested stock options. The compensation expense for the year is approximately US$55,000 (2020: US$54,000; 2019: US$10,000). The Group applies the provisions of ASC No. 718-10, which requires to recognise expense related to the fair value of stock-based compensation awards, including employee stock options. The Binomial option-pricing model is used to estimate the fair value of the options granted. This requires the input of subjective assumptions, including the expected volatility of stock price, expected option term, expected risk-free rate over the expected option term and expected dividend yield rate over the expected option term. Because changes in subjective input assumptions can materially affect the fair value estimate, in directors’ opinion, the existing model may not necessarily provide a realisable measure of the fair value of the stock options. Expected volatility is based on historical volatility in the 180 days prior to the issue of the options. Expected option term and dividend yield rate are based on historical trends. Expected risk-free rate is based on US Treasury securities with similar maturities as the expected terms of the options at the date of grant. |
Pension plan
Pension plan | 12 Months Ended |
Dec. 31, 2021 | |
Pension plan | 18 Pension plan Prior to December 1, 2000, Far East had only one defined contribution pension plan for all its Hong Kong employees. Under this plan, all employees were entitled to pension benefits equal to their own contributions plus 50% to 100% of individual fund account balances contributed by Far East, depending on their years of service with Far East. Far East was required to make specific contributions at approximately 10% of the basic salaries of the employees to an independent fund management company. With the introduction of the Mandatory Provident Fund Scheme (“MPF scheme”), a defined contribution scheme managed by an independent trustee on December 1, 2000, Far East and its employees who joined Far East subsequently make monthly contributions to the scheme at 5% of the employee’s cash income as defined under the Mandatory Provident Fund Schemes Ordinance. Under the MPF scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees' relevant income, subject to a cap of monthly relevant income of HK$30,000. Contributions to the plan vest immediately. During the years ended December 31, 2021, 2020 and 2019, the aggregate contributions of the Group to the aforementioned pension plans and retirement benefit schemes were approximately US$225,000, US$104,000 and US$332,000 respectively. As stipulated by the rules and regulations in the PRC, the PRC’s subsidiaries contributes to state-sponsored retirement plans for its employees in Mainland China. PRC’s subsidiaries’ contribution approximately 16% of the basic salaries of its employees, and have no further obligations for the actual payment of pension or post-retirement benefits beyond the annual contributions. The state-sponsored retirement plans are responsible for the entire pension obligations payable to retired employees. |
ZHEJIANG TIANLAN | |
Pension plan | 18 Pension plan As stipulated by the rules and regulations in the PRC, the Group contributes to state-sponsored retirement plans for its employees in Mainland China. The Group contributes approximately 12% to 14% of the basic salaries of its employees, and has no further obligations for the actual payment of pension or post-retirement benefits beyond the annual contributions. The state-sponsored retirement plans are responsible for the entire pension obligations payable to retired employees. During the years ended December 31, 2021, 2020 and 2019, the aggregate contributions of the Group to the aforementioned pension plans and retirement benefit schemes were approximately RMB6,003,000, RMB5,645,000 and RMB5,449,000 respectively. |
Risk factors
Risk factors | 12 Months Ended |
Dec. 31, 2021 | |
Risk factors | 19 Risk factors Financial risk factors The Group’s activities expose it to a variety of financial risks: credit risk and foreign exchange rate risk. (i) Credit risk The Group has no significant concentration of credit risk, cash in banks in Hong Kong and PRC is insured with limit of approximately US$64,000 and US$72,000, respectively per bank per each depositor. Uninsured cash in banks and restricted cash balances in Hong Kong and PRC are of approximately US$5,327,000 (2020: US$4,594,000). Cash transactions are limited to high credit quality banks. (ii) Foreign exchange rate risk The Group operates in Hong Kong, the PRC and trades with both local and overseas customers and suppliers, and is exposed to foreign exchange rate risk arising from various currency exposures, primarily with respect to purchases in Hong Kong dollars, Renminbi and Euros. Foreign exchange risk arises from committed and unmatched future commercial transactions, such as confirmed import purchase orders and sales orders, recognized assets and liabilities, and net investment in the PRC operations. |
ZHEJIANG TIANLAN | |
Risk factors | 19 Risk factor s Financial risk factors The Group’s activities expose it mainly to credit risk. Credit risk The Group has no significant concentration of credit risk, cash in banks in PRC is insured with limit of approximately RMB500,000, per bank per each depositor. Uninsured cash in banks and restricted cash balances in PRC are of approximately RMB48,855,000 (2020: RMB44,494,000). Cash transactions are limited to high credit quality banks. |
Risk and uncertainty
Risk and uncertainty | 12 Months Ended |
Dec. 31, 2021 | |
Risk and uncertainty | |
Risk and uncertainty | 20 Risk and uncertainty The outbreak of COVID-19 worldwide and the various public health measures put in place in many countries to prevent the spread of COVID-19 have disrupted the overall business of the Group at different levels of time and regions in 2020. After the Chinese new year in February 2020, the Group’s domestic businesses were affected by the lock-down of various cities implemented in PRC, resulting in the forced suspension of some local operations until the gradual resumption of work beginning from late March to early April 2020. Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Group’s consolidated financial position, results of its operations, the specific impact is not readily determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related party transactions | 21 Related party transactions Other than compensation to directors and stock options available to the directors and disposal of long-term investment to associate Blue Sky for a total consideration of approximately US$148,000 with nil gain or loss on disposal during the year ended December 31, 2020, there were no transactions with other related parties in the years 2021, 2020 and 2019. |
ZHEJIANG TIANLAN | |
Related party transactions | 20 Related party transaction There were purchase of a subsidiary from shareholders of the Company with total consideration of approximately RMB Nil (2020: RMB4,590,000), engineering service income from an investment of approximately RMB273,000 (2020: RMB2,518,000) and remuneration to key management personnel of approximately RMB1,209,000 (2020: RMB 1,400,000). |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and contingencies | 22 Commitments and contingencies (i) Banking facilities As at December 31, 2021 and 2020, the Group had various banking facilities available for overdraft and import and export credits from which the Group can draw up to approximately US$897,000 and US$897,000 respectively, of which approximately US$605,000 and US$596,000 were utilised for issuance of bank guarantees as security for the performance of various contracts with customers and import loans. The various banking facilities are secured by a bank deposit of approximately US$897,000 and various blanket counter indemnities and counter indemnities. The Group undertakes to maintain its tangible net worth not at any time less than approximately US$3,846,000 and was in compliance with the covenant. The weighted average interest rate for import loans as at December 31, 2021 was 5% per annum (December 31, 2020: 4.9% per annum). For the years ended December 31, 2021 and 2020, the average dollar amount of the bank borrowings was approximately US$219,000 and US$457,000 respectively and average interest rates were approximately 5% and 4.9% per annum respectively for the years ended December 31, 2021 and 2020. (ii) Non-controlling interest put option The Group granted the non-controlling interest of Yixing Pact Environmental Technology Co., Ltd. and Pact Asia Pacific Limited a put option, which is effective from 2009, requiring the Group to acquire part or all remaining shares of these two companies at a purchase price per share calculated by 5.2 times of their average net income for the three prior fiscal years divided by total number of shares outstanding at the time of exercise of such option. Such put option did not have an expiry date. (iii) Insurance The Group carries insurance policies to cover various risks, primarily general liability, automobile liability, workers’ compensation and employee medical expenses under which we are liable to reimburse the insurance company for a portion of each claim paid. (iv) Purchase commitments To manage the risk of changes in material prices and subcontracting costs used in tendering bids for engineering contracts, most of the time, the Group obtains firm quotations from suppliers and subcontractors before submitting a bid. These quotations do not include any quantity guarantees. As soon as the Group is advised that its bid is successful, the Group enters into firm contracts with most of its materials suppliers and sub-contractors, thereby mitigating the risk of future price variations affecting the contract costs. (v) Litigations The Group is now and may in the future be involved as a party to various legal proceedings that are incidental to the ordinary course of business. Management, after consultation with legal counsel, does not believe that the outcome of these actions will have a material impact on the consolidated financial statements of the Group. There are no significant unresolved legal issues as of December 31, 2021 and 2020. (vi) Contingencies The Group accounts for loss contingencies in accordance with ASC Topic 450 and other related guidelines. As of December 31, 2021 and 2020, the Group’s management is of the opinion that there are no commitments and contingencies to account for. |
ZHEJIANG TIANLAN | |
Commitments and contingencies | 21 Commitments and contingencies (i) Insurance The Group carries insurance policies to cover various risks, primarily general liability, automobile liability, workers’ compensation and employee medical expenses under which we are liable to reimburse the insurance company for a portion of each claim paid. (ii) Purchase commitments To manage the risk of changes in material prices and subcontracting costs used in tendering bids for contracts, most of the time, the Group obtains firm quotations from suppliers and subcontractors before submitting a bid. These quotations do not include any quantity guarantees. As soon as the Group is advised that its bid is successful, the Group enters into firm contracts with most of its materials suppliers and sub-contractors, thereby mitigating the risk of future price variations affecting the contract costs. (iii) Litigation The Group is now and may in the future be involved as a party to various legal proceedings that are incidental to the ordinary course of business. Management, after consultation with legal counsel, does not believe that the outcome of these actions will have a material impact on the consolidated financial statements of the Group. There are no significant unresolved legal issues as of December 31, 2021 and 2020. (v) Contingencies The Group accounts for loss contingencies in accordance with ASC Topic 450 and other related guidelines. As of December 31, 2021 and 2020, the Group’s management is of the opinion that there are no commitments and contingencies to account for. (vi) Operating leases The Group has no operating leases expense during the year ended December 31, 2021 (2020 and 2019: RMB Nil). At December 31, 2021, the Group has no future minimum lease payments under non-cancellable operating leases. |
Segment information
Segment information | 12 Months Ended |
Dec. 31, 2021 | |
Segment information | |
Segment information | 23 Segment information (i) The Group reports under two segments: Trading and manufacturing, and Engineering. Operating income represents total revenues less operating expenses, excluding other expense, interest and income taxes. The identifiable assets by segment are those used in each segment’s operations. Intersegment transactions are not significant and have been eliminated to arrive at consolidated totals. Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Revenue Trading and manufacturing 9,619 9,476 11,877 Engineering 11,769 3,881 5,522 21,388 13,357 17,399 Operating income / (loss) Trading and manufacturing 140 (488 ) (102 ) Engineering 846 (1,027 ) (158 ) Unallocated corporate expenses (205 ) (186 ) (180 ) 781 (1,701 ) (440 ) Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Depreciation: Trading and manufacturing 32 39 54 Engineering 6 10 15 38 49 69 Capital expenditures, gross Trading and manufacturing 1 2 17 Engineering 3 9 4 4 11 21 (i) The Group reports under two segments: Trading and manufacturing, and Engineering. (Cont’d) December 31, 2021 2020 US$’000 US$’000 Assets Trading and manufacturing 7,969 7,877 Engineering 13,281 12,218 21,250 20,095 Liabilities Trading and manufacturing 3,428 2,645 Engineering 3,021 2,987 6,449 5,632 (ii) Geographical analysis of revenue by customer location is as follows: Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Revenue - The PRC 13,217 5,072 6,886 Hong Kong 7,937 8,024 10,169 Others 234 261 344 21,388 13,357 17,399 (iii) Long-lived assets (1) Geographical analysis of long-lived assets is as follows: December 31, 2021 2020 US$’000 US$’000 Hong Kong 25 47 The PRC 190 212 215 259 (1) (iv) Major suppliers Details of individual suppliers accounting for more than 5% of the Group’s purchases are as follows: Year ended December 31, 2021 2020 2019 Supplier A 42 % 30 % 53 % Supplier B 13 % 10 % 7 % Supplier C 6 % 9 % 6 % Supplier D 6 % 6 % 6 % Supplier E 5 % 5 % - Supplier F - 12 % - (v) Major customers Details of individual customers accounting for more than 5% of the Group’s revenue are as follows: Year ended December 31, 2021 2020 2019 Customer A 15 % 9 % 19 % Customer B - 8 % - Customer C - 6 % 10 % Customer D - - 5 % |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent events | 24 Subsequent event On December 16, 2021, the Company announced that the Company’s board of directors authorized the issuance of bonus shares (the “Bonus Shares”), which are issuable on January 21, 2022 to shareholders of record as of January 7, 2022 (the “Record Date”). Shareholders of record on the Record Date will receive one (1) ordinary share for every two (2) ordinary shares held. All issuances resulting in a fractional share will be rounded down to the next whole share. The common stock began trading on a split-adjusted basis on January 24, 2022. The effect of the stock split in form of bonus shares has been reflected retroactively in the financial statements and net income per ordinary share computations. |
ZHEJIANG TIANLAN | |
Subsequent events | 22 Subsequent event On April 22, 2022, the director of the Company proposed a cash dividend of an aggregate of approximately RMB9,082,000, which dividend was paid to all holders of record subject to approval in shareholders’ annual general meeting. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Basis of consolidation | The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the results of operations of the Company and its subsidiaries. Significant intercompany transactions and balances have been eliminated. |
Subsidiaries | Subsidiaries are all entities over which the Group has control; has the power to appoint or remove the majority of the members of the board of directors; has the right to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. |
Investments in affiliates | We account for our interest in an investment using the equity method of accounting per Accounting Standards Codification (“ASC”) No. 323, “Investments - Equity Method and Joint Ventures” if we are not the primary beneficiary of a VIE or do not have a controlling interest. The investment is recorded at cost and the carrying amount is adjusted periodically to recognize our proportionate share of income or loss, additional contributions made and dividends and capital distributions received. We record the effect of any impairment or other than temporary decrease in the value of the investment. In the event a partially owned equity affiliate were to incur a loss and our cumulative proportionate share of the loss exceeded the carrying amount of the equity method investment, application of the equity method would be suspended and our proportionate share of further losses would not be recognized unless we committed to provide further financial support to the affiliate. We would resume application of the equity method once the affiliate became profitable and our proportionate share of the affiliate’s earnings equals our cumulative proportionate share of losses that were not recognized during the period the application of the equity method was suspended. |
Revenue recognition | Our revenue is derived from long-term contracts for customers in our engineering segment, as well as short-term contracts for customers in our trading and manufacturing segment. Accounting treatment for these contracts in accordance with Accounting Standards Update (“ASU”) 2014-09 (Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customer), is as follows: Performance obligations satisfied over time (Engineering services) Recognition of performance obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Engineering service projects typically span between several days to over 5 years. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, is not distinct. Some contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the project life cycle (engineering). Revenues are recognized as our obligations are satisfied over time, by reference to the progress towards complete satisfaction of that performance obligation. If the Group expects the reference to progress certificates issued by the customers, with additional adjustments where necessary, depicts the Group’s performance in transferring control of goods or services promised to customers for individual projects, the Group satisfies the performance obligation over time and therefore, recognizes revenue over time in accordance with the output method for measuring progress. Under output method, revenue recognition is based on the stage of completion of the contracts, provided that the stage of contract completion and the gross billing value of contracting work can be measured reliably. The stage of completion of a contract is established by reference to the construction works certified by customers. Remaining performance obligations (“RPOs”) RPOs represent the amount of revenues we expect to recognize in the future from our contract commitments on projects and are hereafter referred to as “Backlog”. Backlog includes the entire expected revenue values for subsidiary we consolidate. Backlog may not be indicative of future operating results, and projects included in Backlog may be canceled, modified or otherwise altered by customers. The Group had the following backlog: 2021 2020 US$’000 US$’000 Engineering segment 5,400 11,581 Unrecognized contract revenue which is expected to be recognized in next 12 months is approximately US$5,400,000 (2020: US$11,581,000). Performance obligations satisfied over time (Engineering services) (Cont’d) Variable consideration Contract modifications through change orders, claims and incentives are routine in the performance of the Group’s contracts to account for changes in the contract specifications or requirements. In most instances, contract modifications are not distinct from the existing contract due to the significant integration service provided in the contract and are accounted for as a modification of the existing contract and performance obligation. Either the Group or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Change orders that are unapproved as to both price and scope are evaluated as claims. The Group considers claims to be amounts in excess of approved contract prices that the Group seeks to collect from its customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs. The Group estimates variable consideration for a performance obligation at the most likely amount to which the Group expects to be entitled (or the most likely amount the Group expects to incur in the case of liquidated damages), utilizing estimation methods that best predict the amount of consideration to which the Group will be entitled (or will be incurred in the case of liquidated damages). The Group includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Group’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of its anticipated performance and all information (historical, current and forecasted) that is reasonably available to the Group. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected in transaction price (or excluded from transaction price in the case of liquidated damages) are not resolved in the Group’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. Performance obligations satisfied at a point-in-time (Trading and manufacturing ) Revenue for our trading and manufacturing contracts is recognized at a point in time. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been delivered to the point of receipt by customer. Classification of contract assets and liabilities For revenue recognized associated with its contracts with customers over time, for which the Group has an enforceable right to receive compensation. Many of our contracts contain specific provisions that determine when the Group can bill for its work performed under these contracts. Any revenue earned on a contract that has not yet been billed to the customer is recorded as a contract asset on the Group’s consolidated balance sheets. The Group’s consolidated balance sheets present contract liabilities that contain deferred revenue that represent any costs incurred on contracts in process for which revenue has not yet been recognized. Rental income Rental income from operating leases is recognized in consolidated statements of operations and comprehensive income /(loss) on a straight-line basis over the term of the relevant lease. |
Research and development costs | Research and development costs (“R&D” costs) are expensed as incurred. The R&D costs amounted to approximately US$61,000, US$497,000 and US$35,000 for the years ended December 31, 2021, 2020 and 2019 respectively and were included in “Selling and administrative expenses” |
Advertising and promotional expenses | Advertising and promotional expenses (“A&P” expenses) are expensed as incurred. The A&P expenses amounted to approximately US$7,000, US$7,000 and US$13,000 for the years ended December 31, 2021, 2020 and 2019 respectively and were included in “Selling and administrative expenses” |
Income taxes | The Group follows the liability method of accounting for income tax. Under this method, deferred tax assets and liabilities are recorded for future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the underlying assets or liabilities are recovered or settled. The Group also evaluates whether the recorded deferred tax assets and valuation allowances can be realized and, when necessary, reduces the amounts to what is expected to be realized. The accounting guidance on accounting for uncertainty in income taxes also addresses derecognition, classification, interest and penalties on income taxes, and accounting in interim periods. The Group does not believe it has any uncertain tax positions through the periods ended December 31, 2021, 2020 and 2019 respectively which would have a material impact on the Group’s consolidated financial statements. Interest and penalties related to uncertain income tax positions are included in income tax expense on the Group’s consolidated statements of operations and comprehensive income / (loss). Interest and penalties actually incurred are charged to interest expense and the other income, respectively if applicable. The Group files tax returns in Hong Kong and the PRC. The tax returns for 2021, 2020 and 2019 are subject to examination by Hong Kong and PRC taxing authorities, commencing with the first year filed. |
Cash and cash equivalents | Cash and cash equivalents consist of cash on hand, and bank deposits with original maturities of three months or less, all of which are unrestricted as to withdrawal. There were no cash equivalents as of December 31, 2021 and 2020. |
Restricted cash | Restricted cash represents cash deposits retained with banks in the PRC for issuance of performance bonds and guarantees to the customers and cash deposited by the Group into separate accounts and designated as collateral for standby letters of credit in the same amount in accordance with contractual agreements. |
Accounts receivable and allowance for doubtful accounts | The Group does not charge interest to its customers and carries its customer receivables at their face amounts, less an allowance for doubtful accounts. As is common practice in the industry, the Group classifies all accounts receivable as current assets. The Group grants trade credit, on a non-collateralized basis, to its customers and is subject to potential credit risk related to changes in business and overall economic activity. The Group analyzes specific accounts receivable balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the event that a customer balance is deemed to be uncollectible, the account balance is written-off against the allowance for doubtful accounts. |
Inventories | Inventories are measured using the first-in, first-out method and are stated at the lower of cost or net realizable value. Cost of finished goods comprise direct material, direct production costs and an allocated portion of production overhead costs based on normal operating capacity. Allowance is made for obsolete, slow moving or defective items, where appropriate. |
Property, plant and equipment and land use right, net | Property, plant and equipment is carried at cost. Major modifications or refurbishments which extend the useful life of the assets are capitalized and depreciated over the adjusted remaining useful life of the assets. Upon retirement or disposition of property, plant and equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is recognized in consolidated income from operations. The cost of maintenance and repairs is charged to expense as incurred. Property, plant and equipment is reviewed for impairment and tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value of property, plant and equipment exceeds its fair value, an impairment charge would be recorded in the consolidated statement of operations. Depreciation of property, plant and equipment are computed using the straight-line method over the assets’ estimated useful lives as follows: Office premises 47 to 51 years Leasehold improvements over terms of the leases or the useful lives whichever is less Furniture, fixtures and office equipment 3 to 5 years Motor vehicles 4 years Testing equipment 3 years |
Long-term investment | The Group has elected to apply the measurement alternative to equity securities without readily determinable fair values. As such, the Group’s non-marketable equity securities are measured at cost, less any impairment, and are adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the investee. |
Lease arrangements | In the ordinary course of business, the Group enters into a variety of operating lease arrangements. Operating right-of-use leases are included in operating lease right-of-use assets, current portion of long-term operating lease obligations and long-term operating lease obligations, net of current maturities on the Group’s consolidated balance sheets, as appropriate. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Group’s leases do not provide an implicit rate to calculate present value, the Group determines this rate by estimating the Group’s incremental borrowing rate, utilizing the borrowing rates associated with the Group’s various debt instruments. The operating lease right-of-use asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. |
Goodwill | Goodwill is not amortized. The Group performs either a qualitative or quantitative assessment to review goodwill for impairment on an annual basis. This assessment is performed at the beginning of the fourth quarter, or when circumstances change, such as a significant adverse change in the business climate or the decision to sell a business, both of which would indicate that impairment may have occurred. A qualitative assessment considers financial, industry, segment and macroeconomic factors, if the qualitative assessment indicates a potential for impairment, a quantitative assessment is performed to determine if impairment exists. The quantitative assessment begins with a comparison of the fair value of the reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss would be recognized in an amount equal to that excess, limited to the total amount of the goodwill allocated to the reporting unit. If the carrying value of goodwill exceeds its implied fair value, an impairment charge would be recorded in the consolidated statements of operations and comprehensive income / (loss). As a result of the annual qualitative review process in 2021 and 2020, the Group determined it was not necessary to perform a quantitative assessment. |
Foreign currency translation | The assets and liabilities of the Group’s subsidiaries denominated in currencies other than U.S. dollars are translated into U.S. dollars using the applicable exchange rates at the consolidated balance sheet date. For consolidated statements of operations and comprehensive income/(loss)’ items, amounts denominated in currencies other than U.S. dollars were translated into U.S. dollars using the average exchange rate during the period. Equity accounts were translated at their historical exchange rates. Net gains and losses resulting from translation of foreign currency on consolidated financial statements are included in the consolidated statements of stockholders’ equity as accumulated other comprehensive income. Foreign currency transaction gains and losses are reflected in the consolidated statements of operations and comprehensive income / (loss). |
Comprehensive income / (loss) | We account for comprehensive income in accordance with ASC No. 220, “Comprehensive Income”, which specifies the computation, presentation and disclosure requirements for comprehensive income / (loss). Comprehensive income / (loss) consists of net income / (loss) and foreign currency translation adjustments, primarily from fluctuations in foreign currency exchange rates of our foreign subsidiaries with a functional currency other than the U.S. dollar. |
Ordinary share | On November 22, 2011, the Company filed Amended and Restated Memorandum and Articles of Association with the Registry of Corporate Affairs of the BVI Financial Services Commission that on November 29, 2011 became effective as of the filing date to amend the Company’s ordinary shares of US$0.01 par value capital stock to no par value capital stock. Treasury stock is accounted for using the cost method. When treasury stock is reissued, the value is computed and recorded using a weighted-average basis. On October 8, 2019, the Company had stock split in the form of bonus shares at the rate of one ordinary share for every two ordinary shares held, creating 1,030,950 new shares of common stock. On March 3, 2021, the Company had stock split in the form of bonus shares at the rate of two ordinary shares for every three ordinary shares held, creating 2,061,900 new shares of common stock. The effect of the above stock splits have been reflected retroactively in the financial statements and net income per ordinary share computations. |
Net income per ordinary share | The Group computes net income per ordinary share using the treasury stock method. Under the treasury stock method, basic earnings per share attributable to Euro Tech Holdings Company Limited are computed by dividing net income attributable to Euro Tech Holdings Company Limited by the weighted average number of ordinary shares outstanding during the period. The Group reports both basic earnings per share, which is based on the weighted average number of ordinary shares outstanding, and diluted earnings per share, which is based on the weighted average number of ordinary shares outstanding and all dilutive potential ordinary shares outstanding. Outstanding stock options are the only dilutive potential shares of the Company. |
Stock-based compensation | The Group determines compensation expense for stock-based awards based on the estimated fair values at the grant date and recognizes the related compensation expense over the vesting period. The Group uses the straight-line amortization method to recognize compensation expense related to stock-based awards that have only service conditions. This method recognizes stock compensation expense on a straight-line basis over the requisite service period for the entire award. |
Use of estimates | The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting estimates of the Group require a higher degree of judgment than others in their application. These include the recognition of revenue and earnings from engineering contracts over time, the valuation of goodwill, and contract assets and contract liabilities. Management continually evaluates all of its estimates and judgments based on available information and experience; however, actual results could differ from these estimates. |
Related parties | Related parties are affiliates of the Group; entities for which investments are accounted for by the equity method by the Group; trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; principal owners of the Group; its management; members of the immediate families of principal owners of the Group and its management; and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Another party also is a related party if it can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. |
Segment information | The Group reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Group’s reportable segments. The Group categorises its operations into two business segments: Trading and manufacturing, and Engineering. |
Concentrations | Financial instruments that potentially subject the Group to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable, net. The Group maintains substantially all of its cash and cash equivalent balances with large financial institutions which are believed to be high quality institutions. The Group is subject to a concentration of risk because it derives a significant portion of its revenues from a few customers. The Group’s top customers accounting for more than 5% of the Group’s revenue generated approximately 15%, 23%, and 34% of consolidated revenues for the years ended December 31, 2021, 2020 and 2019, respectively. The Group grants trade credit under contractual payment terms, generally without collateral, to its customers, which include high credit quality electric utilities, general contractors, owners and managers of industrial properties and government departments. Consequently, the Group is subject to potential credit risk related to changes in business and economic factors. At December 31, 2021, three (2020: three) of the Group’s customers individually exceeded 10.0% of accounts receivable, net. The Group believes the terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk. |
Finance costs | Interest relating to loans repaid is expensed in the period the repayment occurs. |
Warranties | The suppliers of the Group offer a standard one-year warranty to end customers of the Group. The Group only provides labour service to repair or replace parts. The Group does not maintain a general warranty reserve because historically labour costs for such repair or replacement have been de minimis. |
Shipping and handling costs | Amounts billed to customers related to shipping and handling are classified as revenues, and the Group’s shipping and handling costs are included in cost of revenues. |
Statutory reserves | The Group is required to make appropriation to reserve funds, comprising the statutory reserve fund and statutory staff welfare fund, based on after-tax net income determined with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory reserve fund is required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve fund is equal to 50% of the entities’ registered capital. |
Fair value measurements | The Group uses the three-tier hierarchy of fair value measurement, which prioritizes the inputs used in measuring fair value based upon their degree of availability in external active markets. These tiers include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of December 31, 2021 and 2020, the Group determined that the carrying values of cash and cash equivalents, restricted cash, accounts receivable, net, prepayments and other current assets, contract assets, bank borrowings, accounts payable, contract liabilities, other payables and accrued expenses approximate their fair values because of the short-term nature of these instruments. |
Recent accounting pronouncements | Changes to GAAP are typically established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s ASC. The Group considers the applicability and impact of all ASUs. The Group, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Group or may have minimal impact on its consolidated financial statements. Recently adopted accounting pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities. The Group adopted this ASU in January 2021 and there was no effect on the consolidated financial statements or disclosures. In January 2020, the FASB issued ASU 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815),” an amendment clarifying the interaction between accounting standards related to equity securities, equity method investments, and certain derivative instruments. The Group adopted this guidance in January 2021 and there was no effect on the consolidated financial statements or disclosures. Recently issued accounting pronouncements not yet adopted In October 2020, the FASB issued ASU 2020-10, “Codification Improvements,” this ASU affects a wide variety of Topics in the Codification. They apply to all reporting entities within the scope of the affected accounting guidance. More specifically, this ASU, among other things, contains amendments that improve the consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50). Many of the amendments arose because the FASB provided an option to give certain information either on the face of the financial statements or in the notes to financial statements and that option only was included in the Other Presentation Matters Section (Section 45) of the Codification. The option to disclose information in the notes to financial statements should have been codified in the Disclosure Section as well as the Other Presentation Matters Section (or other Section of the Codification in which the option to disclose in the notes to financial statements appears). Those amendments are not expected to change current practice. The amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early application of the amendments is permitted for and varies based on the entity. The amendments should be applied retrospectively and at the beginning of the period that includes the adoption date. The Group is currently evaluating the impact of the new guidance on its consolidated financial statements. |
Reclassification | Certain reclassifications have been made to prior year amounts to conform with the current year presentation. |
Non-controlling interests | For entities that are consolidated, but not 100% owned, a portion of the income or loss and equity is allocated to owners other than the Group. The aggregate of the income or loss and corresponding equity that is not owned by the Group is included within non-controlling interests in the consolidated financial statements. Non-controlling interests is presented as a separate component of equity in the consolidated balance sheets. Net income includes the net income attributable to the holders of non-controlling interests in the consolidated statements of operations and comprehensive income / (loss). Profits and losses are allocated to non-controlling interests in proportion to their relative ownership interests regardless of their basis. |
Impairment of long lived assets | Long-lived assets such as property, plant and equipment with finite lives are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. There was no impairment of long lived assets during 2021, 2020 and 2019, respectively. |
Effect of the Restatement on the Consolidated Financial Statements | Subsequent to the issuance of the Company’s consolidated financial statements for the year ended December 31, 2021 on May 13, 2022, certain errors were identified, (i) (loss) / gain on disposal of property, plant and equipment not included in operating income / (loss) (ii) bonus share issuances were not accounted for and disclosed as stock splits in the consolidated statements of shareholders' equity, earnings per share computations for all periods presented The impact of the restatement on the December 31, 2021 financial statements is reflected in the following tables: CONSOLIDATED BALANCE SHEETS December 31, 2021 As Previously Reported As Restated US$’000 US$’000 Ordinary share 5,322,459 no par value shares issued as of December 31, 2021 (2020: 3,260,559) 7,899,832 no par value shares issued as of December 31, 2021 and 2020 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS) December 31 As Previously Reported As Restated US$’000 US$’000 Operating income / (loss) 2021 781 771 2020 (1,701 ) (272 ) 2019 (440 ) (445 ) Net income / (loss) per ordinary share attributable to Euro Tech Holdings Company Limited’s shareholders - Basic 2021 $ US0.19 $ US0.13 2020 $ US0.25 $ US0.10 2019 $ US(0.06 ) $ US(0.02 ) - Diluted 2021 $ US0.19 $ US0.13 2020 $ US0.25 $ US0.10 2019 $ US(0.06) $ US(0.02 ) Weighted average number of ordinary shares outstanding - Basic 2021 5,154,759 7,732,132 2020 3,092,859 7,732,132 2019 2,301,993 7,732,132 - Diluted 2021 5,154,759 7,732,132 2020 3,092,859 7,732,132 2019 2,301,993 7,732,132 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY December 31 As Previously Reported As Restated US$’000 US$’000 Number of ordinary share Balance at December 31, 2018 2,229,609 7,899,832 Balance at December 31, 2019 3,260,559 7,899,832 Balance at December 31, 2020 3,260,559 7,899,832 Balance at December 31, 2021 5,322,459 7,899,832 Commensurate adjustments have been made to Notes 2 (s), 11, 16 and 24 to the consolidated financial statements. |
ZHEJIANG TIANLAN | |
Basis of consolidation | The accompanying consolidated financial statements include the results of operations of the Company and its subsidiaries. Significant intercompany transactions and balances have been eliminated. |
Subsidiaries | Subsidiaries are all entities over which the Group has control; has the power to appoint or remove the majority of the members of the board of directors; has the right to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. |
Revenue recognition | Our revenue is derived from long-term contracts for customers, as well as short-term contracts for customers. Accounting treatment for these contracts in accordance with Accounting Standards Update (“ASU”) 2014-09 (Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers), is as follows: Performance o bligations s atisfied o ver t ime ( Design, installation and operation management s ervices) Recognition of performance obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Engineering projects typically span between 12 to 36 months. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Some contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the project life cycle (design, installation and operation management services). Revenues are recognized as our obligations are satisfied over time, using the ratio of project costs incurred to estimated total costs for each contract because of the continuous transfer of control to the customer as all of the work is performed at the customer’s site and, therefore, the customer controls the asset as it is being installed. This continuous transfer of control to the customer is further supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay the Group for costs incurred plus a reasonable profit and take control of any work in process. This cost-to-cost measure is used because management considers it to be the best available measure of progress on these contracts. Contract costs include all direct material, labor, subcontract and other costs. Items excluded from cost-to-cost Pre-contract costs are generally not material and are charged to expense as incurred, but in certain cases pre-contract recognition may be deferred if specific probability criteria are met. Variable consideration Contract modifications through change orders, claims and incentives are routine in the performance of the Group’s contracts to account for changes in the contract specifications or requirements. In most instances, contract modifications are not distinct from the existing contract due to the significant integration of services provided in the contract and are accounted for as a modification of the existing contract and performance obligation. Either the Group or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Change orders that are unapproved as to both price and scope are evaluated as claims. The Group considers claims to be amounts in excess of approved contract prices that the Group seeks to collect from its customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs. The Group estimates variable consideration for a performance obligation at the most likely amount to which the Group expects to be entitled (or the most likely amount the Group expects to incur in the case of liquidated damages), utilizing estimation methods that best predict the amount of consideration to which the Group will be entitled (or will incur in the case of liquidated damages). The Group includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Group’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of its anticipated performance and all information (historical, current and forecasted) that is reasonably available to the Group. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected in transaction price (or excluded from transaction price in the case of liquidated damages) are not resolved in the Group’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. Performance obligations satisfied at a point-in-time (Sales of equipment ) Revenue for our sales contracts is recognized at a point in time. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been delivered to the point of receipt by customer. |
Research and development costs | Research and development costs (“R&D” costs) are expensed as incurred. The R&D costs amounted to approximately 23,419,000, RMB28,589,000 and RMB19,018,000 for the years ended December 31, 2021, 2020 and 2019 respectively and were included in “Selling and administrative expenses” in the Group’s consolidated statements of operations. |
Income taxes | The Group follows the liability method of accounting for income tax. Under this method, deferred tax assets and liabilities are recorded for future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the underlying assets or liabilities are recovered or settled. The Group also evaluates whether the recorded deferred tax assets and valuation allowances can be realized and, when necessary, reduces the amounts to what is expected to be realized. The accounting guidance on accounting for uncertainty in income taxes also addresses derecognition, classification, interest and penalties on income taxes, and accounting in interim periods. The Group does not believe it has any uncertain tax positions through the periods ended December 31, 2021, 2020 and 2019 respectively which would have a material impact on the Group’s consolidated financial statements. The Group files tax returns in the PRC. The tax returns for 2021, 2020 and 2019 are subject to examination by the PRC taxing authorities, commencing with the first year filed. |
Cash and cash equivalents | Cash and cash equivalents consist of bank deposits with original maturities of three months or less, all of which are unrestricted as to withdrawal and uninsured. There were no cash equivalents as of December 31, 2021 and 2020. |
Accounts receivable and allowance for doubtful accounts | The Group does not charge interest to its customers and carries its customer receivables at their face amounts, less an allowance for doubtful accounts. As is common practice in the industry, the Group classifies all accounts receivable as current assets. The Group grants trade credit, on a non-collateralized basis, to its customers and is subject to potential credit risk related to changes in business and overall economic activity. The Group analyzes specific accounts receivable balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the event that a customer balance is deemed to be uncollectible, the account balance is written-off against the allowance for doubtful accounts. |
Inventories | Inventories are measured using the weighted average method and are stated at the lower of cost or net realizable value. Cost of finished goods comprise direct material, direct production costs and an allocated portion of production overhead costs based on normal operating capacity. |
Property, plant and equipment and land use right, net | Property, plant and equipment is carried at cost. Major modifications or refurbishments which extend the useful life of the assets are capitalized and depreciated over the adjusted remaining useful life of the assets. Upon retirement or disposition of property, plant and equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is recognized in consolidated income from operations. The cost of maintenance and repairs is charged to expense as incurred. Property, plant and equipment is reviewed for impairment and tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value of property, plant and equipment exceeds its fair value, an impairment charge would be recorded in the consolidated statement of operations. Land in the PRC is owned by the PRC government. The government in the PRC, according to PRC Law, may sell the right to use the land for a specific period of time. Thus, all of the Group’s land purchases in the PRC are considered to be leasehold land and are classified as land use right. Depreciation of property, plant and equipment and amortization of land use right are computed using the straight-line method over the assets’ estimated useful lives as follows: Land use right Over terms of the leases Buildings and leasehold improvements 11 to 50 years, with 5% residual value Furniture, fixtures and office equipment 5 years, with 5% residual value Motor vehicles 5 years, with 5% residual value Plant and machineries 5 to 10 years, with 5% residual value |
Lease arrangements | The Group adopted ASU No. 2016-02, Leases (Topic 842). The Group leases certain equipment under finance leases. The economic substance of the leases is a financing transaction for acquisition of the equipment. Accordingly, the right-of-use assets for these leases are included on the Group’s consolidated balance sheets in property, plant and equipment, net of accumulated depreciation, amortization and impairment losses, with a corresponding amount recorded in current portion of long-term finance lease obligations. The finance lease assets are amortized over the life of the lease or, if shorter, the life of the leased asset, on a straight-line basis and included in depreciation expense. The financing component associated with finance lease obligations is included in interest expense. Generally, for the Group’s finance leases an implicit rate to calculate present value is provided in the lease agreement, however if a rate in not provided the Group determines this rate by estimating the Group’s incremental borrowing rate, utilizing the borrowing rates associated with the Group’s various debt instruments. The Group determines if an arrangement is a lease at inception. Lease liabilities are the Group’s obligation to make lease payments arising from a lease and are measured on a discounted basis. |
Net income per ordinary share | The Group computes net income per ordinary share using the treasury stock method. Under the treasury stock method, basic earnings per share attributable to Zhejiang Tianlan Environmental Protection Technology Company Limited are computed by dividing net income attributable to Zhejiang Tianlan Environmental Protection Technology Company Limited by the weighted average number of ordinary shares outstanding during the period. |
Use of estimates | The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting estimates of the Group require a higher degree of judgment than others in their application. These include the recognition of revenue and earnings from contracts over time, contract assets, net and contract liabilities. Management continually evaluates all of its estimates and judgments based on available information and experience; however, actual results could differ from these estimates. |
Related parties | Entities are considered to be related to the Group if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Group. Related parties also include principal owners of the Group, its management, members of the immediate families of principal owners of the Group and its management and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. |
Concentrations | Financial instruments that potentially subject the Group to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable, net. The Group maintains substantially all of its cash and cash equivalent balances with large financial institutions which are believed to be high quality institutions. The Group is subject to a concentration of risk because it derives a significant portion of its revenues from a few customers. The Group’s top five customers accounted for approximately 35%, 39%, and 40% of consolidated revenues for the years ended December 31, 2021, 2020 and 2019, respectively. For the years ended December 31, 2021, 2020 and 2019, one customer accounted for 16%, 16% and 17% of annual revenues, respectively. The Group grants trade credit under contractual payment terms, generally without collateral, to its customers, which include high credit quality electric utilities, general contractors, owners and managers of industrial properties. Consequently, the Group is subject to potential credit risk related to changes in business and economic factors. At December 31, 2021 and 2020, none of the Group’s customers individually exceeded 10.0% of accounts receivable. The Group believes the terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk. |
Finance costs | Interest relating to loans repaid is expensed in the period the repayment occurs. |
Warranties | The suppliers of the Group offer a standard one-year warranty to end customer of the Group. The Group only provides labour service to repair or replace parts. The Group does not maintain a general warranty reserve because historically labour costs for such repair or replacement have been de minimis. |
Shipping and handling costs | Amounts billed to customers related to shipping and handling are classified as revenues, and the Group’s shipping and handling costs are included in cost of revenues. |
Statutory reserves | The Group is required to make appropriation to reserve, comprising the PRC statutory reserve, based on after-tax net income determined with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the PRC statutory reserve are required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. |
Fair value measurements | The Group uses the three-tier hierarchy of fair value measurement, which prioritizes the inputs used in measuring fair value based upon their degree of availability in external active markets. These tiers include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of December 31, 2021 and 2020, the Group determined that the carrying values of cash, and cash equivalents, accounts receivable, net, prepayments and other current assets, contract assets, bank borrowings, accounts payable, other payables and accrued expenses and contract liabilities approximate their fair values because of the short-term nature of these instruments. |
Recent accounting pronouncements | Changes to GAAP are typically established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s ASC. The Group considers the applicability and impact of all ASUs. The Group, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Group or may have minimal impact on its consolidated financial statements. Recently adopted accounting pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial instruments, including trade receivables and off-balance sheet credit exposures. Under this guidance, an entity is required to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. This ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The Group adopted this ASU in January 2020 and there was no effect on the consolidated financial statements or disclosures. Recently issued accounting pronouncements not yet adopted In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. Upon adoption, the Group must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The adoption of this standard is not expected to have a material impact on the Group’s consolidated financial statements or disclosures. In January 2020, the FASB issued ASU 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815),” an amendment clarifying the interaction between accounting standards related to equity securities, equity method investments, and certain derivative instruments. The guidance is effective for fiscal years beginning after December 15, 2020. ASU 2020-01 will become effective for the Group in fiscal 2022. The Group is currently evaluating the impact of the new guidance on its consolidated financial statements. In October 2020, the FASB issued ASU 2020-10, “Codification Improvements,” this ASU affects a wide variety of Topics in the Codification. They apply to all reporting entities within the scope of the affected accounting guidance. More specifically, this ASU, among other things, contains amendments that improve the consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50). Many of the amendments arose because the FASB provided an option to give certain information either on the face of the financial statements or in the notes to financial statements and that option only was included in the Other Presentation Matters Section (Section 45) of the Codification. The option to disclose information in the notes to financial statements should have been codified in the Disclosure Section as well as the Other Presentation Matters Section (or other Section of the Codification in which the option to disclose in the notes to financial statements appears). Those amendments are not expected to change current practice. The amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early application of the amendments is permitted for and varies based on the entity. The amendments should be applied retrospectively and at the beginning of the period that includes the adoption date. The Group is currently evaluating the impact of the new guidance on its consolidated financial statements. |
Non-controlling interests | For entities that are consolidated, but not 100% owned, a portion of the income or loss and equity is allocated to owners other than the Group. The aggregate of the income or loss and corresponding equity that is not owned by the Group is included within non-controlling interests in the consolidated financial statements. Non-controlling interests is presented as a separate component of equity in the consolidated balance sheets. Net income includes the net income attributable to the holders of non-controlling interests in the consolidated statements of operations and comprehensive income / (loss). Profits and losses are allocated to non-controlling interests in proportion to their relative ownership interests regardless of their basis. |
Basis of presentation | The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
Classification of contract assets and liabilities | For revenue recognized associated with its contracts with customers over time, for which the Group has an enforceable right to receive compensation. Many of our contracts contain specific provisions that determine when the Group can bill for its work performed under these contracts. Any revenue earned on a contract that has not yet been billed to the customer is recorded as a contract asset on the Group’s consolidated balance sheets. The Group’s consolidated balance sheets present contract liabilities that contain deferred revenue that represent any costs incurred on contracts in process for which revenue has not yet been recognized. |
Intangible assets, net | The Group is currently amortizing its acquired intangible assets, consisted of patents and others, with finite-lived over periods generally ranging between three to twenty years. |
Government grant income | Government grant income consists of receipt of funds to subsidize the investment cost of technical development in China. No present or future obligation arises from the receipt of such amount. Government grants are recognized in the consolidated balance sheet initially when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are recognized as income in the consolidated statement of operations on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are deducted from the carrying amount of the asset and consequently are effectively recognized in the consolidated statements of operations over the useful life of the asset by way of reduced depreciation expenses. |
Share capital | Paid in capital refers to the registered capital paid up by the shareholders of the Company. At December 31, 2021, there were 82,572,000 shares (2020: 82,572,000 shares) issued. |
Short-term and long-term investments | The Group has elected to apply the measurement alternative to equity securities without readily determinable fair values. As such, the Group’s non-marketable equity securities are measured at cost, less any impairment, and are adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the investee. |
Impairment of long lived assets | Long-lived assets such as property, plant and equipment and intangible assets with finite lives are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. The impairment of long-lived assets amounted to approximately RMB Nil, RMB2,742,000 and RMB Nil for the years ended December 31, 2021, 2020 and 2019 respectively and were included in “Selling and administrative expenses” in the Group’s consolidated statements of operations. |
Organization and business (Tabl
Organization and business (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Schedule of significant subsidiaries | Name of entity Ownership interest held by the Group Place of incorporation and principal place of operation Principal activities 2021 2020 Euro Tech (Far East) Limited 100 % 100 % Hong Kong Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Euro Tech Trading (Shanghai) Limited 100 % 100 % The PRC Inactive Shanghai Euro Tech Limited 100 % 100 % The PRC Manufacturing of analytical and testing equipment Shanghai Euro Tech Environmental Engineering Company Limited - 100 % The PRC Inactive Euro Tech (China) Limited - - Hong Kong Inactive Name of entity Ownership interest held by the Group Place of incorporation and principal place of operation Principal activities 2021 2020 Yixing Pact Environmental Technology Co., Ltd. 58 % 58 % The PRC Design, manufacturing and operation of water and waste water treatment machinery and equipment Pact Asia Pacific Limited 58 % 58 % The British Virgin Islands Selling of environmental protection equipment, undertaking environment protection projects and providing relevant technology advice, training and services Affiliate: Zhejiang Tianlan Environmental Protection Technology Co. Ltd. (“Blue Sky”) 19.4 %* 19.4 %* The PRC Design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted |
ZHEJIANG TIANLAN | |
Schedule of significant subsidiaries | Name of entity Ownership interest held by the Group Place of incorporation and principal place of operation Principal activities 2021 2020 Zhejiang Tianlan Environmental Protection Engineering Company Limited 100 %* 100 %* PRC Design, general contract, installation and operating management of environmental protection projects Hangzhou Tianlan Environmental Protection Equipment Company Limited 51 % 51 % PRC Manufacturing and installation services of environmental protection equipment Hangzhou Tianlan Pure Environmental Protection Technology Company Limited 38.25 % 38.25 % PRC Manufacturing of environmental protection equipment Hangzhou Tiancan Environmental Technology Company Limited 80 % 80 % PRC Manufacturing of environmental protection equipment |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of significant accounting policies | |
Property, plant and equipment | Office premises 47 to 51 years Leasehold improvements over terms of the leases or the useful lives whichever is less Furniture, fixtures and office equipment 3 to 5 years Motor vehicles 4 years Testing equipment 3 years |
Engineering segment backlog | 2021 2020 US$’000 US$’000 Engineering segment 5,400 11,581 |
Impact of the restatement equity | December 31, 2021 As Previously Reported As Restated US$’000 US$’000 Ordinary share 5,322,459 no par value shares issued as of December 31, 2021 (2020: 3,260,559) 7,899,832 no par value shares issued as of December 31, 2021 and 2020 |
Impact of the restatement income loss of opration | December 31 As Previously Reported As Restated US$’000 US$’000 Operating income / (loss) 2021 781 771 2020 (1,701 ) (272 ) 2019 (440 ) (445 ) Net income / (loss) per ordinary share attributable to Euro Tech Holdings Company Limited’s shareholders - Basic 2021 $ US0.19 $ US0.13 2020 $ US0.25 $ US0.10 2019 $ US(0.06 ) $ US(0.02 ) - Diluted 2021 $ US0.19 $ US0.13 2020 $ US0.25 $ US0.10 2019 $ US(0.06) $ US(0.02 ) Weighted average number of ordinary shares outstanding - Basic 2021 5,154,759 7,732,132 2020 3,092,859 7,732,132 2019 2,301,993 7,732,132 - Diluted 2021 5,154,759 7,732,132 2020 3,092,859 7,732,132 2019 2,301,993 7,732,132 |
Impact of the restatement shareholders equity | December 31 As Previously Reported As Restated US$’000 US$’000 Number of ordinary share Balance at December 31, 2018 2,229,609 7,899,832 Balance at December 31, 2019 3,260,559 7,899,832 Balance at December 31, 2020 3,260,559 7,899,832 Balance at December 31, 2021 5,322,459 7,899,832 |
Lease obligations (Tables)
Lease obligations (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Lease expense | Years ended December 31, 2021 2020 US$’000 US$’000 Operating lease cost 243 257 Short-term lease cost 62 64 Total lease cost 305 321 |
Supplemental information related to operating leases | Years ended December 31, 2021 2020 US$’000 US$’000 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 196 195 Right-of-use assets obtained in exchange for lease obligations (noncash): Operating leases - - December 31, 2021 2020 US$’000 US$’000 Operating leases Operating lease right-of-use assets 238 233 Current portion of long-term operating lease obligations 175 118 Long-term operating lease obligations, net of current maturities 41 94 216 212 Total operating lease liabilities Weighted average remaining lease term Operating leases 23 months 16 months Weighted average discount rate Operating leases 5 % 5 % |
Future minimum lease payments required under operating leases | Operating leases US$’000 Year ending December 31, 2022 181 2023 42 Total lease payments 223 Less: imputed interest (7 ) Total 216 |
ZHEJIANG TIANLAN | |
Lease expense | Years ended December 31, 2021 2020 RMB ’000 RMB ’000 Finance lease cost: Amortization of right-of-use assets - 5,837 Interest on lease liabilities included under cost of revenue and selling and administrative expenses - 1,244 Total finance lease cost - 7,081 |
Supplemental information related to finance leases | Years ended December 31, 2021 2020 RMB ’000 RMB ’000 Cash paid for amounts included in the measurement of lease liabilities: Finance cash flows from finance leases - 11,263 Right-of-use assets obtained in exchange for lease obligations (noncash): Finance leases - - December 31, 2021 2020 RMB ’000 RMB ’000 Finance leases Property, plant and equipment, at cost - - Accumulated depreciation and impairment losses - - Property, plant and equipment, net - - Current maturities of long-term debt - - Total finance lease liabilities - - Weighted average remaining lease term Finance leases - - Weighted average discount rate Finance leases 5.9 % 5.9 % |
Accounts receivable, net (Table
Accounts receivable, net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounts receivable, net | 2021 2020 US$’000 US$’000 Contract receivables 3,661 3,229 Less: allowance for doubtful accounts (30 ) (30 ) 3,631 3,199 |
Allowance for doubtful accounts activity | 2021 2020 US$’000 US$’000 Balance at beginning of period 30 36 Less : reversal in allowances - (6 ) Balance at end of period 30 30 |
Age analysis of past due account receivables | 2021 2020 US$’000 US$’000 Current 1,441 2,014 Past due 1-30 days 1,570 85 31-60 days 495 202 61-90 days 108 41 Greater than or equal to 91 days 17 857 2,190 1,185 3,631 3,199 |
ZHEJIANG TIANLAN | |
Accounts receivable, net | 2021 2020 RMB’000 RMB’000 Contract receivables 148,889 160,803 Less: allowance for doubtful accounts (42,867 ) (42,182 ) 106,022 118,621 |
Allowance for doubtful accounts activity | 2021 2020 RMB’000 RMB’000 Balance at beginning of period 42,182 26,484 Add: provision for allowances 868 22,161 Less: Reversal of provision for doubtful accounts (183 ) (6,463 ) Balance at end of period 42,867 42,182 |
Age analysis of past due account receivables | 2021 2020 RMB’000 RMB’000 Within 1 year 82,534 76,590 1 year - 2 years 12,144 31,389 2 years - 3 years 5,111 6,128 3 years - 4 years 5,141 3,678 4 years - 5 years 1,092 836 106,022 118,621 |
Prepayments and other current_2
Prepayments and other current assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Prepayment and other current assets | December 31, 2021 2020 US$’000 US$’000 Deposits paid 243 838 Prepayments 104 168 Other receivables 222 250 Other tax recoverable 3 258 572 1,514 |
ZHEJIANG TIANLAN | |
Prepayment and other current assets | December 31, 2021 2020 RMB’000 RMB’000 Prepayments 22,717 16,632 Deposits paid for bidding projects and temporary payments 7,030 10,448 Other current assets 3,751 1,307 33,498 28,387 |
Contract assets and liabiliti_2
Contract assets and liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Contract assets and liabilities | 2021 2020 US$’000 US$’000 Unbilled revenue 74 202 2021 2020 US$’000 US$’000 Deferred revenue 1,076 1,063 December 31, 2021 2020 US$’000 US$’000 Contract assets 74 202 Contract liabilities (1,076 ) (1,063 ) Net contract liabilities (1,002 ) (861 ) |
Net (liability) / asset position for contracts in process | 2021 2020 US$’000 US$’000 Costs incurred in contracts in process 169 1,904 Estimated earnings 59 - Cost and estimated earnings on uncompleted contracts 228 1,904 Less: billings to date (1,230 ) (2,765 ) (1,002 ) (861 ) 2021 2020 US$’000 US$’000 Unbilled revenue 74 202 Deferred revenue (1,076 ) (1,063 ) (1,002 ) (861 ) |
Disaggregated revenue from contracts | Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Revenue Trading and manufacturing (revenue recognized at point in time) 9,619 9,476 11,877 Engineering (revenue recognized over time) 11,769 3,881 5,522 21,388 13,357 17,399 |
ZHEJIANG TIANLAN | |
Contract assets and liabilities | 2021 2020 RMB’000 RMB’000 Unbilled revenue 72,310 94,494 2021 2020 RMB’000 RMB’000 Deferred revenue 37,481 47,135 2021 2020 RMB’000 RMB’000 Contract assets 72,310 94,494 Contract liabilities (37,481 ) (47,135 ) Net contract assets 34,829 47,359 2021 2020 RMB’000 RMB’000 Gross contract assets 81,198 102,144 Less: allowance for doubtful accounts (8,888 ) (7,650 ) 72,310 94,494 |
Net (liability) / asset position for contracts in process | 2021 2020 RMB’000 RMB’000 Estimated earnings on uncompleted contracts 503,434 406,064 Less: billings to date (468,605 ) (358,705 ) 34,829 47,359 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventories | December 31, 2021 2020 US$’000 US$’000 Raw materials 89 63 Work in progress 20 20 Finished goods 438 259 547 342 |
ZHEJIANG TIANLAN | |
Inventories | December 31, 2021 2020 RMB’000 RMB’000 Raw materials 2,381 341 Finished goods 1,005 2,048 3,386 2,389 |
Investments in affiliates (Tabl
Investments in affiliates (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Investments in affiliates | |
Investments in affiliates | December 31, 2021 2020 Zhejiang Tianlan Environmental Protection Technology Co. Ltd. Interest held 19.4 % 19.4 % US$’000 US$’000 Long-term investment, at cost, less impairment 5,540 5,540 Share of undistributed profits 2,537 2,544 8,077 8,084 |
Summary of the financial information of the affiliates | December 31, 2021 2020 Balance Sheet: US$’000 US$’000 Current assets 42,510 44,918 Non-current assets 15,172 15,258 Total assets 57,682 60,176 Total liabilities (27,376 ) (30,889 ) Total shareholders’ equity 30,306 29,287 Year ended December 31, 2021 2020 Operating results: US$’000 US$’000 Net sales 51,280 43,933 Operating income 1,997 2,214 Net income 2,105 1,946 |
Property, plant and equipment_2
Property, plant and equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, plant and equipment | December 31, 2021 2020 US$’000 US$’000 Office premises* 673 673 Leasehold improvements 125 157 Furniture, fixtures and office equipment 439 557 Motor vehicles 175 175 Testing equipment 37 37 1,449 1,599 Less: Accumulated depreciation (1,234 ) (1,340 ) 215 259 |
Depreciation charge | Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Depreciation charge 38 49 69 |
ZHEJIANG TIANLAN | |
Property, plant and equipment | December 31, 2021 2020 RMB’000 RMB’000 Building and leasehold improvements 167,874 167,874 Furniture, fixtures and office equipment 3,694 3,658 Motor vehicles 4,647 4,808 Plant and machineries 10,097 9,399 Total 186,312 185,739 Less: Accumulated depreciation and amortization (76,008 ) (70,241 ) Accumulated impairment losses (36,241 ) (36,241 ) Total (112,249 ) (106,482 ) Net 74,063 79,257 |
Depreciation charge | Year ended December 31, 2021 2020 2019 RMB’000 RMB’000 RMB’000 Depreciation charge 6,466 6,359 6,556 |
Other payables and accrued ex_2
Other payables and accrued expenses (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other payables and accrued expenses | December 31, 2021 2020 US$’000 US$’000 Dividend payables 86 84 Deposits received from customers 6 - Rental deposit received 3 4 Accruals for operating expenses 1,360 1,500 Other tax payables 130 5 1,585 1,593 |
ZHEJIANG TIANLAN | |
Other payables and accrued expenses | December 31, 2021 2020 RMB’000 RMB’000 Accrued expenses 8,315 7,629 Output VAT 5,468 6,529 Deposits received and temporary receipts 4,645 3,589 18,428 17,747 |
Ordinary share (Tables)
Ordinary share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Ordinary share | |
Shares outstanding | 2021 2020 Shares issued 7,899,832 * 7,899,832 * Less: shares under treasury stock (167,700 ) (167,700 ) 7,732,132 7,732,132 |
Other income (losses) net (Tabl
Other income (losses) net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other income / (losses), net | Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Exchange gain / (loss), Other income, net 77 101 (30 ) Rental income 50 59 82 Government subsidies – Employment Support Scheme * - 147 - 127 307 52 |
ZHEJIANG TIANLAN | |
Other income / (losses), net | Year ended December 31, 2021 2020 2019 RMB ’000 RMB ’000 RMB’000 Compensation income - 22,548 - Gain on disposal of property, plant and equipment 39 - 39 Investment income 531 266 - Amounts waived by payees 3,061 4,535 280 Reversal of allowance for doubtful accounts 183 6,463 - Subsidy income from PRC government 7,780 5,834 5,957 11,594 39,646 6,276 Year ended December 31, 2021 2020 2019 RMB ’000 RMB ’000 RMB’000 Bad debts written off - - 5,383 Impairment loss on contract assets 1,238 1,399 - Impairment loss on long-term investments - 1,340 - Impairment loss on property, plant and equipment - 2,742 - Investment loss - - 241 1,238 5,481 5,624 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Components of income tax (expense) / credit | Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Current taxes (expense ) Hong Kong profits tax and the PRC EIT (57 ) (4 ) - Income tax expense (57 ) (4 ) - Deferred tax credit / (expenses) Hong Kong and the PRC 147 (92 ) (37 ) Total deferred tax credit / (expenses) 147 (92 ) (37 ) Total credit / (expense) 90 (96 ) (37 ) |
Reconciling items from income tax | Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Income / (loss) before income taxes 1,276 498 (173 ) Computed tax using respective companies’ statutory tax rates 158 133 69 Change in valuation allowances 349 48 30 Under-provision for income taxes in prior years (12 ) - (5 ) Non-deductible expenses (405 ) (277 ) (131 ) Income taxes credit / (expense) at effective tax rate 90 (96 ) (37 ) |
Components of deferred tax assets | December 31, 2021 2020 US$’000 US$’000 Tax losses 614 901 Temporary differences (3 ) (5 ) Less: Valuation allowances (469 ) (901 ) Net deferred tax assets / (liabilities) 142 (5 ) |
ZHEJIANG TIANLAN | |
Components of income tax (expense) / credit | Year ended December 31, 2021 2020 2019 RMB ’000 RMB ’000 RMB ’000 Current tax (credit)/expense PRC EIT (32 ) 757 28 Income tax (credit)/expense (32 ) 757 28 Deferred tax (credit)/expense (666 ) 1,101 268 Total deferred tax (credit)/expense (666 ) 1,101 268 Total (credit)/expense (698 ) 1,858 296 |
Reconciling items from income tax | Year ended December 31, 2021 2020 2019 RMB ’000 RMB ’000 RMB ’000 Income before income tax 12,880 15,358 4,654 Computed tax using respective companies’ statutory tax rates 1,932 2,304 642 (Over)-provision for income tax in prior years (39 ) (48 ) - Temporary differences 401 182 202 Tax effect of expenses not deductible for tax purposes 286 2,306 693 Tax effect of special deduction for research and development costs (3,263 ) (3,001 ) (2,103 ) Others (15 ) 115 862 Income taxes (credit)/expense at effective tax rate (698 ) 1,858 296 |
Components of deferred tax assets | December 31, 2021 2020 RMB’000 RMB’000 Allowance for doubtful accounts 6,188 6,184 Deferred government grant 583 750 Impairment losses on assets 6,940 6,705 Tax losses 594 - Total deferred tax assets 14,305 13,639 |
Net income per ordinary share (
Net income per ordinary share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Net income per ordinary share | |
Basic and diluted number of shares | December 31, 2021 2020 2019 Number of shares Weighted average number of ordinary shares for the purposes of basic and diluted net income per share 7,732,132 7,732,132 7,732,132 |
Stock options (Tables)
Stock options (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stock options | |
Stock option activity | Year ended December 31, 2021 2020 2019 Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price US$ US$ US$ Outstanding, beginning of year 51,000 2.60 51,000 2.60 - - Granted - - - - 51,000 2.60 Bonus shares adjustment 34,000 (1.04 ) - - - - Outstanding, end of year 85,000 1.56 51,000 2.60 51,000 2.60 Exercisable, end of year - - - - - - |
Segment information (Tables)
Segment information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment information | |
Segment information | Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Revenue Trading and manufacturing 9,619 9,476 11,877 Engineering 11,769 3,881 5,522 21,388 13,357 17,399 Operating income / (loss) Trading and manufacturing 140 (488 ) (102 ) Engineering 846 (1,027 ) (158 ) Unallocated corporate expenses (205 ) (186 ) (180 ) 781 (1,701 ) (440 ) Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Depreciation: Trading and manufacturing 32 39 54 Engineering 6 10 15 38 49 69 Capital expenditures, gross Trading and manufacturing 1 2 17 Engineering 3 9 4 4 11 21 December 31, 2021 2020 US$’000 US$’000 Assets Trading and manufacturing 7,969 7,877 Engineering 13,281 12,218 21,250 20,095 Liabilities Trading and manufacturing 3,428 2,645 Engineering 3,021 2,987 6,449 5,632 |
Geographical analysis of revenue and assets | Year ended December 31, 2021 2020 2019 US$’000 US$’000 US$’000 Revenue - The PRC 13,217 5,072 6,886 Hong Kong 7,937 8,024 10,169 Others 234 261 344 21,388 13,357 17,399 December 31, 2021 2020 US$’000 US$’000 Hong Kong 25 47 The PRC 190 212 215 259 |
Major suppliers and customers | Year ended December 31, 2021 2020 2019 Supplier A 42 % 30 % 53 % Supplier B 13 % 10 % 7 % Supplier C 6 % 9 % 6 % Supplier D 6 % 6 % 6 % Supplier E 5 % 5 % - Supplier F - 12 % - Year ended December 31, 2021 2020 2019 Customer A 15 % 9 % 19 % Customer B - 8 % - Customer C - 6 % 10 % Customer D - - 5 % |
Intangible assets, net (Tables)
Intangible assets, net (Tables) - ZHEJIANG TIANLAN | 12 Months Ended |
Dec. 31, 2021 | |
Intangible assets, net | December 31, 2021 2020 RMB’000 RMB’000 Amortizable i ntangible a ssets Gross carrying amount Patents 3,750 3,750 Others 165 165 3,915 3,915 Less: Accumulated amortization (2,050 ) (1,795 ) Net carrying amount 1,865 2,120 |
Amortization expense | Year ended December 31, 2021 2020 2019 RMB’000 RMB’000 RMB’000 Amortization expense 255 142 152 Future amortization expense RMB’000 2022 255 2023 255 2024 255 2025 255 2026 255 Thereafter 590 Total 1,865 Future amortization expense RMB’000 2021 142 2022 142 2023 142 2024 142 2025 142 Thereafter 1,410 Total 2,120 |
Bank borrowings (Tables)
Bank borrowings (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
ZHEJIANG TIANLAN | |
Bank borrowings | December 31, 2021 2020 RMB’000 RMB’000 Bank loans borrowed by the Company (note i) 8,511 10,014 Bank loans borrowed by subsidiaries of the Company (note ii) 5,007 10,015 13,518 20,029 |
Land use right, net (Tables)
Land use right, net (Tables) - ZHEJIANG TIANLAN | 12 Months Ended |
Dec. 31, 2021 | |
Schedule of land use right | December 31, 2021 2020 RMB’000 RMB’000 Gross carrying amount Land use right 7,361 7,361 Less: Accumulated amortization (2,364 ) (2,214 ) Net carrying amount 4,997 5,147 |
Amortization expense | Year ended December 31, 2021 2020 2019 RMB’000 RMB’000 RMB’000 Amortization expense 150 159 149 Future amortization expense RMB’000 2022 150 2023 150 2024 150 2025 150 2026 150 Thereafter 4,247 Total 4,997 Future amortization expense RMB’000 2021 159 2022 159 2023 159 2024 159 2025 159 Thereafter 4,352 Total 5,147 |
Organization and business (Deta
Organization and business (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Shanghai Euro Tech Environmental Engineering Company Limited | ||
Percentage of equity ownership | 0% | 100% |
Place of incorporation | The PRC | The PRC |
Principal activities | Inactive | Inactive |
Shanghai Euro Tech Limited | ||
Percentage of equity ownership | 100% | 100% |
Place of incorporation | The PRC | The PRC |
Principal activities | Manufacturing of analytical and testing equipment | Manufacturing of analytical and testing equipment |
Euro Tech Trading (Shanghai) Limited | ||
Percentage of equity ownership | 100% | 100% |
Place of incorporation | The PRC | The PRC |
Principal activities | Inactive | Inactive |
Euro Tech (China) Limited | ||
Percentage of equity ownership | 0% | 0% |
Place of incorporation | Hong Kong | Hong Kong |
Principal activities | Inactive | Inactive |
Euro Tech (Far East) Limited | ||
Percentage of equity ownership | 100% | 100% |
Place of incorporation | Hong Kong | Hong Kong |
Principal activities | Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems | Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems |
Zhejiang Tianlan Environmental Protection Technology Co. Ltd. | ||
Percentage of equity ownership | 19.40% | 19.40% |
Place of incorporation | The PRC | The PRC |
Principal activities | Design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted | Design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted |
Pact Asia Pacific Limited | ||
Percentage of equity ownership | 58% | 58% |
Place of incorporation | The British Virgin Islands | The British Virgin Islands |
Principal activities | Selling of environmental protection equipment, undertaking environment protection projects and providing relevant technology advice, training and services | Selling of environmental protection equipment, undertaking environment protection projects and providing relevant technology advice, training and services |
Yixing Pact Environmental Technology Co., Ltd | ||
Percentage of equity ownership | 58% | 58% |
Place of incorporation | The PRC | The PRC |
Principal activities | Design, manufacturing and operation of water and waste water treatment machinery and equipment | Design, manufacturing and operation of water and waste water treatment machinery and equipment |
ZHEJIANG TIANLAN | Hangzhou Tiancan Environmental Technology Company Limited | ||
Percentage of equity ownership | 80% | 80% |
Place of incorporation | PRC | PRC |
Principal activities | Manufacturing of environmental protection equipment | Manufacturing of environmental protection equipment |
ZHEJIANG TIANLAN | Hangzhou Tianlan Pure Environmental Protection Technology Company Limited | ||
Percentage of equity ownership | 38.25% | 38.25% |
Place of incorporation | PRC | PRC |
Principal activities | Manufacturing of environmental protection equipment | Manufacturing of environmental protection equipment |
ZHEJIANG TIANLAN | Zhejiang Tianlan Environmental Protection Engineering Company Limited | ||
Percentage of equity ownership | 100% | 100% |
Place of incorporation | PRC | PRC |
Principal activities | Design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted | Design, general contract, installation and operating management of environmental protection projects |
ZHEJIANG TIANLAN | Hangzhou Tianlan Environmental Protection Equipment Company Limited | ||
Percentage of equity ownership | 51% | 51% |
Place of incorporation | PRC | PRC |
Principal activities | Manufacturing and installation services of environmental protection equipment | Manufacturing and installation services of environmental protection equipment |
Summary of significant accoun_4
Summary of significant accounting policies (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Summary of significant accounting policies | ||
Engineering segment backlog | $ 5,400 | $ 11,581 |
Summary of significant accoun_5
Summary of significant accounting policies (Details 1) | 12 Months Ended |
Dec. 31, 2021 | |
Furniture, Fixtures and Office Equipment | |
Useful lives | 3 to 5 years |
Furniture, Fixtures and Office Equipment | ZHEJIANG TIANLAN | |
Useful lives | 5 years, with 5% residual value |
Motor Vehicles | |
Useful lives | 4 years |
Motor Vehicles | ZHEJIANG TIANLAN | |
Useful lives | 5 years, with 5% residual value |
Testing Equipment | |
Useful lives | 3 years |
Office Premises | |
Useful lives | 47 to 51 years |
Land Use Right | ZHEJIANG TIANLAN | |
Useful lives | Over terms of the leases |
Plant and Machineries | ZHEJIANG TIANLAN | |
Useful lives | 5 to 10 years, with 5% residual value |
Buildings and Leasehold Improvements | ZHEJIANG TIANLAN | |
Useful lives | 11 to 50 years, with 5% residual value |
Summary of significant accoun_6
Summary of significant accounting policies (Details 2) - shares | Dec. 31, 2021 | Mar. 03, 2021 | Dec. 31, 2020 | Oct. 08, 2019 |
Shares issued | 7,899,832 | 2,061,900 | 7,899,832 | 1,030,950 |
Previously reported | ||||
Shares issued | 5,322,459 | 3,260,559 | ||
Restatement | ||||
Shares issued | 7,899,832 | 7,899,832 |
Summary of significant accoun_7
Summary of significant accounting policies (Details 3) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating income (loss) | $ 771 | $ (272) | $ (445) |
Previously reported | |||
Operating income (loss) | $ 781 | $ (1,701) | $ (440) |
Net income (loss) per ordinary share | $ 0.19 | $ 0.25 | $ (0.06) |
Weighted average number of ordinary shares outstanding | 5,154,759 | 3,092,859 | 2,301,993 |
Weighted average number of ordinary shares outstanding diluted | 5,154,759 | 3,092,859 | 2,301,993 |
Net income (loss) per ordinary share diluted | $ 0.19 | $ 0.25 | $ (0.06) |
Restatement | |||
Operating income (loss) | $ 771 | $ (272) | $ (445) |
Net income (loss) per ordinary share | $ 0.13 | $ 0.10 | $ (0.02) |
Weighted average number of ordinary shares outstanding | 7,732,132 | 7,732,132 | 7,732,132 |
Weighted average number of ordinary shares outstanding diluted | 7,732,132 | 7,732,132 | 7,732,132 |
Net income (loss) per ordinary share diluted | $ 0.13 | $ 0.10 | $ (0.02) |
Summary of significant accoun_8
Summary of significant accounting policies (Details 4) - shares | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Previously reported | ||||
Shares issued | 5,322,459 | 3,260,559 | 3,260,559 | 2,229,609 |
Restatement | ||||
Shares issued | 7,899,832 | 7,899,832 | 7,899,832 | 7,899,832 |
Summary of significant accoun_9
Summary of significant accounting policies (Details Narrative) | 12 Months Ended | |||||||
Dec. 31, 2021 USD ($) shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2020 USD ($) shares | Dec. 31, 2020 CNY (¥) shares | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | Mar. 03, 2021 shares | Oct. 08, 2019 shares | |
Research and development costs | $ 61,000 | $ 497,000 | $ 35,000 | |||||
Advertising and promotional expenses | 7,000 | 7,000 | $ 13,000 | |||||
Unrecognized contract revenue | $ 5,400,000 | $ 11,581,000 | ||||||
Shares issued | shares | 7,899,832 | 7,899,832 | 7,899,832 | 7,899,832 | 2,061,900 | 1,030,950 | ||
Revenue | ||||||||
Concentration percentage | 15% | 15% | 23% | 23% | 34% | 34% | ||
Accounts Receivable | ||||||||
Concentration percentage | 10% | 10% | ||||||
ZHEJIANG TIANLAN | ||||||||
Research and development costs | ¥ | ¥ 23,419,000 | ¥ 28,589,000 | ¥ 19,018,000 | |||||
Shares issued | shares | 82,572,000 | 82,572,000 | 82,572,000 | 82,572,000 | ||||
Impairment of long-lived assets | ¥ | ¥ 0 | ¥ 2,742,000 | ¥ 0 | |||||
ZHEJIANG TIANLAN | Revenue | ||||||||
Concentration percentage | 35% | 35% | 39% | 39% | 40% | 40% | ||
ZHEJIANG TIANLAN | Revenue | Customer One | ||||||||
Concentration percentage | 16% | 16% | 16% | 16% | 17% | 17% | ||
ZHEJIANG TIANLAN | Accounts Receivable | ||||||||
Concentration percentage | 10% | 10% |
Lease obligations (Details)
Lease obligations (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | |
Operating lease cost | $ | $ 243 | $ 257 | |
Short-term lease cost | $ | 62 | 64 | |
Total lease cost | $ | $ 305 | $ 321 | |
ZHEJIANG TIANLAN | |||
Total lease cost | ¥ | ¥ 7,081 | ||
Amortization of right-of-use assets | ¥ | 5,837 | ||
Interest on lease liabilities included under cost of revenue and selling and administrative expenses | ¥ | ¥ 1,244 |
Lease obligations (Details 1)
Lease obligations (Details 1) ¥ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | |
Operating cash flows from operating leases | $ | $ 196,000 | $ 195,000 | |||
Right-of-use asset obtained in exchange for new operating lease obligations | $ | $ 0 | $ 0 | $ 460,000 | ||
ZHEJIANG TIANLAN | |||||
Finance cash flows from finance leases | ¥ | ¥ 0 | ¥ 11,263 | |||
Right-of-use assets obtained in exchange for lease obligations (noncash): Finance leases | ¥ | ¥ 0 | ¥ 0 |
Lease obligations (Details 2)
Lease obligations (Details 2) ¥ in Thousands, $ in Thousands | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Operating lease right-of-use assets | $ | $ 238 | $ 233 | ||
Current portion of long-term operating lease obligations | $ | 175 | 118 | ||
Long-term operating lease obligations, net of current maturities | $ | 41 | 94 | ||
Total operating lease liabilities | $ | $ 216 | $ 212 | ||
ZHEJIANG TIANLAN | ||||
Property, plant and equipment, at cost | ¥ 0 | ¥ 0 | ||
Accumulated depreciation and impairment losses | 0 | 0 | ||
Property, plant and equipment, net | 0 | 0 | ||
Current maturities of long-term debt | 0 | 0 | ||
Total finance lease liabilities | ¥ 0 | ¥ 0 |
Lease obligations (Details 3)
Lease obligations (Details 3) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Weighted-average remaining lease term - operating leases | 23 months | 16 months |
Weighted-average discount rate - operating leases | 5% | 5% |
ZHEJIANG TIANLAN | ||
Weighted-average remaining lease term - finance leases | 0 months | 0 months |
Weighted-average discount rate - finance leases | 5.90% | 5.90% |
Lease obligations (Details 4)
Lease obligations (Details 4) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Lease obligations | ||
Year ending December 31, 2022 | $ 181 | |
2023 | 42 | |
Total lease payments | 223 | |
Less: imputed interest | (7) | |
Total | $ 216 | $ 212 |
Accounts receivable net (Detail
Accounts receivable net (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 CNY (¥) | Dec. 31, 2019 USD ($) |
Contract receivables | $ | $ 3,661 | $ 3,229 | ||||
Less: allowance for doubtful accounts | $ | (30) | (30) | $ (36) | |||
Accounts receivable, net | $ | $ 3,631 | $ 3,199 | ||||
ZHEJIANG TIANLAN | ||||||
Contract receivables | ¥ | ¥ 148,889 | ¥ 160,803 | ||||
Less: allowance for doubtful accounts | ¥ | (42,867) | (42,182) | ¥ (26,484) | |||
Accounts receivable, net | ¥ | ¥ 106,022 | ¥ 118,621 |
Accounts receivable net (Deta_2
Accounts receivable net (Details 1) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | |
Balance at beginning of period | $ | $ 30,000 | $ 36,000 | ||
Less: reversal of provision for doubtful accounts | $ | 0 | (6,000) | ||
Balance at end of period | $ | $ 30,000 | $ 30,000 | ||
ZHEJIANG TIANLAN | ||||
Balance at beginning of period | ¥ 42,182 | ¥ 26,484 | ||
Less: reversal of provision for doubtful accounts | (183) | (6,463) | ||
Balance at end of period | 42,867 | 42,182 | ||
Add: provision for allowances | ¥ 868 | ¥ 22,161 |
Accounts receivable net (Deta_3
Accounts receivable net (Details 2) $ in Thousands | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) |
Accounts receivable, net | $ 3,631 | $ 3,199 | ||
Current | ||||
Accounts receivable, net | 1,441 | 2,014 | ||
1 - 30 Days Past Due | ||||
Accounts receivable, net | 1,570 | 85 | ||
31 - 60 Days Past Due | ||||
Accounts receivable, net | 495 | 202 | ||
61 - 90 Days Past Due | ||||
Accounts receivable, net | 108 | 41 | ||
Greater Than or Equal to 91 Days | ||||
Accounts receivable, net | 17 | 857 | ||
Past Due | ||||
Accounts receivable, net | $ 2,190 | $ 1,185 | ||
ZHEJIANG TIANLAN | ||||
Accounts receivable, net | ¥ | ¥ 106,022,000 | ¥ 118,621,000 | ||
ZHEJIANG TIANLAN | Within 1 Year | ||||
Accounts receivable, net | ¥ | 85,534,000 | 76,590,000 | ||
ZHEJIANG TIANLAN | 1 year - 2 Years | ||||
Accounts receivable, net | ¥ | 12,144,000 | 31,389,000 | ||
ZHEJIANG TIANLAN | 2 Years - 3 Years | ||||
Accounts receivable, net | ¥ | 5,111,000 | 6,128,000 | ||
ZHEJIANG TIANLAN | 3 Years - 4 Years | ||||
Accounts receivable, net | ¥ | 5,141,000 | 3,678,000 | ||
ZHEJIANG TIANLAN | 4 Years - 5 Years | ||||
Accounts receivable, net | ¥ | ¥ 1,092,000 | ¥ 836,000 |
Accounts receivable net (Deta_4
Accounts receivable net (Details Narrative) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) |
Bank loans | $ | $ 88,000 | $ 92,000 | ||
ZHEJIANG TIANLAN | ||||
Bank loans | ¥ 13,518,000 | ¥ 20,029,000 | ||
ZHEJIANG TIANLAN | Accounts Receivable | ||||
Bank loans | ¥ 0 | ¥ 0 |
Prepayments and other current_3
Prepayments and other current assets (Details) ¥ in Thousands | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Deposits paid | $ 243,000 | $ 838,000 | ||
Prepayments | 104,000 | 168,000 | ||
Other receivables | 222,000 | 250,000 | ||
Other tax recoverable | 3,000 | 258,000 | ||
Prepayments and other current assets | 572,000 | 1,514,000 | ||
ZHEJIANG TIANLAN | ||||
Prepayments | ¥ | ¥ 22,717 | ¥ 16,632 | ||
Prepayments and other current assets | ¥ | 33,498 | 28,387 | ||
Deposits paid for bidding projects and temporary payments | ¥ | 7,030 | 10,448 | ||
Other current assets | ¥ | ¥ 3,751 | ¥ 1,307 | ||
ZHEJIANG TIANLAN | ||||
Other receivables | $ 13,988,000 | $ 10,448,000 |
Contract assets and liabiliti_3
Contract assets and liabilities (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Unbilled revenue | $ | $ 74 | $ 202 | ||
ZHEJIANG TIANLAN | ||||
Unbilled revenue | ¥ | ¥ 72,310 | ¥ 94,494 |
Contract assets and liabiliti_4
Contract assets and liabilities (Details 1) ¥ in Thousands, $ in Thousands | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) |
Deferred revenue | $ | $ 1,076 | $ 1,063 | ||
ZHEJIANG TIANLAN | ||||
Deferred revenue | ¥ | ¥ 37,481 | ¥ 47,135 |
Contract assets and liabiliti_5
Contract assets and liabilities (Details 2) ¥ in Thousands | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Contract assets: unbilled revenue | $ 74,000 | $ 202,000 | ||
Contract liabilities: deferred revenue | (1,076,000) | (1,063,000) | ||
Net contract (liabilities) / assets | (1,002,000) | (861,000) | ||
ZHEJIANG TIANLAN | ||||
Contract assets: unbilled revenue | ¥ | ¥ 72,310 | ¥ 94,494 | ||
Contract liabilities: deferred revenue | ¥ | (37,481) | (47,135) | ||
Net contract (liabilities) / assets | ¥ | ¥ 34,829 | ¥ 47,359 | ||
ZHEJIANG TIANLAN | ||||
Contract liabilities: deferred revenue | $ (55,898,000) | $ (47,135,000) |
Contract assets and liabiliti_6
Contract assets and liabilities (Details 3) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Costs and estimated earnings on uncompleted contracts | $ 228,000 | $ 1,904,000 | ||
Less: billings to date | (1,230,000) | (2,765,000) | ||
Costs incurred in contracts in process | 169,000 | 1,904,000 | ||
Costs and estimated earnings on uncompleted contracts in excess of billings | (1,002,000) | (861,000) | ||
Estimated earnings | (1,002,000) | (861,000) | ||
Unbilled revenue | 74,000 | 202,000 | ||
Deferred revenue | (1,076,000) | (1,063,000) | ||
ZHEJIANG TIANLAN | ||||
Costs and estimated earnings on uncompleted contracts | ¥ | ¥ 503,434,000 | ¥ 406,064,000 | ||
Less: billings to date | ¥ | (468,605,000) | (358,705,000) | ||
Costs and estimated earnings on uncompleted contracts in excess of billings | ¥ | 34,829,000 | 47,359,000 | ||
Unbilled revenue | ¥ | ¥ 72,310,000 | ¥ 94,494,000 | ||
ZHEJIANG TIANLAN | ||||
Costs and estimated earnings on uncompleted contracts | 433,195,000 | 406,064,000 | ||
Costs and estimated earnings on uncompleted contracts in excess of billings | $ 25,063,000 | $ 47,359,000 |
Contract assets and liabiliti_7
Contract assets and liabilities (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Contract assets and liabilities | |||
Trading and manufacturing | $ 9,619 | $ 9,476 | $ 11,877 |
Engineering | 11,769 | 3,881 | 5,522 |
Total revenues | $ 21,388 | $ 13,357 | $ 17,399 |
Contract assets and liabiliti_8
Contract assets and liabilities (Details 5) ¥ in Thousands, $ in Thousands | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Contract assets, net | $ | $ 74 | $ 202 | ||
ZHEJIANG TIANLAN | ||||
Gross contract assets | ¥ 81,198 | ¥ 102,144 | ||
Less: allowance for doubtful accounts | (8,888) | (7,650) | ||
Contract assets, net | ¥ 72,310 | ¥ 94,494 |
Inventories (Details)
Inventories (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Raw materials | $ 89 | $ 63 | ||
Work in progress | 20 | 20 | ||
Finished goods | 438 | 259 | ||
Inventory, net | $ 547 | $ 342 | ||
ZHEJIANG TIANLAN | ||||
Raw materials | ¥ | ¥ 2,381 | ¥ 341 | ||
Finished goods | ¥ | 1,005 | 2,048 | ||
Inventory, net | ¥ | ¥ 3,386 | ¥ 2,389 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | 24 Months Ended |
Dec. 31, 2021 | Dec. 31, 2020 | |
Inventories | ||
Write-down of inventories | $ 55,000 | $ 13,000 |
Property plant and equipment ne
Property plant and equipment net (Details) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Office premises | $ 673,000 | $ 673,000 | ||
Leasehold improvements | 125,000 | 157,000 | ||
Furniture, fixtures and office equipment | 439,000 | 557,000 | ||
Motor vehicles | 175,000 | 175,000 | ||
Testing equipment | 37,000 | 37,000 | ||
Property, plant and equipment, gross | 1,449,000 | 1,599,000 | ||
Less: accumulated depreciation and amortization | (1,234,000) | (1,340,000) | ||
Net | 215,000 | 259,000 | ||
ZHEJIANG TIANLAN | ||||
Furniture, fixtures and office equipment | ¥ | ¥ 3,694,000 | ¥ 3,658,000 | ||
Motor vehicles | ¥ | 4,647,000 | 4,808,000 | ||
Property, plant and equipment, gross | ¥ | 186,312,000 | 185,739,000 | ||
Less: accumulated depreciation and amortization | ¥ | (76,008,000) | (70,241,000) | ||
Net | ¥ | 74,063,000 | 79,257,000 | ||
Building and leasehold improvements | ¥ | 167,874,000 | 167,874,000 | ||
Plant and machineries | ¥ | 10,097,000 | 9,399,000 | ||
Accumulated impairment losses | ¥ | (36,241,000) | (36,241,000) | ||
Accumulated, Total | ¥ | ¥ (112,249,000) | ¥ (106,482,000) | ||
ZHEJIANG TIANLAN | ||||
Furniture, fixtures and office equipment | 3,543,000 | 3,658,000 | ||
Motor vehicles | 4,808,000 | 4,808,000 | ||
Property, plant and equipment, gross | 185,162,000 | 185,739,000 | ||
Net | 87,781,000 | 79,257,000 | ||
Building and leasehold improvements | 167,874,000 | |||
Plant and machineries | $ 8,937,000 | $ 9,399,000 |
Property plant and equipment _2
Property plant and equipment net (Details 1) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | |
Depreciation charge | $ | $ 38 | $ 49 | $ 69 | |||
ZHEJIANG TIANLAN | ||||||
Depreciation charge | ¥ | ¥ 6,466 | ¥ 6,359 | ¥ 6,556 |
Property plant and equipment _3
Property plant and equipment net (Details Narrative) ¥ in Thousands | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) |
Bank loans | $ 88,000 | $ 92,000 | ||
ZHEJIANG TIANLAN | ||||
Bank loans | ¥ | ¥ 13,518 | ¥ 20,029 | ||
ZHEJIANG TIANLAN | Property, Plant and Equipment [Member] | ||||
Bank loans | $ 1,524,000 | $ 34,403,000 |
Investments in affiliates (Deta
Investments in affiliates (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Investments in affiliates | ||
Interest held | 19.40% | 19.40% |
Long-term investment, at cost, less impairment | $ 5,540 | $ 5,540 |
Share of undistributed profits | 2,537 | 2,544 |
Investment in affiliates | $ 8,077 | $ 8,084 |
Investments in affiliates (De_2
Investments in affiliates (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Interest held | 19.40% | 19.40% |
Long-term investment, at cost, less impairment | $ 5,540,000 | $ 5,540,000 |
Blue Sky | ||
Interest held | 19.40% | 19.40% |
Long-term investment, at cost, less impairment | $ 5,540,000 |
Investments in affiliates (De_3
Investments in affiliates (Details 1) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | |
Balance Sheet: | ||||
Current assets | $ 11,504 | $ 10,448 | ||
Non-current assets | 9,746 | 9,647 | ||
Total assets | 21,250 | 20,095 | ||
Total liabilities | (6,449) | (5,632) | ||
Total shareholders' equity | 13,884 | 13,935 | ¥ 182,869 | |
Operating results: | ||||
Operating income | 771 | (272) | $ (445) | |
Net income | 989 | 769 | $ (146) | |
Blue Sky | ||||
Balance Sheet: | ||||
Current assets | 42,510 | 44,918 | ||
Non-current assets | 15,172 | 15,258 | ||
Total assets | 57,682 | 60,176 | ||
Total liabilities | (27,376) | (30,889) | ||
Total shareholders' equity | 30,306 | 29,287 | ||
Operating results: | ||||
Net sales | 51,280 | 43,933 | ||
Operating income | 1,997 | 2,214 | ||
Net income | $ 2,105 | $ 1,946 |
Other payables and accrued ex_3
Other payables and accrued expenses (Details) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) |
Dividend payables | $ 86,000 | $ 84,000 | ||
Deposit received from customers | 6,000 | 0 | ||
Rental deposit received | 3,000 | 4,000 | ||
Accruals for operating expenses | 1,360,000 | 1,500,000 | ||
Other tax payables | 130,000 | 5,000 | ||
Other payables and accrued expenses | $ 1,585,000 | $ 1,593,000 | ||
ZHEJIANG TIANLAN | ||||
Other payables and accrued expenses | ¥ | ¥ 18,428,000 | ¥ 17,747,000 | ||
Accrued expenses | ¥ | 8,315 | 7,629 | ||
Output VAT | ¥ | 5,468 | 6,529 | ||
Deposits received and temporary receipts | ¥ | ¥ 4,645 | ¥ 3,589 |
Ordinary share (Details)
Ordinary share (Details) - shares | Dec. 31, 2021 | Mar. 03, 2021 | Dec. 31, 2020 | Oct. 08, 2019 |
Ordinary share | ||||
Shares issued | 7,899,832 | 2,061,900 | 7,899,832 | 1,030,950 |
Less: shares under treasury stock | (167,700) | (167,700) | ||
Total | 7,732,132 | 7,732,132 |
Ordinary share (Details Narrati
Ordinary share (Details Narrative) - shares | 1 Months Ended | ||
Mar. 03, 2021 | Oct. 08, 2019 | Jan. 24, 2022 | |
Ordinary share | |||
New shares of common stock | 2,061,900 | 1,030,950 | 2,577,373 |
Goodwill (Details Narrative)
Goodwill (Details Narrative) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill | ||
Goodwill | $ 1,071,000 | $ 1,071,000 |
PRC statutory reserves (Details
PRC statutory reserves (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statutory Reserve Fund | |||
Statutory reserve | $ 2,452,000 | $ 3,174,000 | $ 3,174,000 |
Minimum Registered capital percentage | 25% | ||
Registered capital percentage | 50% | ||
Net income statutory reserve fund | 10% | ||
Statutory Staff Welfare Fund | |||
Statutory reserve | $ 12,000 | 12,000 | |
Enterprise Expansion Fund | |||
Statutory reserve | $ 408,000 | $ 408,000 | |
Minimum Registered capital percentage | 25% |
Net income per ordinary share_2
Net income per ordinary share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net income per ordinary share | |||
Weighted average number of ordinary shares for the purposes of basic and diluted net income per share | 7,732,132 | 7,732,132 | 7,732,132 |
Stock options (Details)
Stock options (Details) - Stock Options - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2019 | |
Number of options | ||
Outstanding, beginning of year | 51,000 | |
Granted | 51,000 | |
Bonus shares adjustment | 34,000 | |
Outstanding, end of year | 85,000 | 51,000 |
Weighted average exercise price | ||
Outstanding, beginning of years | $ 2.60 | |
Granteds | $ 2.60 | |
Bonus shares adjustments | (1.04) | |
Outstanding, end of years | $ 1.56 | $ 2.60 |
Stock options (Details Narrativ
Stock options (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Compensation expense | $ 55,000 | $ 54,000 | $ 10,000 | |
2019 Stock Option and Incentive Plan | ||||
Fair market value ordinary shares percentage | 100% | |||
Bonus shares adjustment | 500,000 | |||
Granted | 300,000 | |||
Percentage of number of ordinary shares outstanding | 5% | |||
Purchase ordinary shares | 51,000 | |||
Fair value options granted | $ 2.324 | |||
Compensation expense | $ 55,000 | $ 54,000 | $ 10,000 | |
Exercise price options granted | $ 2.60 |
Segment information (Details)
Segment information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | $ 21,388,000 | $ 13,357,000 | $ 17,399,000 |
Operating loss | 781,000 | (1,701,000) | (440,000) |
Depreciation | 38,000 | 49,000 | 69,000 |
Capital expenditures, gross | 4,000 | 11,000 | 21,000 |
Assets | 21,250,000 | 20,095,000 | |
Liabilities | 6,449,000 | 5,632,000 | |
Trading and Manufacturing | |||
Revenue | 9,619,000 | 9,476,000 | 11,877,000 |
Operating loss | 140,000 | (488,000) | (102,000) |
Depreciation | 32,000 | 39,000 | 54,000 |
Capital expenditures, gross | 1,000 | 2,000 | 17,000 |
Assets | 7,969,000 | 7,877,000 | |
Liabilities | 3,428,000 | 2,645,000 | |
Engineering | |||
Revenue | 11,769,000 | 3,881,000 | 5,522,000 |
Operating loss | 846,000 | (1,027,000) | (158,000) |
Depreciation | 6,000 | 10,000 | 15,000 |
Capital expenditures, gross | 3,000 | 9,000 | 4,000 |
Assets | 13,281,000 | 12,218,000 | |
Liabilities | 3,021,000 | 2,987,000 | |
Unallocated Corporate Expenses | |||
Revenue | 0 | ||
Operating loss | $ (205,000) | $ (186,000) | $ (180,000) |
Segment information (Details 1)
Segment information (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | $ 21,388 | $ 13,357 | $ 17,399 |
Geographical analysis of long-lived assets | 215 | 259 | |
The PRC | |||
Revenue | 13,217 | 5,072 | 6,886 |
Geographical analysis of long-lived assets | 190 | 212 | |
Hong Kong | |||
Revenue | 7,937 | 8,024 | 10,169 |
Geographical analysis of long-lived assets | 25 | 47 | |
Others | |||
Revenue | $ 234 | $ 261 | $ 344 |
Segment information (Details 2)
Segment information (Details 2) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Supplier A | |||
Supplier accounting for more than 5% of Group's purchases | 42 | 30 | 53 |
Supplier B | |||
Supplier accounting for more than 5% of Group's purchases | 13 | 10 | 7 |
Supplier C | |||
Supplier accounting for more than 5% of Group's purchases | 6 | 9 | 6 |
Supplier D | |||
Supplier accounting for more than 5% of Group's purchases | 6 | 6 | 6 |
Supplier E | |||
Supplier accounting for more than 5% of Group's purchases | 5 | 5 | 0 |
Supplier F | |||
Supplier accounting for more than 5% of Group's purchases | 0 | 12 | 0 |
Segment information (Details 3)
Segment information (Details 3) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Customer D | |||
Customers accounting for more than 5% of the Group's revenue | 0 | 0 | 5 |
Customer C | |||
Customers accounting for more than 5% of the Group's revenue | 0 | 6 | 10 |
Customer B | |||
Customers accounting for more than 5% of the Group's revenue | 0 | 8 | 0 |
Customer A | |||
Customers accounting for more than 5% of the Group's revenue | 15 | 9 | 19 |
Intangible assets net (Details)
Intangible assets net (Details) - ZHEJIANG TIANLAN - CNY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Patents | ¥ 3,750 | ¥ 3,750 |
Others | 165 | 165 |
Intangible assets, gross | 3,915 | 3,915 |
Less: accumulated amortization | (2,050) | (1,795) |
Intangible assets, net | ¥ 1,865 | ¥ 2,120 |
Intangible assets net (Details
Intangible assets net (Details 1) - CNY (¥) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
ZHEJIANG TIANLAN | |||
Amortization expense | ¥ 255 | ¥ 142 | ¥ 152 |
Intangible assets net (Detail_2
Intangible assets net (Details 2) - ZHEJIANG TIANLAN - CNY (¥) | Dec. 31, 2021 | Dec. 31, 2020 |
2021 | ¥ 142,000 | |
2022 | ¥ 255,000 | 142,000 |
2023 | 255,000 | 142,000 |
2024 | 255,000 | 142,000 |
2025 | 255,000 | 142,000 |
2026 | 255 | |
Thereafter | 590,000 | 1,410,000 |
Intangible assets, net | ¥ 1,865,000 | ¥ 2,120,000 |
Land use right net (Details)
Land use right net (Details) - ZHEJIANG TIANLAN - CNY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Land use right, gross | ¥ 7,361 | ¥ 7,361 |
Less: accumulated amortization | (2,364) | (2,214) |
Land use right, net | ¥ 4,997 | ¥ 5,147 |
Land use right net (Details 1)
Land use right net (Details 1) - CNY (¥) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
ZHEJIANG TIANLAN | |||
Amortization expense | ¥ 150 | ¥ 159 | ¥ 149 |
Land use right net (Details 2)
Land use right net (Details 2) - ZHEJIANG TIANLAN - CNY (¥) | Dec. 31, 2021 | Dec. 31, 2020 |
2021 | ¥ 159,000 | |
2022 | ¥ 150,000 | 159,000 |
2023 | 150,000 | 159,000 |
2024 | 150,000 | 159,000 |
2025 | 150,000 | 159,000 |
2026 | 150 | |
Thereafter | 4,247,000 | 4,352,000 |
Total | ¥ 4,997,000 | ¥ 5,147,000 |
Land use right net (Details Nar
Land use right net (Details Narrative) - CNY (¥) | Dec. 31, 2021 | Dec. 31, 2020 |
ZHEJIANG TIANLAN | ||
Land use right pledged bank loan | ¥ 1,463,000 | ¥ 4,463,000 |
Bank borrowings (Details)
Bank borrowings (Details) ¥ in Thousands | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) |
Bank loan | $ | $ 88,000 | $ 92,000 | ||
ZHEJIANG TIANLAN | ||||
Bank loan | ¥ 13,518 | ¥ 20,029 | ||
ZHEJIANG TIANLAN | Bank Loan Borrowed by the Company | ||||
Bank loan | 8,511 | 10,014 | ||
ZHEJIANG TIANLAN | Bank Loan Borrowed by Subsidiaries of the Company | ||||
Bank loan | ¥ 5,007 | ¥ 10,015 |
Bank borrowings (Details Narrat
Bank borrowings (Details Narrative) - ZHEJIANG TIANLAN - CNY (¥) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Interest fixed rates minimum | 4.35% | ||
Interest paid | ¥ 253,000 | ¥ 1,377,000 | ¥ 1,991,000 |
Interest fixed rates | 5% | 4.79% |
Other taxes payable (Details Na
Other taxes payable (Details Narrative) - ZHEJIANG TIANLAN | Dec. 31, 2021 | Dec. 31, 2020 |
Minimum [Member] | ||
Valued-Added Tax rate | 3% | 3% |
Maximum [Member] | ||
Valued-Added Tax rate | 13% | 13% |
Other income net (Details)
Other income net (Details) | 12 Months Ended | |||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | |
Exchange gain / (loss), net | $ | $ 77,000 | $ 101,000 | $ (30,000) | |||
Rental income | $ | 50,000 | 59,000 | 82,000 | |||
Government subsidies - Employment Support Scheme | $ | 0 | 147,000 | 0 | |||
Other income, net | $ | 127,000 | 307,000 | 52,000 | |||
Other income | $ | $ 127,000 | $ 307,000 | $ 52,000 | |||
ZHEJIANG TIANLAN | ||||||
Compensation income | ¥ 0 | ¥ 22,548,000 | ¥ 0 | |||
Gain on disposal of property, plant and equipment | 39,000 | 0 | 39,000 | |||
Investment income | 531,000 | 266,000 | 0 | |||
Amounts waived by payees | 3,061,000 | 4,535,000 | 280,000 | |||
Reversal of allowance for doubtful accounts | 183,000 | 6,463,000 | 0 | |||
Subsidy income from PRC government | 7,780,000 | 5,834,000 | 5,957,000 | |||
Other income | 11,594,000 | 39,646,000 | 6,276,000 | |||
Bad debts written off | 0 | 0 | 5,383,000 | |||
Impairment loss on contract assets | 1,238,000 | 1,399,000 | 0 | |||
Impairment loss on long-term investments | 0 | 1,340,000 | 0 | |||
Impairment loss on property, plant and equipment | 0 | 2,742,000 | 0 | |||
Investment loss | 0 | 0 | 241,000 | |||
Other losses | ¥ 1,238,000 | ¥ 5,481,000 | ¥ 5,624,000 |
Income taxes (Details)
Income taxes (Details) ¥ in Thousands | 12 Months Ended | |||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | |
Current taxes (expense ) | ||||||
Current taxes (expense): Hong Kong profits tax and the PRC EIT | $ | $ (57,000) | $ (4,000) | $ 0 | |||
Income tax expense | $ | (57,000) | (4,000) | 0 | |||
Deferred tax credit / (expenses): Hong Kong and the PRC | $ | 147,000 | (92,000) | (37,000) | |||
Total deferred tax credit / (expense) | $ | 147,000 | (92,000) | (37,000) | |||
Total credit / (expense) | $ | $ (90,000) | $ 96,000 | $ 37,000 | |||
ZHEJIANG TIANLAN | ||||||
Current taxes (expense ) | ||||||
Income tax expense | ¥ | ¥ (32) | ¥ 757 | ¥ 28 | |||
Total deferred tax credit / (expense) | ¥ | (666) | 1,101 | 268 | |||
Total credit / (expense) | ¥ | (698) | 1,858 | 296 | |||
Current PRC EIT | ¥ | (32) | 757 | 28 | |||
Deferred tax (credit)/expense | ¥ | ¥ (666) | ¥ 1,101 | ¥ 268 |
Income taxes (Details 1)
Income taxes (Details 1) | 12 Months Ended | |||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | |
Income / (loss) before income taxes | $ | $ 1,276,000 | $ 498,000 | $ (173,000) | |||
Computed tax using respective companies' statutory tax rates | $ | 158,000 | 133,000 | 69,000 | |||
Change in valuation allowances | $ | 349,000 | 48,000 | 30,000 | |||
Under-provision for income taxes in prior years | $ | (12,000) | 0 | (5,000) | |||
Non-deductible expenses | $ | (405,000) | (277,000) | (131,000) | |||
Income taxes credit / (expense) at effective tax rate | $ | $ (90,000) | $ 96,000 | $ 37,000 | |||
ZHEJIANG TIANLAN | ||||||
Income / (loss) before income taxes | ¥ 12,880,000 | ¥ 15,358,000 | ¥ 4,654,000 | |||
Computed tax using respective companies' statutory tax rates | 1,932,000 | 2,304,000 | 642,000 | |||
Under-provision for income taxes in prior years | (39,000) | (48,000) | 0 | |||
Non-deductible expenses | 286,000 | 2,306,000 | 693,000 | |||
Income taxes credit / (expense) at effective tax rate | (698,000) | 1,858,000 | 296,000 | |||
Temporary differences | 401,000 | 182,000 | 202,000 | |||
Tax effect of special deduction for research and development costs | 3,263,000 | 3,001,000 | 2,103,000 | |||
Others | ¥ (15,000) | ¥ 115,000 | ¥ 862,000 |
Income taxes (Details 2)
Income taxes (Details 2) $ in Thousands | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) |
Tax losses | $ | $ 614 | $ 901 | ||
Temporary differences | $ | (3) | (5) | ||
Less: valuation allowances | $ | (469) | (901) | ||
Net deferred tax assets / (liabilities) | $ | $ 142 | $ (5) | ||
ZHEJIANG TIANLAN | ||||
Tax losses | ¥ 594,000 | ¥ 0 | ||
Allowance for doubtful debts | 6,188,000 | 6,184,000 | ||
Deferred government grant | 583,000 | 750,000 | ||
Impairment losses on assets | 6,940,000 | 6,705,000 | ||
Net deferred tax assets | ¥ 14,305,000 | ¥ 13,639,000 |
Income taxes (Details Narrative
Income taxes (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Aggregate undistributed earnings | $ 600,000 | $ 600,000 | $ 600,000 | |
Income tax rate | 10% | |||
Assessable profits/loss | $ 1,366,000 | $ 402,000 | $ (210,000) | |
Hong Kong | ||||
Income tax rate | 8.25% | 16.50% | 16.50% | |
Assessable profits/loss | $ 256,000 | $ 256,000 | ||
Shanghai Euro Tech Limited | ||||
Income tax rate | 25% | 25% | ||
Assessable profits/loss | (678,000) | $ (658,733) | $ (444,192) | |
Shanghai Euro Tech Environmental Engineering Company Limited | ||||
Income tax rate | 25% | 25% | ||
Assessable profits/loss | 0 | $ (34,032) | $ (380,591) | |
Yixing Pact Environmental Technology Co. Ltd. | ||||
Income tax rate | 25% | 25% | ||
Assessable profits/loss | 1,759,000 | $ 2,304,828 | $ 1,664,275 | |
Euro Tech Trading (Shanghai) Limited | ||||
Income tax rate | 25% | 25% | ||
Assessable profits/loss | $ (18,000) | $ (604,778) | $ (518,328) |
Pension plan (Details Narrative
Pension plan (Details Narrative) | 12 Months Ended | |||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | |
Aggregate contributions to pension plans and retirement benefit schemes | $ | $ 225,000 | $ 104,000 | $ 332,000 | |||
ZHEJIANG TIANLAN | ||||||
Aggregate contributions to pension plans and retirement benefit schemes | ¥ | ¥ 6,003,000 | ¥ 5,645,000 | ¥ 5,449,000 |
Risk factors (Details Narrative
Risk factors (Details Narrative) | 12 Months Ended | ||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) | |
Restricted cash | $ | $ 1,411,000 | $ 1,672,000 | $ 729,000 | ||
Hong Kong | |||||
Concentration of credit risk | $ | 64,000 | ||||
Restricted cash | $ | $ 5,327,000 | ||||
PRC | |||||
Concentration of credit risk | ¥ 72,000 | ||||
Restricted cash | ¥ 4,594,000 | ||||
PRC | ZHEJIANG TIANLAN | |||||
Concentration of credit risk | ¥ 44,494,000 | ||||
Restricted cash | ¥ 48,855,000 |
Related party transactions (Det
Related party transactions (Details Narrative) | 12 Months Ended | ||||
Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | |
Proceeds from sale of long-term investment | $ | $ 0 | $ 148,000 | $ 0 | ||
ZHEJIANG TIANLAN | Engineering Service | |||||
Investment | ¥ 273,000 | ¥ 2,518,000 | |||
Remuneration | 1,209,000 | 1,400,000 | |||
Total consideration | ¥ 0 | ¥ 4,590,000 | |||
Blue Sky | |||||
Proceeds from sale of long-term investment | $ | $ 148,000 |
Commitments and contingencies (
Commitments and contingencies (Details Narrative) | 12 Months Ended | ||||
Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 CNY (¥) | |
Banking facilities available for overdraft and import and export credits | $ 897,000 | $ 897,000 | |||
Utilised for issuance of bank guarantees | 605,000 | $ 596,000 | |||
Secured by bank deposit | $ 897,000 | ||||
Weighted average interest rate | 5% | 4.90% | |||
Bank borrowings | $ 219,000 | $ 457,000 | |||
Average interest rates | 5% | 5% | 4.90% | 4.90% | |
ZHEJIANG TIANLAN | |||||
Operating leases expense | ¥ | ¥ 0 | ¥ 0 | ¥ 0 |
Subsequent event (Details Narra
Subsequent event (Details Narrative) | Apr. 22, 2022 CNY (¥) |
ZHEJIANG TIANLAN | Subsequent Event [Member] | |
Proposed dividend | ¥ 9,082,000 |