Euro Tech(US:CLWT)2024-04-30 20:31Financial Performance - Pact-Yixing's revenue in Fiscal 2023 was $5,797,000, an increase from $5,617,000 in Fiscal 2022[202]. - Blue Sky contributed $1,927,000 to the Company in Fiscal 2023, primarily from the disposal of two desulfurization treatment plants[191]. - The Company's revenue from customers in mainland China was 40% and in Hong Kong was 55% in Fiscal 2023[204]. - Pact-Yixing had an operating loss of $438,000 from engineering activities in Fiscal 2023, compared to an operating income of $590,000 in Fiscal 2022[202]. - Total revenue increased by 20.0% to US$17,940,000 in fiscal year 2023 from US$14,949,000 in fiscal year 2022[282]. - Net income surged by 395.3% to US$1,828,000 in fiscal year 2023 compared to US$369,000 in fiscal year 2022[282]. - Cost of revenue as a percentage of revenue increased to 78.5% in fiscal year 2023 from 69.1% in fiscal year 2022[289]. - Gross profit decreased by 16.4% to US$3,861,000 in fiscal year 2023 from US$4,618,000 in fiscal year 2022[289]. - Selling and administrative expenses decreased by 8.6% to US$4,103,000 in fiscal year 2023 from US$4,490,000 in fiscal year 2022[290]. Market and Business Strategy - The Company shifted its focus from distribution to engineering and manufacturing activities, particularly in ballast water treatment technology[199]. - The company has found a strategic OEM partner in Greece to exclusively distribute its products in 20 European countries starting in 2024[210]. - The company is applying for type approval certificates for its BWTS from various European and Asian Classification Societies to expand market coverage[209]. - The company has received type approval certificates from Lloyds and RINA for its BWTS[209]. - The BWTS business thrived in fiscal year 2023, driven by increased demand in the maritime industry[284]. - The Company plans to seek additional capital to fund the development of new technologies and expand into new markets[200]. Customer and Sales Information - The company distributed products to approximately 380 customers in Fiscal 2023, with sales to the three largest customers accounting for approximately 31% of total revenue[218]. - Sales to the three largest customers accounted for approximately 31% of total revenue in 2023, down from 33% in 2022 and 41% in 2021, showing a trend of decreasing reliance on major customers[229]. - The company registered 6 patents and has 6 patents in application in mainland China as of December 31, 2023, indicating ongoing investment in intellectual property[236]. - The company registered 8 trademarks and has 6 trademarks in application in mainland China as of December 31, 2023, highlighting its focus on brand protection[237]. Operational Changes - The Company dissolved several subsidiaries, including Shanghai Environmental, to streamline operations and reduce costs[193]. - The company had a marketing and sales force of 7 individuals in Fiscal 2023, down from 11 in Fiscal 2021, reflecting a reduction in sales personnel[228]. - The company occupies approximately 7,000 square feet of office and warehouse space in Hong Kong, with a monthly rental payment of approximately US$8,910[278]. - Euro Tech Trading (Shanghai) Limited occupies approximately 55 square meters of office space in Shanghai, with a monthly rent of approximately US$322[278]. Regulatory and Compliance - The Amended PRC Company Law, effective July 1, 2024, introduces significant changes in corporate governance, including the elimination of the upper limit on the number of directors[234]. - The company is not currently involved in any legal proceedings or investigations that could materially affect its business or financial condition[231]. - The CAC has not conducted any cybersecurity investigations against the company, indicating compliance with existing laws and regulations[249]. - The company has not received any inquiries or sanctions from PRC regulatory authorities related to cybersecurity or data protection, affirming its adherence to current regulations[249]. Financial Position and Cash Flow - Net cash used in operating activities was US$80,000 for the year ended December 31, 2023, compared to US$461,000 provided in 2022[296]. - Working capital at the end of fiscal year 2023 was US$4,949,000, slightly down from US$4,980,000 in fiscal year 2022[294]. - Cash decreased from US$5,628,000 at the end of Fiscal 2022 to US$5,453,000 at the end of Fiscal 2023, mainly due to increased cash collaterals for bank guarantees[300]. - Accounts receivable, net increased from US$1,586,000 at the end of Fiscal 2022 to US$2,864,000 at the end of Fiscal 2023[301]. - Inventories increased from US$603,000 at the end of Fiscal 2022 to US$723,000 at the end of Fiscal 2023[301]. - The Company expects to continue funding its working capital and capital expenditures from operations and available bank credit facilities[305]. Shareholder Information - Major shareholder T.C. Leung owns 3,994,647 shares, representing 51.8% of ordinary shares[378]. - The company declared a special cash dividend of $1,030,951.80 on June 17, 2021, and $463,927.92 on May 31, 2022, but did not declare any dividends in fiscal year 2023[381]. - The company intends to retain all earnings for business operations and does not plan to declare cash dividends in the foreseeable future[381]. - The company's ordinary shares are traded on NASDAQ under the symbol "CLWT"[384]. - Holders of ordinary shares are entitled to one vote per share, with no cumulative voting rights[387].