Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2015CNY (¥)shares | |
Document And Entity Information | |
Entity Registrant Name | EURO TECH HOLDINGS CO LTD |
Entity Central Index Key | 1,026,662 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2015 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Public Float | ¥ | ¥ 0 |
Entity Common Stock, Shares Outstanding | shares | 2,061,909 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) |
Assets | ||||
Cash and cash equivalents | $ | $ 2,480 | $ 4,857 | ||
Restricted cash | $ | 475 | 879 | ||
Accounts receivable, net | $ | 4,500 | 4,268 | ||
Prepayments and other current assets | $ | 500 | 589 | ||
Inventories | $ | 557 | 543 | ||
Total current assets | $ | 8,512 | 11,136 | ||
Property, plant and equipment, net | $ | 773 | 811 | ||
Interests in affiliates | $ | 10,712 | 10,154 | ||
Goodwill | $ | 1,071 | 1,071 | ||
Deferred tax assets | $ | 202 | 227 | ||
Total assets | $ | 21,270 | 23,399 | ||
Liabilities and shareholders' equity | ||||
Accounts payable | $ | 3,054 | 3,561 | ||
Other payables and accrued expenses | $ | 1,626 | 2,101 | ||
Taxes payable | $ | 134 | 207 | ||
Total current liabilities | $ | $ 4,814 | $ 5,869 | ||
Commitments and contingencies | $ | ||||
Total liabilities | $ | $ 4,814 | $ 5,869 | ||
Shareholders' equity: | ||||
Ordinary share, 20,000,000 (2014: 20,000,000) shares authorised; 2,229,609 (2014: 2,229,609) shares issued | $ | 123 | 123 | ||
Additional paid-in capital | $ | 9,551 | 9,535 | ||
Treasury stock, 167,700 (2014: 160,386) shares at cost | $ | (786) | (766) | ||
PRC statutory reserves | $ | 315 | 315 | ||
Accumulated other comprehensive income | $ | 799 | 776 | ||
Retained earnings | $ | 5,144 | 5,760 | ||
Equity attributable to shareholders of Euro Tech | $ | 15,146 | 15,743 | ||
Non-controlling interest | $ | 1,310 | 1,787 | ||
Total shareholders' equity | 16,456 | 17,530 | ||
Total liabilities and shareholders' equity | $ | $ 21,270 | $ 23,399 | ||
ZHEJIANG JIAHUAN | ||||
Assets | ||||
Cash and cash equivalents | ¥ 7,303 | ¥ 3,129 | ||
Restricted cash | 1,490 | 1,469 | ||
Accounts receivable, net | 99,832 | 73,893 | ||
Notes receivables | 700 | 5,704 | ||
Other receivables | 17,472 | 14,400 | ||
Inventories | 21,463 | 32,249 | ||
Total current assets | 148,260 | 130,844 | ||
Property, plant and equipment, net | 23,788 | 25,858 | ||
Land use right, net | 6,451 | 6,614 | ||
Intangible asset, net | 508 | 0 | ||
Long term investment | 69 | 69 | ||
Total assets | 179,076 | 163,385 | ||
Liabilities and shareholders' equity | ||||
Short term borrowings | 39,400 | 26,600 | ||
Note payable | 3,595 | 0 | ||
Accounts payable | 27,130 | 24,861 | ||
Other payables and accrued expenses | 10,223 | 13,367 | ||
Amount due to a shareholder | 0 | 5,470 | ||
Income tax payable | 2,892 | 1,771 | ||
Total current liabilities | 83,240 | 72,069 | ||
Other long term liabilities | ¥ 5,790 | ¥ 5,923 | ||
Commitments and contingencies | ||||
Shareholders' equity: | ||||
Share capital | ¥ 11,250 | ¥ 11,250 | ||
Capital reserve | 8,542 | 8,542 | ||
PRC statutory reserves | 20,931 | 20,931 | ||
Accumulated other comprehensive income | 49,323 | 44,387 | ||
Equity attributable to shareholders of Euro Tech | 90,046 | 85,110 | ||
Non-controlling interest | 0 | 283 | ||
Total shareholders' equity | 90,046 | 85,393 | ||
Total liabilities and shareholders' equity | 179,076 | 163,385 | ||
ZHEJIANG TIANLAN | ||||
Assets | ||||
Cash and cash equivalents | 35,635 | 29,197 | ||
Accounts receivable, net | 207,907 | 156,608 | ||
Prepayments and other current assets | 119,563 | 176,814 | ||
Income tax receivables | 0 | 1,045 | ||
Inventories | 12,111 | 16,054 | ||
Total current assets | 375,216 | 379,718 | ||
Property, plant and equipment, net | 161,731 | 161,924 | ||
Land use right, net | 5,896 | 6,045 | ||
Intangible asset, net | 1,548 | 1,741 | ||
Deferred tax assets | 4,527 | 4,350 | ||
Total assets | 548,918 | 553,778 | ||
Liabilities and shareholders' equity | ||||
Short term borrowings | 45,000 | 97,900 | ||
Accounts payable | 176,981 | 177,038 | ||
Other payables and accrued expenses | 40,775 | 113,438 | ||
Other taxes payable | 8,423 | 8,902 | ||
Income tax payable | 994 | 60 | ||
Total current liabilities | 272,173 | 397,338 | ||
Long term borrowings | ¥ 107,732 | ¥ 0 | ||
Commitments and contingencies | ||||
Total liabilities | ¥ 379,905 | ¥ 397,338 | ||
Shareholders' equity: | ||||
Share capital | 80,172 | 61,200 | ||
Capital reserve | 24,217 | 43,189 | ||
PRC statutory reserves | 9,094 | 6,821 | ||
Retained earnings | 53,928 | 43,710 | ||
Equity attributable to shareholders of Euro Tech | 167,411 | 154,920 | ||
Non-controlling interest | 1,602 | 1,520 | ||
Total shareholders' equity | 169,013 | 156,440 | ||
Total liabilities and shareholders' equity | ¥ 548,918 | ¥ 553,778 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Dec. 31, 2015 | Dec. 31, 2014 |
Shareholders equity: | ||
Common Stock Authorized | 20,000,000 | 20,000,000 |
Common Stock Issued | 2,229,609 | 2,229,609 |
Treasury stock, shares | 167,700 | 160,386 |
ZHEJIANG JIAHUAN | ||
Shareholders equity: | ||
Common Stock Issued | 11,250,000 | 11,250,000 |
ZHEJIANG TIANLAN | ||
Shareholders equity: | ||
Common Stock Issued | 80,172,000 | 61,200,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/ INCOME ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2015CNY (¥)shares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014CNY (¥)shares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013CNY (¥)shares | Dec. 31, 2013USD ($)$ / sharesshares | |
Revenues | ||||||
Trading and manufacturing | $ | $ 12,256 | $ 11,647 | $ 10,986 | |||
Engineering | $ | 6,046 | 7,175 | 7,616 | |||
Total revenues | $ | 18,302 | 18,822 | 18,602 | |||
Cost of revenues | ||||||
Trading and manufacturing | $ | (9,577) | (9,060) | (8,422) | |||
Engineering | $ | (4,682) | (4,931) | (4,716) | |||
Total cost of revenues | $ | (14,259) | (13,991) | (13,138) | |||
Gross profit | $ | 4,043 | 4,831 | 5,464 | |||
Finance costs | $ | (4) | 0 | 0 | |||
Selling and administrative expenses | $ | (5,997) | (5,802) | (5,719) | |||
Operating loss/ income | $ | (1,958) | (971) | (255) | |||
Interest income | $ | 45 | 27 | 45 | |||
Other income, net | $ | 9 | 65 | 54 | |||
(Loss) on disposal of fixed assets | $ | 0 | 0 | (1) | |||
(Loss)/profit before income taxes, equity in income of affiliates and non-controlling interests | $ | (1,904) | (879) | (157) | |||
Income taxes credit / (expenses) | $ | 47 | (18) | (73) | |||
Equity in income of affiliates | $ | 850 | 605 | 325 | |||
Net (loss)/profit for the year | $ | (1,007) | (292) | 95 | |||
Less: net (income)/loss attributable to non-controlling interest | $ | 391 | 169 | (113) | |||
Net (loss)/income attributable to the Company | $ | (616) | (123) | (18) | |||
Other comprehensive loss | ||||||
Net (loss)/profit | $ | (1,007) | (292) | 95 | |||
Foreign exchange translation adjustments | $ | (63) | (15) | 181 | |||
Release of translation reserves upon disposal of a subsidiary | $ | 0 | 0 | (74) | |||
Comprehensive (loss)/income | $ | (1,070) | (307) | 202 | |||
Less: Comprehensive (income)/loss attributable to non-controlling interest | $ | 477 | 176 | (167) | |||
Comprehensive income/(loss) attributable to the Company | $ | $ (593) | $ (131) | $ 35 | |||
Net income/(loss) per ordinary share | ||||||
- Basic | $ / shares | $ (.30) | $ (.06) | $ (0.01) | |||
- Diluted | $ / shares | $ (.30) | $ (.06) | $ (0.01) | |||
Weighted average number of ordinary shares outstanding | ||||||
- Basic | shares | 2,063,738 | 2,063,738 | 2,069,223 | 2,069,223 | 2,069,223 | 2,069,223 |
- Diluted | shares | 2,063,738 | 2,063,738 | 2,069,223 | 2,069,223 | 2,069,223 | 2,069,223 |
ZHEJIANG JIAHUAN | ||||||
Revenues | ||||||
Total revenues | ¥ 115,515 | ¥ 99,908 | ¥ 89,685 | |||
Cost of revenues | ||||||
Total cost of revenues | (76,473) | (72,490) | (67,015) | |||
Gross profit | 39,042 | 27,418 | 22,670 | |||
Selling and administrative expenses | (30,792) | (21,090) | (19,338) | |||
Operating loss/ income | 8,250 | 6,328 | 3,332 | |||
Interest expenses | (3,861) | (2,209) | (1,702) | |||
Other income, net | 1,408 | 1,075 | 697 | |||
(Loss)/profit before income taxes, equity in income of affiliates and non-controlling interests | 5,797 | 5,194 | 2,327 | |||
Income taxes credit / (expenses) | (861) | (484) | (19) | |||
Net (loss)/profit for the year | 4,936 | 4,710 | 2,308 | |||
Less: net (income)/loss attributable to non-controlling interest | 0 | 0 | (3) | |||
Net (loss)/income attributable to the Company | 4,936 | 4,710 | 2,305 | |||
Other comprehensive loss | ||||||
Net (loss)/profit | 4,936 | 4,710 | 2,308 | |||
Comprehensive (loss)/income | 4,936 | 4,710 | 2,308 | |||
Less: Comprehensive (income)/loss attributable to non-controlling interest | 0 | 0 | (3) | |||
Comprehensive income/(loss) attributable to the Company | 4,936 | 4,710 | 2,308 | |||
ZHEJIANG TIANLAN | ||||||
Revenues | ||||||
Total revenues | 419,275 | 396,424 | 378,956 | |||
Cost of revenues | ||||||
Total cost of revenues | (331,875) | (313,776) | (303,039) | |||
Gross profit | 87,400 | 82,648 | 75,917 | |||
Selling and administrative expenses | (60,702) | (66,343) | (70,823) | |||
Operating loss/ income | 26,698 | 16,305 | 5,094 | |||
Interest income | 166 | 148 | 194 | |||
Interest expenses | (4,710) | (6,272) | (4,751) | |||
Other income, net | 2,773 | 4,595 | 7,424 | |||
(Loss)/profit before income taxes, equity in income of affiliates and non-controlling interests | 24,927 | 14,776 | 7,961 | |||
Income taxes credit / (expenses) | (3,174) | (768) | (2,663) | |||
Net (loss)/profit for the year | 21,753 | 14,008 | 5,298 | |||
Less: net (income)/loss attributable to non-controlling interest | (82) | (8) | 2,328 | |||
Net (loss)/income attributable to the Company | 21,671 | 14,000 | 7,626 | |||
Other comprehensive loss | ||||||
Net (loss)/profit | 21,753 | 14,008 | 5,298 | |||
Comprehensive (loss)/income | 21,753 | 14,008 | 5,298 | |||
Less: Comprehensive (income)/loss attributable to non-controlling interest | (82) | (8) | 2,328 | |||
Comprehensive income/(loss) attributable to the Company | ¥ 21,671 | ¥ 14,000 | ¥ 7,626 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2013CNY (¥) | Dec. 31, 2013USD ($) | |
Cash flows from operating activities: | ||||||
Net income/(loss) | $ | $ (616) | $ (123) | $ (18) | |||
(Used in)/ adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation of property, plant and equipment | $ | 56 | 88 | 108 | |||
(Gain)/loss on disposal of property, plant and equipment | $ | 0 | 0 | 1 | |||
Stock-based compensation expenses | $ | 16 | 2 | 0 | |||
Non-controlling interest in (loss)/profits of subsidiaries | $ | (391) | (169) | 113 | |||
Equity in profit/loss of affiliates | $ | (850) | (605) | (325) | |||
Deferred tax assets | $ | 25 | 9 | 26 | |||
Decrease/(increase) in current assets: | ||||||
Accounts receivable, net | $ | (232) | (186) | (993) | |||
Prepayments and other current assets | $ | 89 | 695 | (436) | |||
Inventories | $ | (14) | (49) | 159 | |||
Increase/(decrease) in current liabilities: | ||||||
Accounts payable | $ | (507) | 446 | (598) | |||
Other payables and accrued expenses | $ | (475) | (585) | (299) | |||
Taxation payable | $ | (73) | 7 | (293) | |||
Net cash (used in)/provided by operating activities | $ | (2,972) | (470) | (2,555) | |||
Cash flows from investing activities: | ||||||
Purchase of property, plant and equipment | $ | (21) | (10) | (51) | |||
Proceeds on disposal of property, plant and equipment | $ | 0 | 0 | 1 | |||
Dividend received from affiliates | $ | 292 | 302 | 246 | |||
Restricted cash for issuance of bank guarantees | $ | 404 | (314) | 274 | |||
Dividend paid to non-controlling interest | $ | 0 | (42) | (134) | |||
Net cash (used in)/provided by investing activities | $ | 675 | (64) | 336 | |||
Cash flows from financing activities: | ||||||
Purchase of treasury stock | $ | (20) | 0 | 0 | |||
Net cash (used in)/provided by financing activities | $ | (20) | 0 | 0 | |||
Effect of exchange rate changes on cash and cash equivalents | $ | (60) | (15) | 157 | |||
Net (decrease)/increase in cash and cash equivalents | $ | (2,377) | (549) | (2,062) | |||
Cash and cash equivalents, beginning of year | $ | 4,857 | 5,406 | 7,468 | |||
Cash and cash equivalents, end of year | $ | 2,480 | 4,857 | 5,406 | |||
Supplementary information | ||||||
Interest received | $ | 45 | 27 | 45 | |||
Income taxes paid | $ | $ 1 | $ 3 | $ 340 | |||
ZHEJIANG JIAHUAN | ||||||
Cash flows from operating activities: | ||||||
Net income/(loss) | ¥ 4,936 | ¥ 4,710 | ¥ 2,308 | |||
(Used in)/ adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation of property, plant and equipment | 2,296 | 2,408 | 2,461 | |||
Written off of property, plant and equipment | 32 | 0 | 0 | |||
Amortisation of intangible asset | 83 | 0 | 0 | |||
Amortisation of land use right | 163 | 163 | 163 | |||
Other gains | (282) | 0 | 0 | |||
Decrease/(increase) in current assets: | ||||||
Accounts receivable, net | (25,939) | (6,448) | (4,115) | |||
Restricted cash | (21) | 0 | (10) | |||
Note receivables | 5,004 | (322) | (2,942) | |||
Other receivables | (3,072) | (6,074) | (1,094) | |||
Inventories | 10,786 | 5,909 | (6,520) | |||
Increase/(decrease) in current liabilities: | ||||||
Accounts payable | 2,269 | 1,767 | 5,457 | |||
Note payable | 3,595 | 0 | 0 | |||
Other payables and accrued expenses | (3,145) | 2,131 | (920) | |||
Income tax payable | 1,121 | 405 | 805 | |||
Other long-term liability | (133) | (73) | (87) | |||
Net cash (used in)/provided by operating activities | (2,307) | 4,576 | (4,494) | |||
Cash flows from investing activities: | ||||||
Purchase of intangible asset | (591) | 0 | 0 | |||
Purchase of property, plant and equipment | (258) | (664) | (1,404) | |||
Net cash (used in)/provided by investing activities | (849) | (664) | (1,404) | |||
Cash flows from financing activities: | ||||||
Repayment of bank borrowings | (50,400) | (50,300) | (18,200) | |||
Advance of bank borrowings | 63,200 | 50,100 | 26,800 | |||
(Decrease)/Increase in amount due to shareholders | (5,470) | (3,200) | 850 | |||
Dividend paid to owners | 0 | (2,250) | (2,250) | |||
Net cash (used in)/provided by financing activities | 7,330 | (5,650) | 7,200 | |||
Net (decrease)/increase in cash and cash equivalents | 4,174 | (1,738) | 1,302 | |||
Cash and cash equivalents, beginning of year | 3,129 | 4,867 | 3,565 | |||
Cash and cash equivalents, end of year | 7,303 | 3,129 | 4,867 | |||
Supplementary information | ||||||
Interest received | 44 | 17 | 32 | |||
Interest paid | (3,799) | (2,209) | (1,702) | |||
Income taxes paid | 0 | (79) | 0 | |||
Income tax refund | 260 | 0 | 786 | |||
ZHEJIANG TIANLAN | ||||||
Cash flows from operating activities: | ||||||
Net income/(loss) | 21,753 | 14,008 | 5,298 | |||
(Used in)/ adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation of property, plant and equipment | 8,473 | 2,985 | 2,956 | |||
Amortisation of intangible asset | 193 | 239 | 395 | |||
Amortisation of land use right | 149 | 149 | 141 | |||
Written off of motor vehicles | 5 | 0 | 0 | |||
(Gain)/loss on disposal of property, plant and equipment | 0 | 225 | (40) | |||
(Gain)/loss on disposal of intangible asset | 0 | (150) | (23) | |||
Deferred tax assets | (177) | (1,391) | (446) | |||
Decrease/(increase) in current assets: | ||||||
Accounts receivable, net | (51,299) | (9,481) | 79,243 | |||
Amounts due from owners | 0 | 0 | 0 | |||
Prepayments and other current assets | 57,251 | (19,654) | (52,792) | |||
Inventories | 3,943 | (1,078) | (5,822) | |||
Income tax receivables | 1,045 | (1,045) | 0 | |||
Increase/(decrease) in current liabilities: | ||||||
Accounts payable | (57) | 77,861 | (76,615) | |||
Amount due to owner | 0 | 0 | 9 | |||
Other payables and accrued expenses | (72,663) | 37,075 | 48,898 | |||
Other taxes payable | (479) | 1,034 | 6,040 | |||
Income tax payable | 934 | (449) | (5,175) | |||
Net cash (used in)/provided by operating activities | (30,929) | 100,328 | 2,067 | |||
Cash flows from investing activities: | ||||||
Purchase of intangible asset | 0 | 0 | (39) | |||
Purchase of property, plant and equipment | (8,285) | (117,966) | (1,983) | |||
Sales proceeds from intangible assets | 0 | 420 | 110 | |||
Proceeds on disposal of property, plant and equipment | 0 | 923 | 69 | |||
Net cash (used in)/provided by investing activities | (8,285) | (116,623) | (1,843) | |||
Cash flows from financing activities: | ||||||
Repayment of bank borrowings | (174,900) | (104,690) | (88,100) | |||
Advance of bank borrowings | 122,000 | 137,900 | 92,790 | |||
Dividend paid to owners | (9,180) | (9,180) | (6,120) | |||
Advance of long term borrowings | 107,732 | 0 | 0 | |||
Net cash (used in)/provided by financing activities | 45,652 | 24,030 | (1,430) | |||
Net (decrease)/increase in cash and cash equivalents | 6,438 | 7,735 | (1,206) | |||
Cash and cash equivalents, beginning of year | 29,197 | 21,462 | 22,668 | |||
Cash and cash equivalents, end of year | 35,635 | 29,197 | 21,462 | |||
Supplementary information | ||||||
Interest received | 166 | 148 | 194 | |||
Interest paid | 6,429 | 6,272 | 4,751 | |||
Income taxes paid | ¥ 3,310 | ¥ 2,263 | ¥ 396 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY ¥ in Thousands, $ in Thousands | OrdinaryCNY (¥)shares | Additional Paid-In CapitalCNY (¥) | Treasury StockCNY (¥) | Accumulated Other Comprehensive IncomeCNY (¥) | PRC statutory reservesCNY (¥) | Retained EarningsCNY (¥) | Noncontrolling InterestCNY (¥) | CNY (¥) | USD ($) |
Beginning Balance, shares at Dec. 31, 2012 | shares | 2,229,609 | ||||||||
Beginning Balance, amount at Dec. 31, 2012 | ¥ 123 | ¥ 9,533 | ¥ (766) | ¥ 731 | ¥ 311 | ¥ 5,905 | ¥ 1,919 | ¥ 17,756 | |
Net income/loss | (18) | 113 | $ 95 | ||||||
Other comprehensive income: Foreign exchange translation adjustment | 127 | 54 | 181 | ||||||
Appropriation of reserves | 4 | (4) | 0 | ||||||
Dividend paid/payable to non-controlling interest | (134) | (134) | |||||||
Disposal of a subsidiary | 53 | 53 | |||||||
Release of translation reserves upon disposal of a subsidiary | (74) | (74) | |||||||
Ending Balance, shares at Dec. 31, 2013 | shares | 2,229,609 | ||||||||
Ending Balance, amount at Dec. 31, 2013 | ¥ 123 | 9,533 | (766) | 784 | 315 | 5,883 | 2,005 | 17,877 | |
Net income/loss | (123) | (169) | (292) | ||||||
Other comprehensive income: Foreign exchange translation adjustment | (8) | (7) | (15) | ||||||
Dividend paid/payable to non-controlling interest | (42) | (42) | |||||||
Release of translation reserves upon disposal of a subsidiary | $ | 0 | ||||||||
Stock-based compensation expense | 2 | 2 | |||||||
Ending Balance, shares at Dec. 31, 2014 | shares | 2,229,609 | ||||||||
Ending Balance, amount at Dec. 31, 2014 | ¥ 123 | 9,535 | (766) | 776 | 315 | 5,760 | 1,787 | 17,530 | |
Net income/loss | (616) | (391) | (1,007) | ||||||
Other comprehensive income: Foreign exchange translation adjustment | 23 | (86) | (63) | ||||||
Purchase of treasury stock | (20) | (20) | |||||||
Release of translation reserves upon disposal of a subsidiary | $ | 0 | ||||||||
Stock-based compensation expense | 16 | ¥ 16 | |||||||
Ending Balance, shares at Dec. 31, 2015 | shares | 2,229,609 | ||||||||
Ending Balance, amount at Dec. 31, 2015 | ¥ 123 | ¥ 9,551 | ¥ (786) | ¥ 799 | ¥ 315 | ¥ 5,144 | ¥ 1,310 | $ 16,456 |
ZHEJIANG JIAHUAN ELECTRONIC COM
ZHEJIANG JIAHUAN ELECTRONIC COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY ¥ in Thousands, $ in Thousands | CNY (¥) | USD ($) | Share capitalCNY (¥) | Capital reservesCNY (¥) | PRC statutory reservesCNY (¥) | Retained earningsCNY (¥) | Non controlling interestCNY (¥) |
Beginning Balance, amount (ZHEJIANG JIAHUAN) at Dec. 31, 2012 | ¥ 82,875 | ¥ 11,250 | ¥ 8,542 | ¥ 20,920 | ¥ 41,883 | ¥ 280 | |
Net loss and total comprehensive loss | ZHEJIANG JIAHUAN | 2,308 | 2,305 | 3 | ||||
Net loss and total comprehensive loss | $ | $ 35 | ||||||
Transfer to statutory reserve | ZHEJIANG JIAHUAN | 0 | 11 | (11) | ||||
Dividend paid | ZHEJIANG JIAHUAN | (2,250) | (2,250) | |||||
Ending Balance, amount (ZHEJIANG JIAHUAN) at Dec. 31, 2013 | 82,933 | 11,250 | 8,542 | 20,931 | 41,927 | 283 | |
Net loss and total comprehensive loss | ZHEJIANG JIAHUAN | 4,710 | 4,710 | |||||
Net loss and total comprehensive loss | $ | (131) | ||||||
Dividend paid | ZHEJIANG JIAHUAN | (2,250) | (2,250) | |||||
Ending Balance, amount (ZHEJIANG JIAHUAN) at Dec. 31, 2014 | 85,393 | 11,250 | 8,542 | 20,931 | 44,387 | 283 | |
Net loss and total comprehensive loss | ZHEJIANG JIAHUAN | 4,936 | 4,936 | |||||
Net loss and total comprehensive loss | $ | $ (593) | ||||||
Disposal of Non-controlling interest | ZHEJIANG JIAHUAN | (283) | (283) | |||||
Ending Balance, amount (ZHEJIANG JIAHUAN) at Dec. 31, 2015 | ¥ 90,046 | ¥ 11,250 | ¥ 8,542 | ¥ 20,931 | ¥ 49,323 | ¥ 0 |
ZHEJIANG TIANLAN CONSOLIDATED S
ZHEJIANG TIANLAN CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY ¥ in Thousands, $ in Thousands | CNY (¥) | USD ($) | OrdinaryCNY (¥) | Capital reserveCNY (¥) | PRC statutory reservesCNY (¥) | Retained EarningsCNY (¥) | Noncontrolling InterestCNY (¥) |
Beginning Balance, amount (ZHEJIANG TIANLAN) at Dec. 31, 2012 | ¥ 152,434 | ¥ 61,200 | ¥ 43,189 | ¥ 4,274 | ¥ 39,931 | ¥ 3,840 | |
Net profit/loss | ZHEJIANG TIANLAN | 5,298 | 7,626 | (2,328) | ||||
Net profit/loss | $ 95 | (18) | 113 | ||||
Dividend paid | ZHEJIANG TIANLAN | (6,120) | (6,120) | |||||
Appropriation of reserves | ZHEJIANG TIANLAN | 0 | 1,243 | (1,243) | ||||
Appropriation of reserves | 0 | (4) | |||||
Ending Balance, amount (ZHEJIANG TIANLAN) at Dec. 31, 2013 | 151,612 | 61,200 | 43,189 | 5,517 | 40,194 | 1,512 | |
Net profit/loss | ZHEJIANG TIANLAN | 14,008 | 14,000 | 8 | ||||
Net profit/loss | (292) | (123) | (169) | ||||
Dividend paid | ZHEJIANG TIANLAN | (9,180) | (9,180) | |||||
Appropriation of reserves | ZHEJIANG TIANLAN | 0 | 1,304 | (1,304) | ||||
Ending Balance, amount (ZHEJIANG TIANLAN) at Dec. 31, 2014 | 156,440 | 61,200 | 43,189 | 6,821 | 43,710 | 1,520 | |
Net profit/loss | ZHEJIANG TIANLAN | 21,753 | 21,671 | 82 | ||||
Net profit/loss | $ (1,007) | (616) | (391) | ||||
Dividend paid | ZHEJIANG TIANLAN | (9,180) | (9,180) | |||||
Appropriation of reserves | ZHEJIANG TIANLAN | 0 | 2,273 | (2,273) | ||||
Issue share capital by transfer from statutory reserves | ZHEJIANG TIANLAN | 0 | 18,972 | (18,972) | ||||
Ending Balance, amount (ZHEJIANG TIANLAN) at Dec. 31, 2015 | ¥ 169,013 | ¥ 80,172 | ¥ 24,217 | ¥ 9,094 | ¥ 53,928 | ¥ 1,602 |
1. Organisation and principal a
1. Organisation and principal activities | 12 Months Ended |
Dec. 31, 2015 | |
Organisation and principal activities | 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 Peoples Republic of China (the PRC). Details of the Companys significant subsidiaries and affiliates are summarised as follows: Name Percentage of equity ownership Place of incorporation Principal activities Subsidiaries: Euro Tech (Far East) Limited 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 (China) Limited 100% Hong Kong Inactive Euro Tech Trading (Shanghai) Limited 100% The PRC Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Shanghai Euro Tech Limited 100% The PRC Manufacturing of analytical and testing equipment Shanghai Euro Tech Environmental Engineering Company Limited 100% The PRC Undertaking water and waste-water treatment engineering projects Chongqing Euro Tech Rizhi Technology Co., Ltd 100% The PRC Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Rizhi Euro Tech Instrument (Shaanxi) Co., Ltd 100% The PRC Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Guangzhou Euro Tech Environmental Equipment Co., Ltd 100% The PRC Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Yixing Pact Environmental Technology Co., Ltd 58% The PRC Design, manufacture and operation of water and waste water treatment machinery and equipment Pact Asia Pacific Limited 58% The British Virgin Islands Selling of environment protection equipment, undertaking environment protection projects and providing relevant technology advice, training and services Affiliates: Zhejiang Tianlan Environmental Protection Technology Co. Ltd. (Formerly known as Zhejiang Tianlan Desulfurization and DustRemoval Co. Ltd.) 20% The PRC Design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted Zhejiang Jia Huan Electronic Co. Ltd. 20% The PRC Design and manufacturing automatic control systems and electric voltage control equipment for electrostatic precipitators (air purification equipment) |
ZHEJIANG JIAHUAN | |
Organisation and principal activities | Zhejiang Jiahuan Electronic Company Limited (the Company) was established in the Peoples Republic of China (PRC) as a limited liability company. The principal activities of the Company are design, manufacturing and sales of automatic control systems and electric voltage control equipment for electrostatic precipitators (air purification equipment). Details of the Companys subsidiaries are summarised as follows: Name Percentage of equity ownership Place of incorporation Principal activities 2015 2014 Jinhua Jiahuan Puzhau New Energy Technology Co., Ltd* - 80 % PRC Dormant Zhejiang Jiahuan Xinyu Environmental Production Co., Ltd 100 % 100 % PRC Manufacturing and installation services of environmental production equipment *The Company has been deregistered on September 1, 2015. |
ZHEJIANG TIANLAN | |
Organisation and principal activities | 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 company by shares with an operating period up to August 5, 2037. 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 recently received approval from the National Equities Exchange and Quotations (NEEQ) to list its shares on the New Third Board in the Peoples Republic of China (PRC) on November 17, 2015. Details of the Companys subsidiaries are summarised as follows: Name Percentage of equity ownership Place of incorporation Principal activities 2015 2014 Hangzhou Tianlan Environmental Engineering and Design Company Limited 100 % 100 % PRC Provision of maintenance services of environmental protection equipment Hangzhou Tianlan Environmental Protection Equipments Company Limited 51 % 51 % PRC Manufacturing and installation services of environmental protection equipment Shihezi Tianlan Environmental Protection Technology Company Limited ( 石河子市天藍環保技術有限公司 100 % 100 % PRC Provision of maintenance services of environmental protection equipment Da Tong Tianlan Environmental Protection Technology Service Company Limited ( 大同天藍環保技術服務有限公司 100 % 100 % PRC Provision of maintenance services of environmental protection equipment Hangzhou Tianlan Environmental Testing Technology Company Limited ( 杭州天藍環境檢測技術有限公司 100 % - PRC Provision of testing services of environmental protection equipment * The Company was incorporated on November 10, 2014. ** The Company was incorporated on October 28, 2015. |
2. Summary of significant accou
2. Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2015 | |
Summary of significant accounting policies | (a) Basis of Consolidation The consolidated financial statements include the accounts of Euro Tech Holdings Company Limited and its subsidiaries (the Group). The financial statements of variable interest entities (VIEs), as defined by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 810-10, Consolidation, are included in the consolidated financial statements, if applicable. All material intercompany balances and transactions have been eliminated on consolidation. The Group identified that a retail shop established in the PRC qualified as variable interest entities as defined in ASC 810-10. The retail shops are principally engaged in the retailing business of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems. The Company is the primary beneficiary of this retail shop and, accordingly, consolidated their financial statements. The Company has a controlling financial interest in this retail shop and is subject to a majority of the risk of loss from the retailing activities, and is entitled to receive a majority of the retail shops residual returns. Total assets and liabilities of this consolidated VIE total US$9,179 and US$1,626, as of December 31, 2015 and US$12,968 and US$1,388, as of December 31, 2014, respectively. The cumulative losses on consolidating this VIE in the Groups consolidated statement of income in 2015 were US$348,992 (2014: losses of US$330,299 and 2013: losses of US$302,893), including taxes of US$77 (2014: US$1,046 and 2013: US$1,018). The assets of the entities consist mainly of cash and bank balances, trade and other receivables, inventories and property, plant and equipment. The creditors of this VIE do not have a recourse to the general credit of the Group. The Group will provide for all necessary financing for the VIE. (b) Subsidiaries and affiliates A subsidiary is a company in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors; 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. An investment in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies (generally 20-50 percent ownership), are accounted for using the equity method of accounting. (c) Revenue Recognition The Groups main source of revenue is the sale of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems. The Company recognises revenue when the product is delivered and the title is transferred. For certain products where installation is necessary, revenue is recognised upon completion of installation. Revenue earned from customer support services, which represents a minor percentage of total revenues, is recognised when such services are provided. Revenues and profits in long term fixed price contracts or engineering income are recognised using the percentage of completion method in accordance with FASB ASC Subtopic 605-35, Revenue Recognition Construction-Type and Production-Type Contracts. This approach primarily based on contract costs incurred to date compared with total estimated contract costs. Changes to total estimated contract costs or losses, if any, are recognised in the period they are determined. Revenues recognised in excess of amounts billed are classified as costs and estimated earnings in excess of billings on uncompleted contracts. Essentially all of such amounts are expected to be billed and collected within one year and are classified as current assets. Billings in excess of costs and estimated earnings on uncompleted contracts are classified as current liabilities. When reasonably dependable estimates cannot be made, construction contract revenues are recognised using the completed contract method. (d) Research and Development Costs Research and development costs (R&D costs) are expensed as incurred. The R&D costs amounted to approximately US$852,000, US$631,000 and US$427,000 for the years ended December 31, 2015, 2014 and 2013 respectively and were included in Selling and Administrative expenses (e) Advertising and promotional expenses Advertising and promotional expenses (A&P expenses) are expensed as incurred. The A&P expenses amounted to approximately US$17,000, US$44,000 and US$12,000 for the years December 31, 2015, 2014 and 2013 respectively and were included in Selling and Administrative expenses (f) Taxation The Group accounts for income and deferred tax under the provision of FASB ASC Subtopic 740-10, Income Taxes, under which deferred taxes are recognised for all temporary differences between the applicable tax balance sheets and the consolidated balance sheet. Deferred tax assets and liabilities are recognised for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. ASC 740-10 also requires the recognition of the future tax benefits of net operating loss carry forwards. A valuation allowance is established when the deferred tax assets are not expected to be realised within a reasonable period of time. In accordance with ASC 740-10, the Company recognises tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Company did not have such uncertain tax positions in 2015, 2014 and 2013. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income for the period that includes the enactment date. (g) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and demand deposits with banks. (h) Restricted Cash Restricted cash represents cash deposits retained with banks in the PRC for issuance of performance guarantees to the customers. The amount is expected to be released within one year after the balance sheet date. (i) Receivables and Other Assets Receivables and other assets are recorded at their nominal values. Doubtful debt allowances are provided for identified individual risks for these line items. If the loss of a certain part of the receivables is probable, doubtful debt allowances are provided to cover the expected loss. Receivables are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. (j) Inventories Inventories are stated at the lower of cost, on the first-in, first-out method, or market value. Costs include purchase and related costs incurred in bringing each product to its present location and condition. Market value is calculated based on the estimated normal selling price, less further costs expected to be incurred for disposal. Allowance is made for obsolete, slow moving or defective items, where appropriate. (k) Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Gains or losses on disposal are reflected in current operations. Major expenditures for betterments and renewals are capitalised. All ordinary repair and maintenance costs are expensed as incurred. Depreciation of property, plant and equipment is 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 (l) Impairment The Group has adopted FASB ASC Subtopic 360-10, Property, Plant, and Equipment, which requires impairment losses to be recorded for property, plant and equipment to be held and used in operations when indicators of impairment are present. Reviews are regularly performed to determine whether the carrying value of assets is impaired. The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There was no impairment losses recorded during each of the three years ended December 31, 2015. (m) Operating Leases Leases where substantially all the risks and rewards of ownership of the leased assets remain with the lessors are accounted for as operating leases. Rental payments under operating leases are charged to expense on the straight-line basis over the period of the relevant leases. (n) Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350, goodwill is not amortized, but rather is subject to an annual impairment test. Goodwill is tested for impairment at the reporting unit level by comparing the fair value of the reporting unit with its carrying value. The Company performs its annual impairment analysis of goodwill in the fourth quarter of the year, or more often if there are indicators of impairment present. The provisions of ASC 350 require that a two-step impairment test be performed on goodwill at the level of the reporting units. In the first step, or Step 1, the Company compares the fair value of each reporting unit to its carrying value. If the fair value exceeds the carrying value of the net assets, goodwill is considered not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets exceeds the fair value, then the Company must perform the second step, or Step 2, of the impairment test in order to determine the implied fair value of goodwill. To determine the fair value used in Step 1, the Company uses discounted cash flows. If and when the Company is required to perform a Step 2 analysis, determining the fair value of its net assets and its off-balance sheet intangibles would require it to make judgments that involve the use of significant estimates and assumptions. (o) Foreign Currency Translation The Company maintains its books and records in United States dollars. Its subsidiaries and affiliates maintain their books and records either in Hong Kong dollars or Chinese Renminbi (functional currencies). Foreign currency transactions during the year are translated into the respective functional currencies at the applicable rates of exchange at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the respective functional currencies using the exchange rates prevailing at the balance sheet dates. Gains or losses from foreign currency transactions are recognised in the consolidated statements of income during the year in which they occur. Translation adjustments on subsidiaries equity are included as accumulated comprehensive income or loss. (p) Derivative Instruments and Hedging Activities ASC 815, "Derivatives and Hedging" ("ASC 815"), as amended, requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income (loss). If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized in earnings. The Company uses derivatives to hedge certain cash flow foreign currency exposures in order to further reduce the Group's exposure to foreign currency risks. (q) Fair Value Measurement ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The Group adopted ASC 820, Fair Value Measurements and Disclosures, for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. The fair values of current financial assets and liabilities carried at amortized cost approximate their carrying amounts. (r) Comprehensive Income The Group has adopted FASB ASC Subtopic 220-10, Comprehensive Income, which requires the Group to report all changes in equity during a period, except for those resulting from investment by owners and distribution to owners, in the financial statements for the period in which they are recognised. The Group has presented comprehensive income, which encompasses net income and foreign currency translation adjustments, in the consolidated statement of changes in shareholders equity. (s) 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 Companys 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. (t) Net income per Ordinary Share Net income per ordinary share is computed in accordance with FASB ASC Subtopic 260-10, Earnings Per Share, by dividing the net income by the weighted average number of shares of ordinary share outstanding during the period. The Company 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 accounts for stock-based compensation in accordance with ASC 718, "Compensation-Stock Compensation" ("ASC 718"). ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statement of operations. The Group recognizes compensation expenses for the value of its awards, based on the straight line method over the requisite service period of each of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. (v) Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on managements best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the estimates. (w) Related Parties Related parties (x) Segment Information The Companys segment reporting is prepared in accordance with FASB ASC Subtopic 280-10, Segment Reporting. The management approach required by ASC 280-10 designates that the internal reporting structure that is used by management for making operating decisions and assessing performance should be used as the source for presenting the Companys reportable segments. The Company categorises its operations into two business segments: Trading and manufacturing, and Engineering. (y) Recent Accounting Pronouncements In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the requirements for disposals to qualify as discontinued operations and expands related disclosure requirements. This new accounting guidance will be effective for the interim and annual period beginning December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standards core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under todays guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance was deferred by ASU 2015-14, issued by the FASB in August 2015, and this new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the required presentation of debt issuance costs from an asset on the balance sheet to a deduction from the related debt liability. This new accounting guidance will be effective for interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-05, Customers' Accounting for Fees Paid in a Cloud Computing Arrangement, which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under this ASU, non-LIFO inventory will be measured at the lower of cost and net realizable value, eliminating the options that currently exist for market valuation. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. No other changes were made to the current guidance on inventory measurement. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In August 2014, the FASB issued ASU 2014-15Presentation of Financial StatementsGoing Concern (Subtopic 205-40), which addresses managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures. Managements evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. Early application is permitted as of the beginning of the interim or annual reporting period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In January 2016, the FASB issued ASU 2016-01Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment addresses various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. This amendment will be effective for the interim and annual period beginning after December 31, 2017. Early adoption by public entities is permitted only for certain provisions. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases, which will replace the existing guidance in ASC 840, Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2020. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, which simplifies the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2018. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. This update clarifies when it is acceptable to recognize the unredeemed portion of prepaid gift cards into income. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. |
ZHEJIANG JIAHUAN | |
Summary of significant accounting policies | (a) Basis of Consolidation The consolidated financial statements include the accounts of Zhejiang Jiahuan Electronic Company Limited and its subsidiaries (the Group). In preparing the consolidated financial statements presented herewith, all significant intercompany balances and transactions have been eliminated on consolidation. (b) Subsidiaries A subsidiary is a company in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors; 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 An investment in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies (generally 20-50 percent ownership), are accounted for using the equity method of accounting. (c) Revenue Recognition Revenue from sale of automatic control systems, electric voltage control equipment, environmental equipment, and solar and wind power equipment is recognized when the product is delivered and the title is transferred. For certain products where installation is necessary, revenue is recognized upon completion of installation. (d) Research and Development Costs Research and development costs (R&D costs) are expensed as incurred. The R&D costs amounted to approximately RMB6,982,000 and RMB4,981,000 for the years ended December 31, 2015 and 2014 respectively and were included in Selling and Administrative expenses in the Groups consolidated statements of income. (e) Taxation The Group accounts for income and deferred tax under the provision of FASB ASC Subtopic 740-10, Income Taxes, under which deferred taxes are recognised for all temporary differences between the applicable tax balance sheets and the consolidated balance sheet. Deferred tax assets and liabilities are recognised for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. ASC 740-10 also requires the recognition of the future tax benefits of net operating loss carry forwards. A valuation allowance is established when the deferred tax assets are not expected to be realised within a reasonable period of time. In accordance with ASC-740-10, the Company recognises tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Company did not have such uncertain tax positions in 2015, 2014 and 2013. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income for the period that includes the enactment date. (f) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and demand deposits with banks. (g) Investments Investments comprise marketable securities which are classified as available-for-sale securities and are carried at fair value with unrealized gains and losses, et of taxes, reported as a separate component of shareholders equity (deficit). The Company determines any realized gains or losses on the sale of marketable securities on a specific identification method, and records such gains and losses as a component of other income (expense), net in the consolidated statement of income. (h) Receivables and Other Assets Receivables and other assets are recorded at their nominal values. Doubtful debt allowances are provided for identified individual risks for these line items. If the loss of a certain part of the receivables is probable, doubtful debt allowances are provided to cover the expected loss. Receivables are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. (i) Inventories Inventories are stated at the lower of cost or market determined using the first-in, first-out method. Costs included purchase and related costs incurred in bringing each product to its present location and condition. Market value is calculated based on the estimated normal selling price, less further costs expected to be incurred for disposal. Provision is made for obsolete, slow moving or defective items, where appropriate. (j) Property, Plant and Equipment and Land Use Right Property, plant and equipment are stated at cost less accumulated depreciation. Gains or losses on disposal are reflected in current operations. Major expenditures for betterments and renewals are capitalised. All ordinary repair and maintenance costs are expensed as incurred. 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 for time. Thus, all of the Companys land purchases in the PRC are considered to be leasehold land and classified as land use right. Construction in progress is stated at cost less impairment losses. Cost comprises direct costs of construction as well as borrowing costs capitalized during the periods of construction and installation. Capitalisation of these costs creases and the construction in progress is transferred to the appropriate class of property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for in respect of construction in progress until it is completed and read for its intended use. 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 50 years Buildings 20 years Plant and machinery 5 to 20 years Office equipment 3 to 10 years Motor vehicles 5 to 10 years (k) Intangible Assets The Company amortizes its intangible assets with definite lives over their estimated useful lives and reviews these assets for impairment. The Company is currently amortizing its acquired intangible assets with definite lives over periods generally ranging between five to twenty years. (l) Impairment The Group has adopted FASB ASC Subtopic 360-10, Property, Plant, and Equipment, which requires impairment losses to be recorded for property, plant and equipment to be held and used in operations when indicators of impairment are present. Reviews are regularly performed to determine whether the carrying value of assets is impaired. The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There were no impairment losses recorded during each of the three years ended December 31, 2015, December 31, 2014 and December 31, 2013. (m) Comprehensive Income The Group has adopted FASB ASC Subtopic 220-10, Comprehensive Income, which requires the Group to report all changes in equity during a period, except for those resulting from investment by owners and distribution to owners, in the financial statements for the period in which they are recognised. The Group has presented comprehensive income, which encompasses net income, in the consolidated statement of changes in shareholders equity. (n) Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on managements best knowledge of current events and actions that the Group may undertake in the future, actual results may be different from the estimates. (o) 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. (p) Recent Accounting Pronouncements In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the requirements for disposals to qualify as discontinued operations and expands related disclosure requirements. This new accounting guidance will be effective for the interim and annual period beginning December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standards core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under todays guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance was deferred by ASU 2015-14, issued by the FASB in August 2015, and this new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the required presentation of debt issuance costs from an asset on the balance sheet to a deduction from the related debt liability. This new accounting guidance will be effective for interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-05, Customers' Accounting for Fees Paid in a Cloud Computing Arrangement, which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under this ASU, non-LIFO inventory will be measured at the lower of cost and net realizable value, eliminating the options that currently exist for market valuation. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. No other changes were made to the current guidance on inventory measurement. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In August 2014, the FASB issued ASU 2014-15Presentation of Financial StatementsGoing Concern (Subtopic 205-40), which addresses managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures. Managements evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. Early application is permitted as of the beginning of the interim or annual reporting period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In January 2016, the FASB issued ASU 2016-01Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment addresses various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. This amendment will be effective for the interim and annual period beginning after December 31, 2017. Early adoption by public entities is permitted only for certain provisions. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases, which will replace the existing guidance in ASC 840, Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2020. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, which simplifies the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2018. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. This update clarifies when it is acceptable to recognize the unredeemed portion of prepaid gift cards into income. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. (r) Fair Value Measurement ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The Group adopted ASC 820, Fair Value Measurements and Disclosures, for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. The fair values of current financial assets and liabilities carried at amortized cost approximate their carrying amounts. |
ZHEJIANG TIANLAN | |
Summary of significant accounting policies | (a) Basis of Consolidation The consolidated financial statements include the accounts of Zhejiang Tianlan Environmental Protection Technology Company Limited and its subsidiaries (the Group). In preparing the consolidated financial statements presented herewith, all significant intercompany balances and transactions have been eliminated on consolidation. (b) Subsidiaries A subsidiary is a company in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors; 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 An investment in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies (generally 20-50 percent ownership), are accounted for using the equity method of accounting. (c) Revenue Recognition The Groups main source of revenue is the construction and installation services of environmental protection equipment for flue gas desulphurization, dust removal and flue gas denitration. Revenues are recorded under the percentage of completion method in accordance with FASB ASC Subtopic 605-35, Revenue Recognition Construction-Type and Production-Type Contracts. This approach primarily based on contract costs incurred to date compared with total estimated contract costs. Changes to total estimated contract costs or losses, if any, are recognised in the period they are determined. Revenues recognised in excess of amounts billed are classified as costs and estimated earnings in excess of billings on uncompleted contracts. Essentially all of such amounts are expected to be billed and collected within one year and are classified as current assets. Billings in excess of costs and estimated earnings on uncompleted contracts are classified as current liabilities. When reasonably dependable estimates cannot be made, construction contract revenues are recognised using the completed contract method. (d) Research and Development Costs Research and development costs (R&D costs) are expensed as incurred. The R&D costs amounted to approximately RMB18,895,000, RMB21,796,000 and RMB15,018,000 for the years ended December 31, 2015, 2014 and 2013 respectively and were included in Selling and Administrative expenses in the Groups consolidated statements of income. (e) Advertising and promotional expenses Advertising and promotional expenses (A&P expenses) are expensed as incurred. The A&P expenses amounted to approximately RMB24,000, RMB11,000 and RMB25,000 for the years December 31, 2015, 2014 and 2013 respectively and were included in Selling and Administrative expenses in the Groups consolidated statements of income. (f) Taxation The Group accounts for income and deferred tax under the provision of FASB ASC Subtopic 740-10, Income Taxes, under which deferred taxes are recognised for all temporary differences between the applicable tax balance sheets and the consolidated balance sheet. Deferred tax assets and liabilities are recognised for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. ASC 740-10 also requires the recognition of the future tax benefits of net operating loss carry forwards. A valuation allowance is established when the deferred tax assets are not expected to be realised within a reasonable period of time. In accordance with ASC-740-10, the Company recognises tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Company did not have such uncertain tax positions in 2015, 2014 and 2013. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income for the period that includes the enactment date. (g) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and demand deposits with banks. (h) Receivables and Other Assets Receivables and other assets are recorded at their nominal values. Doubtful debt allowances are provided for identified individual risks for these line items. If the loss of a certain part of the receivables is probable, doubtful debt allowances are provided to cover the expected loss. Receivables are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. According to construction contracts signed with the customers, an amount ranged from 5%-20% of contract sum will only be receivable one year after the final inspection report issued by relevant department of Ministry of Environmental Protection. As of December 31, 2015, accounts receivable in more than one year amounted to RMB 57,623,000 (2014: RMB 46,144,000 and 2013: RMB 52,272,000). (i) Inventories Inventories are stated at the lower of cost or market determined using the weighted average method which approximates cost and estimated net realizable value. Cost of work in progress and finished goods comprise direct material, direct production costs and an allocated portion of production overhead costs based on normal operating capacity. (j) Property, Plant and Equipment and Land Use Right Property, plant and equipment are stated at cost less accumulated depreciation. Gains or losses on disposal are reflected in current operations. Major expenditures for betterments and renewals are capitalised. All ordinary repair and maintenance costs are expensed as incurred. 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 for time. Thus, all of the Companys land purchases in the PRC are considered to be leasehold land and 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 Office premises 47-50 years, with 5% residual value Leasehold improvements over terms of the leases or the useful lives whichever is less, with 5% residual value Plant and machineries 5 to 10 years, with 5% residual value Furniture, fixtures and office equipment 3 to 5 years, with 5% residual value Motor vehicles 1 to 8 years, with 5% residual value (k) Intangible Assets The Company amortizes its intangible assets with definite lives over their estimated useful lives and reviews these assets for impairment. The Company is currently amortizing its acquired intangible assets with definite lives over periods generally ranging between five to twenty years. (l) Impairment The Group has adopted FASB ASC Subtopic 360-10, Property, Plant, and Equipment, which requires impairment losses to be recorded for property, plant and equipment to be held and used in operations when indicators of impairment are present. Reviews are regularly performed to determine whether the carrying value of assets is impaired. The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There were no impairment losses recorded during each of the three years ended December 31, 2015. (m) Government grant income Government grant income consisted of receipt of funds to subsidize the investment cost of information technology system development and market 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 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 consolidated statement of operations over the useful life of the asset by way of reduced depreciation expenses. (n) Operating Leases Leases where substantially all the risks and rewards of ownership of the leased assets remain with the lessors are accounted for as operating leases. Rental payments under operating leases are charged to expense on the straight-line basis over the period of the relevant leases. (o) Comprehensive Income The Group has adopted FASB ASC Subtopic 220-10, Comprehensive Income, which requires the Group to report all changes in equity during a period, except for those resulting from investment by owners and distribution to owners, in the financial statements for the period in which they are recognised. The Group has presented comprehensive income, which encompasses net income, in the consolidated statement of changes in shareholders equity. (p) Share capital Paid in capital refers to the registered capital paid-up by the shareholders of the Company. At the year end of December 31, 2014, there were 61,200,000 shares were issued. On December 17, 2015, the Company increased the number of registered shares by 18,972,000 shares. The paid up capital will be increased by RMB 18,972,000 by transfer from the capital reserves, which is agreed by the shareholders and the board of directors. At the year end of December 31, 2015, there were 80,172,000 shares were issued. (q) Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on managements best knowledge of current events and actions that the Group may undertake in the future, actual results may be different from the 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) Fair Value Measurement ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The Group adopted ASC 820, Fair Value Measurements and Disclosures, for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. The fair values of current financial assets and liabilities carried at amortized cost approximate their carrying amounts. (t) Recent Accounting Pronouncements In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the requirements for disposals to qualify as discontinued operations and expands related disclosure requirements. This new accounting guidance will be effective for the interim and annual period beginning December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standards core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under todays guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance was deferred by ASU 2015-14, issued by the FASB in August 2015, and this new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the required presentation of debt issuance costs from an asset on the balance sheet to a deduction from the related debt liability. This new accounting guidance will be effective for interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-05, Customers' Accounting for Fees Paid in a Cloud Computing Arrangement, which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under this ASU, non-LIFO inventory will be measured at the lower of cost and net realizable value, eliminating the options that currently exist for market valuation. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. No other changes were made to the current guidance on inventory measurement. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In August 2014, the FASB issued ASU 2014-15Presentation of Financial StatementsGoing Concern (Subtopic 205-40), which addresses managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures. Managements evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. Early application is permitted as of the beginning of the interim or annual reporting period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In January 2016, the FASB issued ASU 2016-01Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment addresses various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. This amendment will be effective for the interim and annual period beginning after December 31, 2017. Early adoption by public entities is permitted only for certain provisions. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases, which will replace the existing guidance in ASC 840, Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2020. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, which simplifies the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2018. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. This update clarifies when it is acceptable to recognize the unredeemed portion of prepaid gift cards into income. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. |
3. Other income, net
3. Other income, net | 12 Months Ended |
Dec. 31, 2015 | |
Other income, net | 2015 2014 2013 US$000 US$000 US$000 Exchange (loss), net (75 ) (12 ) (18 ) Rental income 84 77 72 9 65 54 |
ZHEJIANG JIAHUAN | |
Other income, net | 2015 2014 2013 RMB000 RMB000 RMB000 Government grant 200 73 - Rental income (i) 901 850 665 Interest income 44 17 32 Sundry income 263 135 - 1,408 1,075 697 (i) Rental income under operating leases is recognized on a straight-line basis over the term of the relevant lease. |
ZHEJIANG TIANLAN | |
Other income, net | 2015 2014 2013 RMB000 RMB000 RMB000 Gain on disposal of intangible asset - 150 23 Gain on disposal of property, plant and equipment - 7 41 Subsidy income 2,617 4,163 6,893 Sales of scrapped materials 6 6 18 Others 150 269 449 2,773 4,595 7,424 |
4. Income taxes
4. Income taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income taxes | The Company is exempt from taxation in the British Virgin Islands (BVI). Euro Tech (Far East) Limited and Euro Tech (China) Limited provided for Hong Kong profits tax at a rate of 16.5% in year 2015 (2014 and 2013: 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 the Company, provides for PRC Enterprise Income Tax at a rate of 25% (2014 and 2013: 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, 2015, ETTS had an assessable loss carried forward of US$588,103 as agreed by the local tax authority to offset its profit for the forth coming years (2014: US$506,117 and 2013: US$374,902). Such loss will expire in 5 years. Shanghai Euro Tech Limited (SET), a subsidiary of the Company, provides for PRC Enterprise Income Tax at a rate of 25% (2014 and 2013: 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, 2015, SET had an assessable loss carried forward of US$284,173 as agreed by the local tax authority to offset its profit for the forth coming years (2014: US$390,290 and 2013: US$580,835). Such loss will expire in 5 years. Shanghai Euro Tech Environmental Engineering Limited (SETEE), a subsidiary of the Company, provides for PRC Enterprise Income Tax at a rate of 25% (2014 and 2013: 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, 2015, SETEE had an assessable loss carried forward of US$1,363,392 as agreed by the local tax authority to offset its profit for the forth coming years (2014: US$1,635,072 and 2013: US$1,409,408). Such loss will expire in 5 years. Yixing Pact Environmental Technology Co. (Yixing), a subsidiary of the Company, provides for PRC Enterprise Income Tax at a rate of 25% (2014 and 2013: 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, 2015, Yixing had an assessable loss carried forward of US$994,025 as agreed by the local tax authority to offset its profit for the forth coming years (2014: US$180,002). Such loss will expire in 5 years. Chongqing Euro Tech Rizhi Technology Co., Ltd (CQ), Rizhi Euro Tech Instrument (Shaanxi) Co., Ltd (RZ) and Guangzhou Euro Tech Environmental Equipment Co., Ltd (GZ) provide for PRC Enterprise Income Tax at a rate of 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. CQ, RZ and GZ had an assessable loss carried forward of US$139,068, US$76,029 and US$385,183 respectively as agreed by the local tax authority to offset its profit for the forth coming years (2014: US$140,484, US$65,882 and US$405,625). Such loss will expire in 5 years. VIEs of the Group provide for PRC Enterprise Income Tax at a rate of 25% (2014 and 2013: 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. 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 the Companys subsidiaries located in the PRC that are available for distribution to the Company of approximately US$1.1 million at December 31, 2015 (2014: US$2.2 million and 2013: US$2.0 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 the Company. Distributions made out of pre January 1, 2008 retained earnings will not be subject to the withholding tax. Loss before income taxes: 2015 2014 2013 US$000 US$000 US$000 The PRC and Hong Kong (1,904 ) (879 ) (157 ) The (credit) / provision for income taxes consist of: 2015 2014 2013 US$000 US$000 US$000 Current tax expenses: The PRC and Hong Kong (72 ) 8 47 Total current (credit) / provision (72 ) 8 47 Deferred tax expenses: The PRC and Hong Kong 25 10 26 Total deferred provision 25 10 26 The principal reconciling items from income tax computed at the statutory rates and at the effective income tax rates are as follows: 2015 2014 2013 US$000 US$000 US$000 Computed tax using respective companies statutory tax rates (177 ) (194 ) (49 ) Change in valuation allowances 455 93 124 Under-provision for income tax in prior years (69 ) - - Non-deductible expenses (256 ) 119 (2 ) Total (credit) / provision for income tax at effective tax rate (47 ) 18 73 The components of deferred tax assets are as follows: 2015 2014 US$000 US$000 Tax losses 1,159 1,131 Temporary differences 1 4 Less: Valuation allowances (958 ) (908 ) Net deferred tax assets 202 227 |
ZHEJIANG JIAHUAN | |
Income taxes | 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 for certain High and New Technology Enterprises (HNTE) on PRC taxable income. Zhejiang Jiahuan Electronic Company Limitedis classified as HNTE which enjoyed a preferential tax rate of 15%. The provision for income taxes consists of: 2015 2014 2013 RMB000 RMB000 RMB000 Income taxes 861 484 19 The principal reconciling items from income tax computed at the statutory rates and at the effective income tax rates are as follows: 2015 2014 2013 RMB000 RMB000 RMB000 Income before income taxes 5,797 5,194 2,327 Computed tax using respective companies statutory tax rates 1,119 1,299 582 Tax effect on revenue not subject to tax (447 ) (537 ) (20,983 ) Tax effect on expenses not deductible for tax purposes - - 20,455 Under / (over) provision for income tax in prior years 189 (278 ) - Others - - (35 ) Total provision for income tax at effective tax rate 861 484 19 No deferred tax assets or liabilities has been recognized in the financial statements as the Company did not have material temporary differences arising between the tax bases of assets and liabilities and their carrying amounts as at 31 December, 2015, and 2014. |
ZHEJIANG TIANLAN | |
Income taxes | 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 Equipments Company Limited are classified as HNTE which enjoyed a preferential tax rate of 15%. During the year ended December 31, 2015 and 2014, the PRC tax laws and regulations have launched a tax reduction scheme for small enterprises, Hangzhou Tianlan Environmental Engineering and Design Company Limited, Shihezi Tianlan Environmental Protection Technology Company Limited, Da Tong Tianlan Environmental Protection Technology Service Company Limited and Hangzhou Tianlan Environmental Testing Technology Company Limited are entitled to enjoy this tax benefit. It, thus, subjects to Enterprise Income Tax rate of 10% only. The provision for income taxes consists of: 2015 2014 2013 RMB000 RMB000 RMB000 Current PRC EIT: Domestic 3,351 2,159 3,110 Income taxes 3,351 2,159 3,110 Deferred tax benefit: (177 ) (1,391 ) (447 ) Total deferred taxes (177 ) (1,391 ) (447 ) The principal reconciling items from income tax computed at the statutory rates and at the effective income tax rates are as follows: 2015 2014 2013 RMB000 RMB000 RMB000 Income before income taxes 24,927 14,776 7,961 Computed tax using respective companies statutory tax rates 3,767 2,216 1,194 (Over)-provision for income tax in prior years - (2,418 ) (123 ) Temporary differences (177 ) 1,575 (445 ) Tax effect of revenue not subject to tax (1,068 ) (695 ) (242 ) Tax effect of expenses not deductible for tax purposes 596 90 2,279 Tax effect of unused tax losses not recognized 56 - - Total provision for income tax at effective tax rate 3,174 768 2,663 The components of deferred tax assets are as follows: 2015 2014 RMB000 RMB000 Tax losses - - Allowance for doubtful debts 4,527 4,350 Net deferred tax assets 4,527 4,350 |
5. Net income per ordinary shar
5. Net income per ordinary share | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Net income per ordinary share | The calculation of the basic and diluted net income per ordinary share is based on the following data: 2015 2014 2013 Number of shares Weighted average number of ordinary shares for the purposes of basic net income per share 2,063,738 2,069,223 2,069,223 Effect of dilutive potential ordinary shares: Stock options - - - Weighted average number of ordinary shares for the purposes of diluted net income per share 2,063,738 2,069,223 2,069,223 |
5A. Other taxes payable
5A. Other taxes payable | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG TIANLAN | |
Other taxes payable | Other taxes payable comprises mainly Valued-Added Tax (VAT) and Business Tax (BT). The Group is subject to output VAT levied at the rate of 17% 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. BT is charged at a rate of 5% and 3% on the revenue from technique services and installation services respectively. |
6. Accounts receivable, net
6. Accounts receivable, net | 12 Months Ended |
Dec. 31, 2015 | |
Accounts receivable, net | 2015 2014 US$000 US$000 Accounts receivable 4,557 4,316 Less: Allowance for doubtful debts (57 ) (48 ) 4,500 4,268 The following is an age analysis of past due account receivables as of December 31, 2015 and 2014: 2015 2014 US$000 US$000 Current 2,762 864 30-59 days past due 633 1,226 60-89 days past due 635 23 Greater than 90 days 470 2,155 4,500 4,268 |
ZHEJIANG JIAHUAN | |
Accounts receivable, net | 2015 2014 RMB000 RMB000 Accounts receivable, gross 99,864 74,024 Less: Allowance for doubtful debts (32 ) (131 ) Accounts receivable, net 99,832 73,893 2015 2014 RMB000 RMB000 Allowance for doubtful debts: Balance at beginning (131 ) (8,000 ) Charged to statement of income Recovered 99 7,869 Balance at end ( 32 ) (131 ) |
ZHEJIANG TIANLAN | |
Accounts receivable, net | 2015 2014 RMB000 RMB000 Accounts receivable 238,325 185,443 Less: Allowance for doubtful debts (30,418 ) (28,835 ) 207,907 156,608 |
7. Prepayments and other curren
7. Prepayments and other current assets | 12 Months Ended |
Dec. 31, 2015 | |
Prepayments and other current assets | Prepayment and other current assets mainly represent deposits for purchases and services, rental and utilities deposits, and prepaid expenses. |
ZHEJIANG JIAHUAN | |
Prepayments and other current assets | Prepayment and other current assets mainly represent deposits for bidding projects, deposits for purchases and services and prepaid expenses. 2015 2014 RMB000 RMB000 Prepayments and other receivables 13,039 11,333 Deposits 4,433 3,067 17,472 14,400 |
ZHEJIANG TIANLAN | |
Prepayments and other current assets | Prepayment and other current assets mainly represent deposits for bidding projects, deposits for purchases and services and prepaid expenses. The other current assets also include cost of estimated earnings in excess of billing. Cost and estimated earnings in excess of billings 2015 2014 RMB000 RMB000 Contracts costs incurred plus estimated earnings 160,634 207,632 Less: Progress billings (62,994 ) (53,723 ) Cost and estimated earnings in excess of billings 97,640 153,909 |
7A. Long term investments
7A. Long term investments | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
7A. Long term investments | 2015 Gross unrealized Amortized cost Gains Losses Fair Value RMB000 RMB000 RMB000 RMB000 Long term investment: Unlisted investment 69 - - 69 2014 Gross unrealized Amortized cost Gains Losses Fair Value RMB000 RMB000 RMB000 RMB000 Long term investment: Unlisted investment 69 - - 69 The balance of investments has their market values close to their book balance. |
8. Inventories
8. Inventories | 12 Months Ended |
Dec. 31, 2015 | |
Inventories | 2015 2014 US$000 US$000 Raw materials 131 146 Work in progress 39 38 Finished goods 387 359 557 543 Management continuously reviews obsolete and slow moving inventories and assesses the inventory valuation to determine if the provision is deemed appropriate. For the year ended December 31, 2015, and 2014, provision for obsolete and slow moving inventories amounted to US$5,000 and US$8,000, respectively, which were charged to cost of revenue in Consolidated Statements of Income. |
ZHEJIANG JIAHUAN | |
Inventories | 2015 2014 RMB000 RMB000 Raw materials 5,603 3,763 Work in progress 7,840 9,840 Finished goods 8,020 18,646 21,463 32,249 |
ZHEJIANG TIANLAN | |
Inventories | 2015 2014 RMB000 RMB000 Raw materials 6,586 9,121 Work in progress 5,525 6,360 Finished goods - 573 12,111 16,054 |
9. Property, plant and equipmen
9. Property, plant and equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, plant and equipment | 2015 2014 US$000 US$000 Office premises 1,866 1,866 Leasehold improvements 157 160 Furniture, fixtures and office equipment 635 637 Motor vehicles 155 155 Testing equipment 30 30 2,843 2,848 Less: Accumulated depreciation (2,070 ) (2,037 ) 773 811 2015 2014 2013 US$000 US$000 US$000 Depreciation charge 56 88 108 |
ZHEJIANG JIAHUAN | |
Property, plant and equipment | 2015 2014 RMB000 RMB000 Buildings 34,493 34,493 Plant and machinery 7,011 7,780 Office equipment 1,148 2,936 Motor vehicles 979 1,124 43,631 46,333 Less: Accumulated depreciation (19,843 ) (20,475 ) 23,788 25,858 2015 2014 2013 RMB000 RMB000 RMB000 Depreciation charge 2,296 2,408 2,461 Buildings with carrying amount of approximately RMB34,493,000 as of December 31, 2015 and 2014 respectively were pledged, along with the land use right as discussed below, to secure the Companys short-term bank loans. |
ZHEJIANG TIANLAN | |
Property, plant and equipment | 2015 2014 RMB000 RMB000 Building and leasehold improvements 56,696 47,091 Furniture, fixtures and office equipment 9,919 9,629 Motor vehicles 3,780 3,682 Plant and machineries 114,617 715 Construction in progress - 115,645 185,012 176,762 Less: Accumulated depreciation (23,281 ) (14,838 ) 161,731 161,924 2015 2014 2013 RMB000 RMB000 RMB000 Depreciation charge 8,473 2,985 2,956 |
10. Interests in affiliates
10. Interests in affiliates | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Interests in affiliates | Investments in affiliates are accounted for using the equity method of accounting. The Company is holding 20% equity interests in Zhejiang Tianlan Environmental Protection Technology Co. Ltd. (Blue Sky), a company incorporated in the PRC, with total cost of investment 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 recently received approval from the National Equities Exchange and Quotations (NEEQ) to list its shares on the New Third Board in the Peoples Republic of China (PRC) on November 17, 2015. A summary of the financial information of the affiliate, Zhejiang Tianlan Environmental Protection Technology Co. Ltd, is set forth below: 2015 2014 Balance Sheet: US$000 US$000 Current assets 57,432 61,708 Non-current assets 26,587 28,287 Total assets 84,019 89,995 Total liabilities (58,149 ) (64,572 ) Total shareholders equity 25,870 25,423 2015 2014 Operating results: US$000 US$000 Net sales 66,899 64,131 Operating income 4,260 2,637 Net income 3,458 2,266 The Company is holding 20% equity interests in Zhejiang Jia Huan Electronic Co. Ltd. (Jia Huan), a company incorporated in the PRC, with total cost of investment US$2,486,000. Jia Huan provides a comprehensive service for environmental protection business since 1969 and is based in Jin Hua, Zhejiang. A summary of the financial information of the affiliate, Zhejiang Jia Huan Electronic Co. Ltd, is set forth below: 2015 2014 Balance Sheet: US$000 US$000 Current assets 22,693 21,264 Non-current assets 4,717 5,288 Total assets 27,410 26,552 Total liabilities (13,627 ) (12,675 ) Total shareholders equity 13,783 13,877 2015 2014 Operating results: US$000 US$000 Net sales 18,481 16,162 Operating income 1,316 1,024 Net income 788 762 |
10A. Land use right, net
10A. Land use right, net | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Land use right, net | 2015 2014 RMB000 RMB000 Land use right 7,987 7,987 Less: Accumulated amortisation (1,536 ) (1,373 ) 6,451 6,614 2015 2014 2013 RMB000 RMB000 RMB000 Amortisation expense 163 163 163 Land use right with a carrying amount of approximately RMB6,451,000 and RMB6,614,000 as of December 31, 2015 and 2014 was pledged, along with the buildings discussed above, to secure the Companys short-term bank loans. |
ZHEJIANG TIANLAN | |
Land use right, net | 2015 2014 RMB000 RMB000 Land use right 7,361 7,361 Less: Accumulated amortisation (1,465 ) (1,316 ) 5,896 6,045 2015 2014 2013 RMB000 RMB000 RMB000 Amortisation expense 149 149 141 |
11. Other payables and accrued
11. Other payables and accrued expenses | 12 Months Ended |
Dec. 31, 2015 | |
Other payables and accrued expenses | Other payables and accrued expenses mainly represent deposits received from customers and accruals for operating expenses. |
ZHEJIANG JIAHUAN | |
Other payables and accrued expenses | Other payables and accrued expenses mainly represent deposits received from customers and accruals for operating expenses. |
11A. Intangible assets, net
11A. Intangible assets, net | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Intangible assets, net | 2015 2014 RMB000 RMB000 Software 591 - 591 - Less: Accumulated depreciation (83 ) - 508 - 2015 2014 2013 RMB000 RMB000 RMB000 Amortization expenses 83 - - |
ZHEJIANG TIANLAN | |
Intangible assets, net | 2015 2014 RMB000 RMB000 Patents 2,400 2,400 Others 165 165 2,565 2,565 Less: Accumulated amortisation (1,017 ) (824 ) 1,548 1,741 2015 2014 2013 RMB000 RMB000 RMB000 Amortisation expense 193 239 395 |
12. Ordinary share
12. Ordinary share | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Ordinary share | During the years ended December 31, 2015 and 2014, there was no movement with the Companys issued ordinary shares and outstanding shares. |
13. Goodwill
13. Goodwill | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Goodwill | The Company accounts for acquisitions of subsidiaries in accordance with FASB ASC Subtopic 805-10, Business Combinations. Goodwill represents the excess of acquisition cost over the estimated fair value of net assets acquired in relation to the acquisition of Yixing Pact Environmental Technology Co., Ltd and Pact Asia Pacific Limited in 2005. As of December 31, 2015, the Company completed the annual impairment test (i.e. comparing the carrying amount of the net assets, including goodwill, with the fair value of the Company as of December 31, 2015). Based on managements assessment, the Company determined that there was no impairment of goodwill as of December 31, 2015 and 2014. |
13A. Short term bank loans
13A. Short term bank loans | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Short term borrowings | The short term loans as of December 31, 2015 bear interest at fixed rates ranging from 5.34% to 6.63% per annum with maturity dates from March 19, 2016 to December 16, 2016 and are secured by the Companys buildings and land use right. Interest paid during the years ended December 31, 2015 and 2014 were approximately RMB 3,799,000 and RMB 2,209,000 respectively. |
ZHEJIANG TIANLAN | |
Short term borrowings | 2015 2014 RMB000 RMB000 Bank loan borrowed by the Company (note i) 40,000 92,900 Bank loan borrowed by a subsidiary of the Company (note ii) 5,000 5,000 45,000 97,900 (i) The bank loan is denominated in Renminbi and repayable within 1 year. The bank loan borrowed by the Company as of December 31, 2015 bear interest at fixed rates 4.62% to 6.47% (2014: 5.88% to 6.90%) per annum. Interest paid during the year ended December 31, 2015 was approximately RMB3,768,000 (2014: RMB4,688,000 and 2013: RMB3,704,000). (ii) The bank loan is denominated in Renminbi and repayable within 1 year. The bank loan borrowed by a subsidiary of the Company as of December 31, 2015 bear interest at fixed rates 7.50% (2014: 7.50%) per annum and are secured by the subsidiarys office premises and leasehold improvements and land use right. Interest paid during the year ended December 31, 2015 was approximately RMB369,000 (2014: RMB377,000). |
13B. Other payables and accrued
13B. Other payables and accrued expenses | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG TIANLAN | |
Other payables and accrued expenses | 2015 2014 RMB000 RMB000 Deposit received from customers 26,749 36,126 Accrued expenses 12,104 11,391 Other payables 1,118 64,471 Deferred income 799 1,437 Amount due to a related company 5 13 40,775 113,438 |
14. Treasury stock
14. Treasury stock | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Treasury stock | The Company authorised a stock buyback program in August 2010 pursuant to which up to 54,546 shares, but not to exceed US$450,000 in value, of the Companys ordinary share could be purchased in the open market from time to time as market and business conditions warrant. The Company repurchased a total of 6,482 shares of ordinary share during 2010 for considerations of approximately US$49,000. The Company repurchased a total of 16,935 shares of ordinary share during 2011 for total consideration of approximately US$94,000. The Company repurchased a total of 8,639 shares of ordinary share during 2012 for total consideration of approximately US$33,000. The Company authorised a stock buyback program in January 2015 pursuant to which up to 60,000 shares, but not to exceed US$150,000 in value, of the Companys ordinary share could be purchased in the open market from time to time as market and business conditions warrant. The Company repurchased a total of 7,314 shares of ordinary share during 2015 for total consideration of approximately US$20,000. |
14A. Dividends to shareholders
14A. Dividends to shareholders | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Dividends to shareholders | In the fiscal year ended December 31, 2015 the Company do not declared dividend to the shareholders. (2014: RMB2,250,000) |
14B. Long Term Borrowing
14B. Long Term Borrowing | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG TIANLAN | |
Long Term Borrowing | 2015 2014 RMB000 RMB000 Loan borrowed by the Company 170,732 - (i) On May 15, 2015, the Company signed a sales and lease back agreement with lessor A with total principal of RMB 66,700,000 and repayable within 5 years. The bank loan is denominated in Renminbi. The bank loan borrowed by the Company as of December 31, 2015 is bear interest at fixed rates 5.27% per annum and is secured by the Companys machinery A. Interest paid during the year ended December 31, 2015 was approximately RMB 1,719,000 and was incurred in Cost of revenue in the Groups consolidated statements of income. (ii) On December 9, 2015, the Company signed a sales and lease back agreement with lessor B with total principal of RMB 87,560,000 and repayable within 5 years. The bank loan is denominated in Renminbi. During the year, the Company received partial amount of RMB 55,232,000. The bank loan borrowed by the Company as of December 31, 2015 is bear interest at fixed rates 4.83% per annum and are secured by the Companys machinery B and its related franchise, income and account receivables . There is no interest paid during the year ended December 31, 2015 |
15. PRC statutory reserves
15. PRC statutory reserves | 12 Months Ended |
Dec. 31, 2015 | |
PRC statutory reserves | Under the relevant PRC laws and regulations, the PRC subsidiaries are required to appropriate 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 their 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 the companies net income to the statutory reserve fund until such fund reaches 50% of the companies registered capital. The statutory reserve fund can be utilised upon the approval by the relevant authorities, to offset accumulated losses or to increase registered capital of the companies, provided that such fund be maintained at a minimum of 25% of the companies registered capital. Under the PRC laws and regulations, the Companys PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the Company 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$3,457,000 as at December 31, 2015 (2014:US$3,357,000 and 2013: US$3,357,000). (ii) Statutory staff welfare fund Pursuant to applicable PRC laws and regulations, the PRC subsidiaries are required to allocate certain amount of the companies net income to the staff welfare fund determined by the Company. The staff welfare fund can only be used to provide staff welfare facilities and other collective benefits to the companies employees. This fund is non-distributable other than upon liquidation of the PRC subsidiaries. (iii) Enterprise expansion fund The expansion fund shall only be used to make up losses, expand the PRC subsidiaries production operations, or increase the capital of the subsidiaries. The 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 the companies registered capital. |
ZHEJIANG JIAHUAN | |
PRC statutory reserves | Under the relevant PRC laws and regulations, the Group is required to appropriate certain percentage of their respective net income to two statutory funds, namely the statutory reserve fund and the statutory staff welfare fund. (i) Statutory reserve fund Pursuant to applicable PRC laws and regulations, the Group is required to allocate at least 10% of the companies net income to the statutory reserve fund until such fund reaches 50% of the companies registered capital. The statutory reserve fund can be utilised upon the approval by the relevant authorities, to offset accumulated losses or to increase registered capital of the companies, provided that such fund be maintained at a minimum of 25% of the companies registered capital. (ii) Statutory staff welfare fund Pursuant to applicable PRC laws and regulations, the Group is required to allocate certain amount of the companies net income to the staff welfare fund determined by the Company. The staff welfare fund can only be used to provide staff welfare facilities and other collective benefits to the companies employees. This fund is non-distributable other than upon liquidation of the Group. |
ZHEJIANG TIANLAN | |
PRC statutory reserves | Under the relevant PRC laws and regulations, the Group is required to appropriate certain percentage of their respective net income to two statutory funds, namely the statutory reserve fund and the statutory staff welfare fund. (i) Statutory reserve fund Pursuant to applicable PRC laws and regulations, the Group is required to allocate at least 10% of the companies net income to the statutory reserve fund until such fund reaches 50% of the companies registered capital. The statutory reserve fund can be utilised upon the approval by the relevant authorities, to offset accumulated losses or to increase registered capital of the companies, provided that such fund be maintained at a minimum of 25% of the companies registered capital. (ii) Statutory staff welfare fund Pursuant to applicable PRC laws and regulations, the Group is required to allocate certain amount of the companies net income to the staff welfare fund determined by the Company. The staff welfare fund can only be used to provide staff welfare facilities and other collective benefits to the companies employees. This fund is non-distributable other than upon liquidation of the Group. |
15A. Amount due to a shareholde
15A. Amount due to a shareholder | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Amount due to a shareholder | The amount due to a shareholder do not bear any interest, unsecured and do not have clearly defined terms of repayment. |
16. Stock options
16. Stock options | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Stock options | 2014 Officers Stock Option and Incentive Plan Effective November 22, 2014, the Company entered into a stock option contract with a Business Development Manager of Yixing Pact Environmental Technology Co., Ltd, granting the optionee the right to purchase 20,692 Ordinary Shares, 1% of the Companys issued and outstanding shares, at an exercise price of $3.484 per share. The exercise price was determined by the average closing price of the Companys as reported by NASDAQ for a ten day period prior to the end of the Business Development Managers probationary period on November 22, 2014, the effective date of the stock option contract. The stock options granted are exercisable three years after the effective date and terminate five years after the effective date. In the event of the optionees termination, except for his resignation, the options may be exercisable within three months of the termination. In the event of optionees death, retirement or disability, he or his legal representative shall have up to one year to exercise the option. The Company estimate the fair value of the options granted under the Binomial pricing model. Changes in outstanding options under various plans mentioned above were as follows: 2015 2014 2013 Number of options Weighted average exercise price Number of options Weighted average exercise price Number of options Weighted average exercise price US$ US$ US$ Outstanding, beginning of year 20,692 3.44 - - - - Granted - - 20,692 3.44 - - Cancelled/Expired - - - - - - Exercised - - - - - - Outstanding, end of year 20,692 3.44 20,692 3.44 - - Exercisable, end of year - - - - - - As of December 31, 2015, there were 20,692 options outstanding. (2014: 20,692 options and 2013: Nil) As of December 31, 2015 and 2014, there was no unrecognised stock-based compensation expense related to unvested stock options. The Group adopted the provisions of ASC 718-10, which requires us to recognise expense related to the fair value of our 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. |
16A. Other long term liabilitie
16A. Other long term liabilities | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Other long term liabilities | Other long term liabilities represent accrued staff benefits and subsidies received from the government in relation to an agreement to meet certain profit and turnover targets until the balance can be recognised as reserves of the Group. As the targets are yet to be met, the balance remained in other long term liabilities. |
16B. Capital reserve
16B. Capital reserve | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG TIANLAN | |
Capital reserve | Capital reserve represents capital contributions from shareholders in excess of the paid-in capital amount. |
17. Pension plan
17. Pension plan | 12 Months Ended |
Dec. 31, 2015 | |
Pension plan | Prior to December 1, 2000, the Group 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 the Group, depending on their years of service with the Group. The Group 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, a defined contribution scheme managed by an independent trustee on December 1, 2000, the Group and its employees who joined the Group subsequently make monthly contributions to the scheme at 5% of the employees cash income as defined under the Mandatory Provident Fund legislation. Contributions of both the Group and its employees are subject to a maximum of HK$1,000 per month and thereafter contributions are voluntary and are not subject to any limitation. The Group and its employees made their first contributions in December 2000. 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 contribution range from 12% to 21% 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, 2015, 2014 and 2013, the aggregate contributions of the Group to the aforementioned pension plans and retirement benefit schemes were approximately US$458,000, US$378,000 and US$353,000 respectively. |
ZHEJIANG JIAHUAN | |
Pension plan | As stipulated by the rules and regulations in the PRC, the Group contributes to the state-sponsored retirement plans for its employees in Mainland China. The Group contributes approximately 26% 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 year ended December 31, 2015 and 2014, the aggregate contributions of the Group to the aforementioned pension plans and retirement benefit schemes were approximately RMB 1,594,000 and RMB 1,324,000 respectively. |
ZHEJIANG TIANLAN | |
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 ranging from 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, 2015, 2014 and 2013, the aggregate contributions of the Group to the aforementioned pension plans and retirement benefit schemes were approximately RMB3,850,000, RMB3,027,000 and RMB2,516,000 respectively. |
18. Risk factors and Derivative
18. Risk factors and Derivative Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Risk factors and Derivative Instruments | Financial risk factors The Groups activities expose it to a variety of financial risks: foreign exchange rate risk and credit risk. (i) Credit risk The Group has no significant concentration of credit risk. The Group has policies in place to ensure that sales of products are made to customers with an appropriate credit history. The Group has policies that limit the amount of credit exposure to any customers. Derivative counterparties and cash transactions are limited to high credit quality banks. (ii) Foreign exchange risk The Group operates in Hong Kong, the PRC and trades with both local and overseas customers, and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to purchases in, Hong Kong dollar, Renminbi and Euro. Foreign exchange risk arises from committed and unmatched future commercial transactions, such as confirmed import purchase orders and sales orders, recognised assets and liabilities, and net investment in the PRC operations. The Group uses derivative financial instruments such as foreign exchange contracts to hedge certain foreign currency exposures. The Groups prevailing risk management policy is to hedge the net committed transactions (mainly sales and import purchases) in each major currency. The Companys policy generally permits the use of derivatives if they are associated with underlying assets or liabilities, forecasted transactions, or legally binding rights or obligations. There were no such derivatives during the years ended December 31, 2015 and 2014. |
ZHEJIANG JIAHUAN | |
Risk factors and Derivative Instruments | The Groups activities expose itself mainly to credit risk. The Group has no significant concentration of credit risk. The Group has policies in place to ensure that sales of products are made to customers with an appropriate credit history. The Group has policies that limit the amount of credit exposure to any customers. |
ZHEJIANG TIANLAN | |
Risk factors and Derivative Instruments | The Groups activities expose itself mainly to credit risk. The Group has no significant concentration of credit risk. The Group has policies in place to ensure that sales of products are made to customers with an appropriate credit history. The Group has policies that limit the amount of credit exposure to any customers. |
19. Related party transactions
19. Related party transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related party transactions | Other than compensation to directors and stock options available to the directors, there were no transactions with other related parties in the years 2015, 2014 and 2013. |
ZHEJIANG TIANLAN | |
Related party transactions | Amounts due from / (to) owners The owners, from time to time, obtain business related advances and pay expenses on behalf of the Company. The amounts due to owners are unsecured, interest free and do not have clearly defined terms of repayment. There were no other transactions with related parties in the years 2015 and 2014 other than those disclosed in elsewhere in the financial statements. |
20. Commitments and contingenci
20. Commitments and contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and contingencies | (i) Operating leases The Group has various operating lease agreements for office and industrial premises. Rental expenses for the years ended December 31, 2015, 2014 and 2013 were approximately US$297,000, US$293,000 and US$277,000, respectively. Future minimum rental payments as of December 31, 2015, under agreements classified as operating leases with non-cancellable terms amounted to US$247,000 of which US$217,000 are payable in the year 2016 and US$30,000 are payable within years 2017 to 2021. (ii) Banking facilities As at December 31, 2015, 2014 and 2013, the Group had various banking facilities available for overdraft, import and export credits and foreign exchange contracts from which the Group can draw up to approximately US$1,660,000, US$1,660,000 and US$1,538,000 respectively, of which approximately US$85,000, US$68,000 and US$690,000 was utilised for issuance of bank guarantees. (iii) 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. (iv) Litigation a) Yixing Pact Environmental Technology Co., Ltd (Yixing) i) Labour dispute Statement of claim was issued by Zhang Qiu Song as the plaintiff against Yixing as the defendant in civil claims at the Peoples Court of HuangBu District, Shanghai, PRC. The total compensations of approximately US$77,000 for the labor dispute in court on March 26, 2015. The Shanghai Peoples Court issued a verdict dated March 26, 2015 finding that the Company was liable. The claim has been settled during the year. ii) Breach of contract in purchases of goods Yixing is a defendant in respect of a litigation under which a total claim of approximately of US$25,000 plus interest expenses of late penalty. At December 31, 2015, provision amounting to approximately of US$25,000 has been made in the consolidated financial statements in connection with the above litigation. The outcome of the interest expenses of late penalty remains uncertain and the claim will be vigorously resisted by Yixing. The Company considers that the interest expenses of the above claim is not material to the extent provision has not been made in the consolidated financial statement of the Group as at December 31, 2015. Hence, no further provision for any potential liability in the consolidated financial statement of the Group for the year if considered necessary. b) Shanghai Euro Tech Environmental Engineering Limited (SETEE) SETEE is a plaintiff in a civil action claiming from the defendant for outstanding debts of approximately of USD 416,000. The litigation has not been concluded, but having taken legal advice, the directors are of the opinion that no provision is required to be made in the consolidated financial statements since based on the evidence that SETEE has a reasonable chance of recovering the whole debts. |
ZHEJIANG JIAHUAN | |
Commitments and contingencies | Operating leases The Group has no rental expense during the year ended December 31, 2015 (2014 and 2013: RMB Nil). As of December 31, 2015, the Group has no future minimum lease payments under non-cancellable operating leases are payable in the year 2015 and thereafter. |
ZHEJIANG TIANLAN | |
Commitments and contingencies | (i) Operating leases The Group has no rental expense during the year ended December 31, 2015 (2014 and 2013: RMB Nil). As of December 31, 2015, the Group has no future minimum lease payments under non-cancellable operating leases are payable in the year 2015. (ii) Litigation Breach of contract in purchase of goods a) The Company is a defendant in respect of a litigation under which a total claim of approximately of RMB179,000 plus interest expenses of late penalty. At December 31, 2015, provision amounting to approximately of RMB179,000 has been made in the consolidated financial statements in connection with the above litigation. The outcome of the interest expenses of late penalty remains uncertain and the claim will be vigorously resisted by the Company. The Company considers that the interest expenses of the above claim is not material to the extent provision has not been made in the consolidated financial statement of the Group as at December 31, 2015. Hence, no further provision for any potential liability in the consolidated financial statement of the Group for the year if considered necessary. b) The Company is a defendant in respect of a litigation under which a total claim of approximately of RMB220,000 plus interest expenses of late penalty. At December 31, 2015, provision amounting to approximately of RMB220,000 has been made in the consolidated financial statements in connection with the above litigation. The outcome of the interest expenses of late penalty remains uncertain and the claim will be vigorously resisted by the Company. The Company considers that the interest expenses of the above claim is not material to the extent provision has not been made in the consolidated financial statement of the Group as at December 31, 2015. Hence, no further provision for any potential liability in the consolidated financial statement of the Group for the year if considered necessary. b) The Company is a defendant in respect of a litigation under which a total claim of approximately of RMB 1,400,000. The outcome remains uncertain and the claim will be vigorously resisted by the Company. The Company considers that the outcome of the above claim is not material the extent provision has not been made in the consolidated financial statement of the Group as at December 31, 2015. Hence, no further provision for any potential liability in the consolidated financial statement of the Group for the year if considered necessary. |
20A. Future Minimum rental rece
20A. Future Minimum rental receivable | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
20A. Future Minimum rental receivable | As at the end of the reporting period, the Companys total future minimum rental under non-cancellable operating leases are receivable as follows:- 2015 2014 RMB000 RMB000 Within 1 year 750 715 After 1 year but within 5 years 785 1,535 After 5 years - - 1,535 2,250 |
21. Fair value of financial ins
21. Fair value of financial instruments | 12 Months Ended |
Dec. 31, 2015 | |
Fair value of financial instruments | The carrying values of financial instruments, which consist of cash and cash equivalents, accounts receivable and accounts payable, bills receivable, bills payable, other payables and balances with related companies approximate their fair values due to the short-term nature of these instruments. |
ZHEJIANG JIAHUAN | |
Fair value of financial instruments | The carrying values of financial instruments, which consist of cash and cash equivalents, accounts receivable and accounts payable, bills receivable, bills payable, other payables and balances with related companies approximate their fair values due to the short-term nature of these instruments. |
22. Segment information
22. Segment information | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
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 segments operations. Intersegment transactions are not significant and have been eliminated to arrive at consolidated totals. 2015 2014 2013 US$000 US$000 US$000 Revenue Trading and manufacturing 12,256 11,647 10,986 Engineering 6,046 7,175 7,616 18,302 18,822 18,602 Operating loss Trading and manufacturing (187 ) (214 ) (241 ) Engineering (1,624 ) (640 ) 106 Unallocated corporate expenses (147 ) (117 ) (120 ) (1,958 ) (971 ) (255 ) 2015 2014 2013 US$000 US$000 US$000 Depreciation: Trading and manufacturing 46 67 74 Engineering 10 21 34 56 88 108 Capital Expenditures, Gross Trading and manufacturing 11 2 31 Engineering 10 8 20 21 10 51 2015 2014 US$000 US$000 Assets Trading and manufacturing 5,050 5,664 Engineering 16,220 17,735 21,270 23,399 Liabilities Trading and manufacturing 2,468 2,929 Engineering 2,346 2,940 4,814 5,869 (ii) Geographical analysis of revenue by customer location is as follows: 2015 2014 2013 US$000 US$000 US$000 Revenue - The PRC 9,327 10,950 12,392 Hong Kong 8,726 6,177 5,919 Others 249 1,695 291 18,302 18,822 18,602 (iii) Long-lived assets (1) Geographical analysis of long-lived assets is as follows: 2015 2014 US$000 US$000 Hong Kong 501 532 The PRC 272 279 773 811 (1) Long-lived assets represent property, plant and equipment, net. (iv) Major suppliers Details of individual suppliers accounting for more than 5% of the Groups purchases are as follows: 2015 2014 2013 Supplier A 39 % 33 % 20 % Supplier B 11 % 11 % 8 % Supplier C 11 % 11 % 17 % Supplier D 6 % 7 % 7 % Supplier E 5 % 6 % 7 % Supplier F 3 % 8 % 8 % (v) Major customers Details of individual customers accounting for more than 5% of the Groups revenue are as follows: 2015 2014 2013 Customer A 11 % - - Customer B 10 % - - Customer C 6 % - - Customer D 6 % - - |
23. Subsequent events
23. Subsequent events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent events | The Company has evaluated all events or transactions that occurred through the date the consolidated financial statements were issued, and has determined that there were no material recognizable nor subsequent events or transactions which would require recognition or disclosure in the consolidated financial statements. |
ZHEJIANG JIAHUAN | |
Subsequent events | The Company has evaluated all events or transactions that occurred through the date the consolidated financial statements were issued, and has determined that there were no material recognizable nor subsequent events or transactions which would require recognition or disclosure in the consolidated financial statements. |
ZHEJIANG TIANLAN | |
Subsequent events | On January 5, 2016, the board of director approved the issuance and allotment of 1,600,000 ordinary shares at a price RMB 2.80 per shares, which in the aggregative amount the gross proceeds of RMB 4,480,000 to the existing shareholders. The share allotment was no material effect to the consolidated financial statement of the Company as at December, 2015. The Company has evaluated all events or transactions that occurred through the date the consolidated financial statements were issued, and has determined that there were no material recognizable nor subsequent events or transactions which would require recognition or disclosure in the consolidated financial statements. |
2. Summary of significant acc44
2. Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Basis of Consolidation | The consolidated financial statements include the accounts of Euro Tech Holdings Company Limited and its subsidiaries (the Group). The financial statements of variable interest entities (VIEs), as defined by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 810-10, Consolidation, are included in the consolidated financial statements, if applicable. All material intercompany balances and transactions have been eliminated on consolidation. The Group identified that a retail shop established in the PRC qualified as variable interest entities as defined in ASC 810-10. The retail shops are principally engaged in the retailing business of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems. The Company is the primary beneficiary of this retail shop and, accordingly, consolidated their financial statements. The Company has a controlling financial interest in this retail shop and is subject to a majority of the risk of loss from the retailing activities, and is entitled to receive a majority of the retail shops residual returns. Total assets and liabilities of this consolidated VIE total US$9,179 and US$1,626, as of December 31, 2015 and US$12,968 and US$1,388, as of December 31, 2014, respectively. The cumulative losses on consolidating this VIE in the Groups consolidated statement of income in 2015 were US$348,992 (2014: losses of US$330,299 and 2013: losses of US$302,893), including taxes of US$77 (2014: US$1,046 and 2013: US$1,018). The assets of the entities consist mainly of cash and bank balances, trade and other receivables, inventories and property, plant and equipment. The creditors of this VIE do not have a recourse to the general credit of the Group. The Group will provide for all necessary financing for the VIE. |
Subsidiaries and affiliates | A subsidiary is a company in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors; 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 An investment in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies (generally 20-50 percent ownership), are accounted for using the equity method of accounting. |
Revenue Recognition | The Groups main source of revenue is the sale of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems. The Company recognises revenue when the product is delivered and the title is transferred. For certain products where installation is necessary, revenue is recognised upon completion of installation. Revenue earned from customer support services, which represents a minor percentage of total revenues, is recognised when such services are provided. Revenues and profits in long term fixed price contracts or engineering income are recognised using the percentage of completion method in accordance with FASB ASC Subtopic 605-35, Revenue Recognition Construction-Type and Production-Type Contracts. This approach primarily based on contract costs incurred to date compared with total estimated contract costs. Changes to total estimated contract costs or losses, if any, are recognised in the period they are determined. Revenues recognised in excess of amounts billed are classified as costs and estimated earnings in excess of billings on uncompleted contracts. Essentially all of such amounts are expected to be billed and collected within one year and are classified as current assets. Billings in excess of costs and estimated earnings on uncompleted contracts are classified as current liabilities. When reasonably dependable estimates cannot be made, construction contract revenues are recognised using the completed contract method. |
Research and Development Costs | Research and development costs (R&D costs) are expensed as incurred. The R&D costs amounted to approximately US$852,000, US$631,000 and US$427,000 for the years ended December 31, 2015, 2014 and 2013 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$17,000, US$44,000 and US$12,000 for the years December 31, 2015, 2014 and 2013 respectively and were included in Selling and Administrative expenses |
Taxation | The Group accounts for income and deferred tax under the provision of FASB ASC Subtopic 740-10, Income Taxes, under which deferred taxes are recognised for all temporary differences between the applicable tax balance sheets and the consolidated balance sheet. Deferred tax assets and liabilities are recognised for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. ASC 740-10 also requires the recognition of the future tax benefits of net operating loss carry forwards. A valuation allowance is established when the deferred tax assets are not expected to be realised within a reasonable period of time. In accordance with ASC 740-10, the Company recognises tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Company did not have such uncertain tax positions in 2015, 2014 and 2013. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income for the period that includes the enactment date. |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand and demand deposits with banks. |
Restricted Cash | Restricted cash represents cash deposits retained with banks in the PRC for issuance of performance guarantees to the customers. The amount is expected to be released within one year after the balance sheet date. |
Receivables and Other Assets | Receivables and other assets are recorded at their nominal values. Doubtful debt allowances are provided for identified individual risks for these line items. If the loss of a certain part of the receivables is probable, doubtful debt allowances are provided to cover the expected loss. Receivables are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Inventories | Inventories are stated at the lower of cost, on the first-in, first-out method, or market value. Costs include purchase and related costs incurred in bringing each product to its present location and condition. Market value is calculated based on the estimated normal selling price, less further costs expected to be incurred for disposal. Allowance is made for obsolete, slow moving or defective items, where appropriate. |
Property, Plant, and Equipment and Land Use Right | Property, plant and equipment are stated at cost less accumulated depreciation. Gains or losses on disposal are reflected in current operations. Major expenditures for betterments and renewals are capitalised. All ordinary repair and maintenance costs are expensed as incurred. Depreciation of property, plant and equipment is 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 |
Impairment | The Group has adopted FASB ASC Subtopic 360-10, Property, Plant, and Equipment, which requires impairment losses to be recorded for property, plant and equipment to be held and used in operations when indicators of impairment are present. Reviews are regularly performed to determine whether the carrying value of assets is impaired. The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There was no impairment losses recorded during each of the three years ended December 31, 2015. |
Operating leases | Leases where substantially all the risks and rewards of ownership of the leased assets remain with the lessors are accounted for as operating leases. Rental payments under operating leases are charged to expense on the straight-line basis over the period of the relevant leases. |
Goodwill | Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350, goodwill is not amortized, but rather is subject to an annual impairment test. Goodwill is tested for impairment at the reporting unit level by comparing the fair value of the reporting unit with its carrying value. The Company performs its annual impairment analysis of goodwill in the fourth quarter of the year, or more often if there are indicators of impairment present. The provisions of ASC 350 require that a two-step impairment test be performed on goodwill at the level of the reporting units. In the first step, or Step 1, the Company compares the fair value of each reporting unit to its carrying value. If the fair value exceeds the carrying value of the net assets, goodwill is considered not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets exceeds the fair value, then the Company must perform the second step, or Step 2, of the impairment test in order to determine the implied fair value of goodwill. To determine the fair value used in Step 1, the Company uses discounted cash flows. If and when the Company is required to perform a Step 2 analysis, determining the fair value of its net assets and its off-balance sheet intangibles would require it to make judgments that involve the use of significant estimates and assumptions. |
Foreign Currency Translation | The Company maintains its books and records in United States dollars. Its subsidiaries and affiliates maintain their books and records either in Hong Kong dollars or Chinese Renminbi (functional currencies). Foreign currency transactions during the year are translated into the respective functional currencies at the applicable rates of exchange at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the respective functional currencies using the exchange rates prevailing at the balance sheet dates. Gains or losses from foreign currency transactions are recognised in the consolidated statements of income during the year in which they occur. Translation adjustments on subsidiaries equity are included as accumulated comprehensive income or loss. |
Derivative Instruments and Hedging Activities | ASC 815, "Derivatives and Hedging" ("ASC 815"), as amended, requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income (loss). If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized in earnings. The Company uses derivatives to hedge certain cash flow foreign currency exposures in order to further reduce the Group's exposure to foreign currency risks. |
Fair Value Measurement | ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The Group adopted ASC 820, Fair Value Measurements and Disclosures, for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. The fair values of current financial assets and liabilities carried at amortized cost approximate their carrying amounts. |
Comprehensive Income | The Group has adopted FASB ASC Subtopic 220-10, Comprehensive Income, which requires the Group to report all changes in equity during a period, except for those resulting from investment by owners and distribution to owners, in the financial statements for the period in which they are recognised. The Group has presented comprehensive income, which encompasses net income and foreign currency translation adjustments, in the consolidated statement of changes in shareholders equity. |
Ordinary Shares | 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 Companys 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. |
Net income per Ordinary Share | Net income per ordinary share is computed in accordance with FASB ASC Subtopic 260-10, Earnings Per Share, by dividing the net income by the weighted average number of shares of ordinary share outstanding during the period. The Company 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 accounts for stock-based compensation in accordance with ASC 718, "Compensation-Stock Compensation" ("ASC 718"). ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statement of operations. The Group recognizes compensation expenses for the value of its awards, based on the straight line method over the requisite service period of each of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on managements best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the estimates. |
Related parties | Related parties |
Segment Information | The Companys segment reporting is prepared in accordance with FASB ASC Subtopic 280-10, Segment Reporting. The management approach required by ASC 280-10 designates that the internal reporting structure that is used by management for making operating decisions and assessing performance should be used as the source for presenting the Companys reportable segments. The Company categorises its operations into two business segments: Trading and manufacturing, and Engineering. |
Recent Accounting Updates Pronouncements | In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the requirements for disposals to qualify as discontinued operations and expands related disclosure requirements. This new accounting guidance will be effective for the interim and annual period beginning December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standards core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under todays guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance was deferred by ASU 2015-14, issued by the FASB in August 2015, and this new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the required presentation of debt issuance costs from an asset on the balance sheet to a deduction from the related debt liability. This new accounting guidance will be effective for interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-05, Customers' Accounting for Fees Paid in a Cloud Computing Arrangement, which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under this ASU, non-LIFO inventory will be measured at the lower of cost and net realizable value, eliminating the options that currently exist for market valuation. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. No other changes were made to the current guidance on inventory measurement. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In August 2014, the FASB issued ASU 2014-15Presentation of Financial StatementsGoing Concern (Subtopic 205-40), which addresses managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures. Managements evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. Early application is permitted as of the beginning of the interim or annual reporting period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In January 2016, the FASB issued ASU 2016-01Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment addresses various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. This amendment will be effective for the interim and annual period beginning after December 31, 2017. Early adoption by public entities is permitted only for certain provisions. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases, which will replace the existing guidance in ASC 840, Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2020. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, which simplifies the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2018. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. This update clarifies when it is acceptable to recognize the unredeemed portion of prepaid gift cards into income. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. |
ZHEJIANG JIAHUAN | |
Basis of Consolidation | The consolidated financial statements include the accounts of Zhejiang Jiahuan Electronic Company Limited and its subsidiaries (the Group). In preparing the consolidated financial statements presented herewith, all significant intercompany balances and transactions have been eliminated on consolidation. |
Subsidiaries and affiliates | A subsidiary is a company in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors; 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 An investment in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies (generally 20-50 percent ownership), are accounted for using the equity method of accounting. |
Revenue Recognition | Revenue from sale of automatic control systems, electric voltage control equipment, environmental equipment, and solar and wind power equipment is recognized when the product is delivered and the title is transferred. For certain products where installation is necessary, revenue is recognized upon completion of installation. |
Research and Development Costs | Research and development costs (R&D costs) are expensed as incurred. The R&D costs amounted to approximately RMB6,982,000 and RMB4,981,000 for the years ended December 31, 2015 and 2014 respectively and were included in Selling and Administrative expenses in the Groups consolidated statements of income. |
Taxation | The Group accounts for income and deferred tax under the provision of FASB ASC Subtopic 740-10, Income Taxes, under which deferred taxes are recognised for all temporary differences between the applicable tax balance sheets and the consolidated balance sheet. Deferred tax assets and liabilities are recognised for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. ASC 740-10 also requires the recognition of the future tax benefits of net operating loss carry forwards. A valuation allowance is established when the deferred tax assets are not expected to be realised within a reasonable period of time. In accordance with ASC-740-10, the Company recognises tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Company did not have such uncertain tax positions in 2015, 2014 and 2013. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income for the period that includes the enactment date. |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand and demand deposits with banks. |
Investments | Investments comprise marketable securities which are classified as available-for-sale securities and are carried at fair value with unrealized gains and losses, et of taxes, reported as a separate component of shareholders equity (deficit). The Company determines any realized gains or losses on the sale of marketable securities on a specific identification method, and records such gains and losses as a component of other income (expense), net in the consolidated statement of income. |
Receivables and Other Assets | Receivables and other assets are recorded at their nominal values. Doubtful debt allowances are provided for identified individual risks for these line items. If the loss of a certain part of the receivables is probable, doubtful debt allowances are provided to cover the expected loss. Receivables are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Inventories | Inventories are stated at the lower of cost or market determined using the first-in, first-out method. Costs included purchase and related costs incurred in bringing each product to its present location and condition. Market value is calculated based on the estimated normal selling price, less further costs expected to be incurred for disposal. Provision is made for obsolete, slow moving or defective items, where appropriate. |
Property, Plant, and Equipment and Land Use Right | Property, plant and equipment are stated at cost less accumulated depreciation. Gains or losses on disposal are reflected in current operations. Major expenditures for betterments and renewals are capitalised. All ordinary repair and maintenance costs are expensed as incurred. 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 for time. Thus, all of the Companys land purchases in the PRC are considered to be leasehold land and classified as land use right. Construction in progress is stated at cost less impairment losses. Cost comprises direct costs of construction as well as borrowing costs capitalized during the periods of construction and installation. Capitalisation of these costs creases and the construction in progress is transferred to the appropriate class of property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for in respect of construction in progress until it is completed and read for its intended use. 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 50 years Buildings 20 years Plant and machinery 5 to 20 years Office equipment 3 to 10 years Motor vehicles 5 to 10 years |
Intangible Assets | The Company amortizes its intangible assets with definite lives over their estimated useful lives and reviews these assets for impairment. The Company is currently amortizing its acquired intangible assets with definite lives over periods generally ranging between five to twenty years. |
Impairment | The Group has adopted FASB ASC Subtopic 360-10, Property, Plant, and Equipment, which requires impairment losses to be recorded for property, plant and equipment to be held and used in operations when indicators of impairment are present. Reviews are regularly performed to determine whether the carrying value of assets is impaired. The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There were no impairment losses recorded during each of the three years ended December 31, 2015, December 31, 2014 and December 31, 2013. |
Fair Value Measurement | ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The Group adopted ASC 820, Fair Value Measurements and Disclosures, for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. The fair values of current financial assets and liabilities carried at amortized cost approximate their carrying amounts. |
Comprehensive Income | The Group has adopted FASB ASC Subtopic 220-10, Comprehensive Income, which requires the Group to report all changes in equity during a period, except for those resulting from investment by owners and distribution to owners, in the financial statements for the period in which they are recognised. The Group has presented comprehensive income, which encompasses net income, in the consolidated statement of changes in shareholders equity. |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on managements best knowledge of current events and actions that the Group may undertake in the future, actual results may be different from the 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. |
Recent Accounting Updates Pronouncements | In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the requirements for disposals to qualify as discontinued operations and expands related disclosure requirements. This new accounting guidance will be effective for the interim and annual period beginning December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standards core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under todays guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance was deferred by ASU 2015-14, issued by the FASB in August 2015, and this new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the required presentation of debt issuance costs from an asset on the balance sheet to a deduction from the related debt liability. This new accounting guidance will be effective for interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-05, Customers' Accounting for Fees Paid in a Cloud Computing Arrangement, which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under this ASU, non-LIFO inventory will be measured at the lower of cost and net realizable value, eliminating the options that currently exist for market valuation. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. No other changes were made to the current guidance on inventory measurement. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In August 2014, the FASB issued ASU 2014-15Presentation of Financial StatementsGoing Concern (Subtopic 205-40), which addresses managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures. Managements evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. Early application is permitted as of the beginning of the interim or annual reporting period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In January 2016, the FASB issued ASU 2016-01Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment addresses various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. This amendment will be effective for the interim and annual period beginning after December 31, 2017. Early adoption by public entities is permitted only for certain provisions. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases, which will replace the existing guidance in ASC 840, Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2020. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, which simplifies the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2018. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. This update clarifies when it is acceptable to recognize the unredeemed portion of prepaid gift cards into income. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. |
ZHEJIANG TIANLAN | |
Basis of Consolidation | The consolidated financial statements include the accounts of Zhejiang Tianlan Environmental Protection Technology Company Limited and its subsidiaries (the Group). In preparing the consolidated financial statements presented herewith, all significant intercompany balances and transactions have been eliminated on consolidation. |
Subsidiaries and affiliates | A subsidiary is a company in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors; 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 An investment in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies (generally 20-50 percent ownership), are accounted for using the equity method of accounting. |
Revenue Recognition | The Groups main source of revenue is the construction and installation services of environmental protection equipment for flue gas desulphurization, dust removal and flue gas denitration. Revenues are recorded under the percentage of completion method in accordance with FASB ASC Subtopic 605-35, Revenue Recognition Construction-Type and Production-Type Contracts. This approach primarily based on contract costs incurred to date compared with total estimated contract costs. Changes to total estimated contract costs or losses, if any, are recognised in the period they are determined. Revenues recognised in excess of amounts billed are classified as costs and estimated earnings in excess of billings on uncompleted contracts. Essentially all of such amounts are expected to be billed and collected within one year and are classified as current assets. Billings in excess of costs and estimated earnings on uncompleted contracts are classified as current liabilities. When reasonably dependable estimates cannot be made, construction contract revenues are recognised using the completed contract method. |
Research and Development Costs | Research and development costs (R&D costs) are expensed as incurred. The R&D costs amounted to approximately RMB18,895,000, RMB21,796,000 and RMB15,018,000 for the years ended December 31, 2015, 2014 and 2013 respectively and were included in Selling and Administrative expenses in the Groups consolidated statements of income. |
Advertising and promotional expenses | Advertising and promotional expenses (A&P expenses) are expensed as incurred. The A&P expenses amounted to approximately RMB24,000, RMB11,000 and RMB25,000 for the years December 31, 2015, 2014 and 2013 respectively and were included in Selling and Administrative expenses in the Groups consolidated statements of income. |
Taxation | The Group accounts for income and deferred tax under the provision of FASB ASC Subtopic 740-10, Income Taxes, under which deferred taxes are recognised for all temporary differences between the applicable tax balance sheets and the consolidated balance sheet. Deferred tax assets and liabilities are recognised for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. ASC 740-10 also requires the recognition of the future tax benefits of net operating loss carry forwards. A valuation allowance is established when the deferred tax assets are not expected to be realised within a reasonable period of time. In accordance with ASC-740-10, the Company recognises tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Company did not have such uncertain tax positions in 2015, 2014 and 2013. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income for the period that includes the enactment date. |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand and demand deposits with banks. |
Receivables and Other Assets | Receivables and other assets are recorded at their nominal values. Doubtful debt allowances are provided for identified individual risks for these line items. If the loss of a certain part of the receivables is probable, doubtful debt allowances are provided to cover the expected loss. Receivables are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. According to construction contracts signed with the customers, an amount ranged from 5%-20% of contract sum will only be receivable one year after the final inspection report issued by relevant department of Ministry of Environmental Protection. As of December 31, 2015, accounts receivable in more than one year amounted to RMB 57,623,000 (2014: RMB 46,144,000 and 2013: RMB 52,272,000). |
Inventories | Inventories are stated at the lower of cost or market determined using the weighted average method which approximates cost and estimated net realizable value. Cost of work in progress and 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 | Property, plant and equipment are stated at cost less accumulated depreciation. Gains or losses on disposal are reflected in current operations. Major expenditures for betterments and renewals are capitalised. All ordinary repair and maintenance costs are expensed as incurred. 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 for time. Thus, all of the Companys land purchases in the PRC are considered to be leasehold land and 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 Office premises 47-50 years, with 5% residual value Leasehold improvements over terms of the leases or the useful lives whichever is less, with 5% residual value Plant and machineries 5 to 10 years, with 5% residual value Furniture, fixtures and office equipment 3 to 5 years, with 5% residual value Motor vehicles 1 to 8 years, with 5% residual value |
Intangible Assets | The Company amortizes its intangible assets with definite lives over their estimated useful lives and reviews these assets for impairment. The Company is currently amortizing its acquired intangible assets with definite lives over periods generally ranging between five to twenty years. |
Impairment | The Group has adopted FASB ASC Subtopic 360-10, Property, Plant, and Equipment, which requires impairment losses to be recorded for property, plant and equipment to be held and used in operations when indicators of impairment are present. Reviews are regularly performed to determine whether the carrying value of assets is impaired. The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There were no impairment losses recorded during each of the three years ended December 31, 2015. |
Government grant income | Government grant income consisted of receipt of funds to subsidize the investment cost of information technology system development and market 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 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 consolidated statement of operations over the useful life of the asset by way of reduced depreciation expenses. |
Operating leases | Leases where substantially all the risks and rewards of ownership of the leased assets remain with the lessors are accounted for as operating leases. Rental payments under operating leases are charged to expense on the straight-line basis over the period of the relevant leases. |
Fair Value Measurement | ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The Group adopted ASC 820, Fair Value Measurements and Disclosures, for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. The fair values of current financial assets and liabilities carried at amortized cost approximate their carrying amounts. |
Comprehensive Income | The Group has adopted FASB ASC Subtopic 220-10, Comprehensive Income, which requires the Group to report all changes in equity during a period, except for those resulting from investment by owners and distribution to owners, in the financial statements for the period in which they are recognised. The Group has presented comprehensive income, which encompasses net income, in the consolidated statement of changes in shareholders equity. |
Share capital | Paid in capital refers to the registered capital paid-up by the shareholders of the Company. At the year end of December 31, 2014, there were 61,200,000 shares were issued. On December 17, 2015, the Company increased the number of registered shares by 18,972,000 shares. The paid up capital will be increased by RMB 18,972,000 by transfer from the capital reserves, which is agreed by the shareholders and the board of directors. At the year end of December 31, 2015, there were 80,172,000 shares were issued. |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on managements best knowledge of current events and actions that the Group may undertake in the future, actual results may be different from the 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. |
Recent Accounting Updates Pronouncements | In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the requirements for disposals to qualify as discontinued operations and expands related disclosure requirements. This new accounting guidance will be effective for the interim and annual period beginning December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standards core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under todays guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance was deferred by ASU 2015-14, issued by the FASB in August 2015, and this new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the required presentation of debt issuance costs from an asset on the balance sheet to a deduction from the related debt liability. This new accounting guidance will be effective for interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB issued ASU 2015-05, Customers' Accounting for Fees Paid in a Cloud Computing Arrangement, which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under this ASU, non-LIFO inventory will be measured at the lower of cost and net realizable value, eliminating the options that currently exist for market valuation. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. No other changes were made to the current guidance on inventory measurement. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In August 2014, the FASB issued ASU 2014-15Presentation of Financial StatementsGoing Concern (Subtopic 205-40), which addresses managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures. Managements evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2016. Early application is permitted as of the beginning of the interim or annual reporting period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In January 2016, the FASB issued ASU 2016-01Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment addresses various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. This amendment will be effective for the interim and annual period beginning after December 31, 2017. Early adoption by public entities is permitted only for certain provisions. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases, which will replace the existing guidance in ASC 840, Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2020. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, which simplifies the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2018. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. This update clarifies when it is acceptable to recognize the unredeemed portion of prepaid gift cards into income. This new accounting guidance will be effective for the interim and annual period beginning after December 31, 2019. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. |
1. Organisation and principal45
1. Organisation and principal activities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Schedule of significant subsidiaries | Name Percentage of equity ownership Place of incorporation Principal activities Subsidiaries: Euro Tech (Far East) Limited 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 (China) Limited 100% Hong Kong Inactive Euro Tech Trading (Shanghai) Limited 100% The PRC Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Shanghai Euro Tech Limited 100% The PRC Manufacturing of analytical and testing equipment Shanghai Euro Tech Environmental Engineering Company Limited 100% The PRC Undertaking water and waste-water treatment engineering projects Chongqing Euro Tech Rizhi Technology Co., Ltd 100% The PRC Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Rizhi Euro Tech Instrument (Shaanxi) Co., Ltd 100% The PRC Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Guangzhou Euro Tech Environmental Equipment Co., Ltd 100% The PRC Marketing and trading of water and waste water related process control, analytical and testing instruments, disinfection equipment, supplies and related automation systems Yixing Pact Environmental Technology Co., Ltd 58% The PRC Design, manufacture and operation of water and waste water treatment machinery and equipment Pact Asia Pacific Limited 58% The British Virgin Islands Selling of environment protection equipment, undertaking environment protection projects and providing relevant technology advice, training and services Affiliates: Zhejiang Tianlan Environmental Protection Technology Co. Ltd. (Formerly known as Zhejiang Tianlan Desulfurization and DustRemoval Co. Ltd.) 20% The PRC Design, general contract, equipment manufacturing, installation, testing and operation management of the treatment of waste gases emitted Zhejiang Jia Huan Electronic Co. Ltd. 20% The PRC Design and manufacturing automatic control systems and electric voltage control equipment for electrostatic precipitators (air purification equipment) |
ZHEJIANG JIAHUAN | |
Schedule of significant subsidiaries | Name Percentage of equity ownership Place of incorporation Principal activities 2015 2014 Jinhua Jiahuan Puzhau New Energy Technology Co., Ltd* - 80 % PRC Dormant Zhejiang Jiahuan Xinyu Environmental Production Co., Ltd 100 % 100 % PRC Manufacturing and installation services of environmental production equipment *The Company has been deregistered on September 1, 2015. |
ZHEJIANG TIANLAN | |
Schedule of significant subsidiaries | Name Percentage of equity ownership Place of incorporation Principal activities 2015 2014 Hangzhou Tianlan Environmental Engineering and Design Company Limited 100 % 100 % PRC Provision of maintenance services of environmental protection equipment Hangzhou Tianlan Environmental Protection Equipments Company Limited 51 % 51 % PRC Manufacturing and installation services of environmental protection equipment Shihezi Tianlan Environmental Protection Technology Company Limited ( 石河子市天藍環保技術有限公司 100 % 100 % PRC Provision of maintenance services of environmental protection equipment Da Tong Tianlan Environmental Protection Technology Service Company Limited ( 大同天藍環保技術服務有限公司 100 % 100 % PRC Provision of maintenance services of environmental protection equipment Hangzhou Tianlan Environmental Testing Technology Company Limited ( 杭州天藍環境檢測技術有限公司 100 % - PRC Provision of testing services of environmental protection equipment * The Company was incorporated on November 10, 2014. ** The Company was incorporated on October 28, 2015. |
2. Summary of significant acc46
2. Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
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 |
ZHEJIANG JIAHUAN | |
Property, Plant and Equipment | Land use right 50 years Buildings 20 years Plant and machinery 5 to 20 years Office equipment 3 to 10 years Motor vehicles 5 to 10 years |
ZHEJIANG TIANLAN | |
Property, Plant and Equipment | Land use right Over terms of the leases Office premises 47-50 years, with 5% residual value Leasehold improvements over terms of the leases or the useful lives whichever is less, with 5% residual value Plant and machineries 5 to 10 years, with 5% residual value Furniture, fixtures and office equipment 3 to 5 years, with 5% residual value Motor vehicles 1 to 8 years, with 5% residual value |
3. Other income, net (Tables)
3. Other income, net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other income | 2015 2014 2013 US$000 US$000 US$000 Exchange (loss), net (75 ) (12 ) (18 ) Rental income 84 77 72 9 65 54 |
ZHEJIANG JIAHUAN | |
Other income | 2015 2014 2013 RMB000 RMB000 RMB000 Government grant 200 73 - Rental income (i) 901 850 665 Interest income 44 17 32 Sundry income 263 135 - 1,408 1,075 697 (i) Rental income under operating leases is recognized on a straight-line basis over the term of the relevant lease. |
ZHEJIANG TIANLAN | |
Other income | 2015 2014 2013 RMB000 RMB000 RMB000 Gain on disposal of intangible asset - 150 23 Gain on disposal of property, plant and equipment - 7 41 Subsidy income 2,617 4,163 6,893 Sales of scrapped materials 6 6 18 Others 150 269 449 2,773 4,595 7,424 |
4. Income taxes (Tables)
4. Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Components of provision for income taxes | Loss before income taxes: 2015 2014 2013 US$000 US$000 US$000 The PRC and Hong Kong (1,904 ) (879 ) (157 ) The (credit) / provision for income taxes consist of: 2015 2014 2013 US$000 US$000 US$000 Current tax expenses: The PRC and Hong Kong (72 ) 8 47 Total current (credit) / provision (72 ) 8 47 Deferred tax expenses: The PRC and Hong Kong 25 10 26 Total deferred provision 25 10 26 |
Reconciling items from income tax | 2015 2014 2013 US$000 US$000 US$000 Computed tax using respective companies statutory tax rates (177 ) (194 ) (49 ) Change in valuation allowances 455 93 124 Under-provision for income tax in prior years (69 ) - - Non-deductible expenses (256 ) 119 (2 ) Total (credit) / provision for income tax at effective tax rate (47 ) 18 73 |
Components of deferred tax assets | 2015 2014 US$000 US$000 Tax losses 1,159 1,131 Temporary differences 1 4 Less: Valuation allowances (958 ) (908 ) Net deferred tax assets 202 227 |
ZHEJIANG JIAHUAN | |
Components of provision for income taxes | 2015 2014 2013 RMB000 RMB000 RMB000 Income taxes 861 484 19 |
Reconciling items from income tax | 2015 2014 2013 RMB000 RMB000 RMB000 Income before income taxes 5,797 5,194 2,327 Computed tax using respective companies statutory tax rates 1,119 1,299 582 Tax effect on revenue not subject to tax (447 ) (537 ) (20,983 ) Tax effect on expenses not deductible for tax purposes - - 20,455 Under / (over) provision for income tax in prior years 189 (278 ) - Others - - (35 ) Total provision for income tax at effective tax rate 861 484 19 |
ZHEJIANG TIANLAN | |
Components of provision for income taxes | 2015 2014 2013 RMB000 RMB000 RMB000 Current PRC EIT: Domestic 3,351 2,159 3,110 Income taxes 3,351 2,159 3,110 Deferred tax benefit: (177 ) (1,391 ) (447 ) Total deferred taxes (177 ) (1,391 ) (447 ) |
Reconciling items from income tax | 2015 2014 2013 RMB000 RMB000 RMB000 Income before income taxes 24,927 14,776 7,961 Computed tax using respective companies statutory tax rates 3,767 2,216 1,194 (Over)-provision for income tax in prior years - (2,418 ) (123 ) Temporary differences (177 ) 1,575 (445 ) Tax effect of revenue not subject to tax (1,068 ) (695 ) (242 ) Tax effect of expenses not deductible for tax purposes 596 90 2,279 Tax effect of unused tax losses not recognized 56 - - Total provision for income tax at effective tax rate 3,174 768 2,663 |
Components of deferred tax assets | 2015 2014 RMB000 RMB000 Tax losses - - Allowance for doubtful debts 4,527 4,350 Net deferred tax assets 4,527 4,350 |
5. Net income per ordinary sh49
5. Net income per ordinary share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Net Income Per Ordinary Share Tables | |
Basic and diluted number of shares | 2015 2014 2013 Number of shares Weighted average number of ordinary shares for the purposes of basic net income per share 2,063,738 2,069,223 2,069,223 Effect of dilutive potential ordinary shares: Stock options - - - Weighted average number of ordinary shares for the purposes of diluted net income per share 2,063,738 2,069,223 2,069,223 |
6. Accounts receivable, net (Ta
6. Accounts receivable, net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounts receivable, net | 2015 2014 US$000 US$000 Accounts receivable 4,557 4,316 Less: Allowance for doubtful debts (57 ) (48 ) 4,500 4,268 |
Age analysis of past due account receivables | 2015 2014 US$000 US$000 Current 2,762 864 30-59 days past due 633 1,226 60-89 days past due 635 23 Greater than 90 days 470 2,155 4,500 4,268 |
ZHEJIANG JIAHUAN | |
Accounts receivable, net | 2015 2014 RMB000 RMB000 Accounts receivable, gross 99,864 74,024 Less: Allowance for doubtful debts (32 ) (131 ) Accounts receivable, net 99,832 73,893 2015 2014 RMB000 RMB000 Allowance for doubtful debts: Balance at beginning (131 ) (8,000 ) Charged to statement of income Recovered 99 7,869 Balance at end ( 32 ) (131 ) |
ZHEJIANG TIANLAN | |
Accounts receivable, net | 2015 2014 RMB000 RMB000 Accounts receivable 238,325 185,443 Less: Allowance for doubtful debts (30,418 ) (28,835 ) 207,907 156,608 |
7. Prepayments and other curr51
7. Prepayments and other current assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Cost and estimated earnings in excess of billings | 2015 2014 RMB000 RMB000 Prepayments and other receivables 13,039 11,333 Deposits 4,433 3,067 17,472 14,400 |
ZHEJIANG TIANLAN | |
Cost and estimated earnings in excess of billings | 2015 2014 RMB000 RMB000 Contracts costs incurred plus estimated earnings 160,634 207,632 Less: Progress billings (62,994 ) (53,723 ) Cost and estimated earnings in excess of billings 97,640 153,909 |
8. Inventories (Tables)
8. Inventories (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventories | 2015 2014 US$000 US$000 Raw materials 131 146 Work in progress 39 38 Finished goods 387 359 557 543 |
ZHEJIANG JIAHUAN | |
Inventories | 2015 2014 RMB000 RMB000 Raw materials 5,603 3,763 Work in progress 7,840 9,840 Finished goods 8,020 18,646 21,463 32,249 |
ZHEJIANG TIANLAN | |
Inventories | 2015 2014 RMB000 RMB000 Raw materials 6,586 9,121 Work in progress 5,525 6,360 Finished goods - 573 12,111 16,054 |
9. Property, plant and equipm53
9. Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, plant and equipment | 2015 2014 US$000 US$000 Office premises 1,866 1,866 Leasehold improvements 157 160 Furniture, fixtures and office equipment 635 637 Motor vehicles 155 155 Testing equipment 30 30 2,843 2,848 Less: Accumulated depreciation (2,070 ) (2,037 ) 773 811 |
Depreciation expense | 2015 2014 2013 US$000 US$000 US$000 Depreciation charge 56 88 108 |
ZHEJIANG JIAHUAN | |
Property, plant and equipment | 2015 2014 RMB000 RMB000 Buildings 34,493 34,493 Plant and machinery 7,011 7,780 Office equipment 1,148 2,936 Motor vehicles 979 1,124 43,631 46,333 Less: Accumulated depreciation (19,843 ) (20,475 ) 23,788 25,858 |
Depreciation expense | 2015 2014 2013 RMB000 RMB000 RMB000 Depreciation charge 2,296 2,408 2,461 |
ZHEJIANG TIANLAN | |
Property, plant and equipment | 2015 2014 RMB000 RMB000 Building and leasehold improvements 56,696 47,091 Furniture, fixtures and office equipment 9,919 9,629 Motor vehicles 3,780 3,682 Plant and machineries 114,617 715 Construction in progress - 115,645 185,012 176,762 Less: Accumulated depreciation (23,281 ) (14,838 ) 161,731 161,924 |
Depreciation expense | 2015 2014 2013 RMB000 RMB000 RMB000 Depreciation charge 8,473 2,985 2,956 |
9A. Long term investments (Tabl
9A. Long term investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Long term investments | 2015 Gross unrealized Amortized cost Gains Losses Fair Value RMB000 RMB000 RMB000 RMB000 Long term investment: Unlisted investment 69 - - 69 2014 Gross unrealized Amortized cost Gains Losses Fair Value RMB000 RMB000 RMB000 RMB000 Long term investment: Unlisted investment 69 - - 69 |
10. Interests in affiliates (Ta
10. Interests in affiliates (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Interests In Affiliates Tables | |
Schedule of Investments in affiliates | A summary of the financial information of the affiliate, Zhejiang Tianlan Environmental Protection Technology Co. Ltd, is set forth below: 2015 2014 Balance Sheet: US$000 US$000 Current assets 57,432 61,708 Non-current assets 26,587 28,287 Total assets 84,019 89,995 Total liabilities (58,149 ) (64,572 ) Total shareholders equity 25,870 25,423 2015 2014 Operating results: US$000 US$000 Net sales 66,899 64,131 Operating income 4,260 2,637 Net income 3,458 2,266 A summary of the financial information of the affiliate, Zhejiang Jia Huan Electronic Co. Ltd, is set forth below: 2015 2014 Balance Sheet: US$000 US$000 Current assets 22,693 21,264 Non-current assets 4,717 5,288 Total assets 27,410 26,552 Total liabilities (13,627 ) (12,675 ) Total shareholders equity 13,783 13,877 2015 2014 Operating results: US$000 US$000 Net sales 18,481 16,162 Operating income 1,316 1,024 Net income 788 762 |
10A. Intangible assets, net (Ta
10A. Intangible assets, net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Intangible assets, net | 2015 2014 RMB000 RMB000 Software 591 - 591 - Less: Accumulated depreciation (83 ) - 508 - |
Amortization expense | 2015 2014 2013 RMB000 RMB000 RMB000 Amortization expenses 83 - - |
ZHEJIANG TIANLAN | |
Intangible assets, net | 2015 2014 RMB000 RMB000 Patents 2,400 2,400 Others 165 165 2,565 2,565 Less: Accumulated amortisation (1,017 ) (824 ) 1,548 1,741 |
Amortization expense | 2015 2014 2013 RMB000 RMB000 RMB000 Amortisation expense 193 239 395 |
11A. Land use right, net (Table
11A. Land use right, net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Schedule Land use right | 2015 2014 RMB000 RMB000 Land use right 7,987 7,987 Less: Accumulated amortisation (1,536 ) (1,373 ) 6,451 6,614 2015 2014 2013 RMB000 RMB000 RMB000 Amortisation expense 163 163 163 |
ZHEJIANG TIANLAN | |
Schedule Land use right | 2015 2014 RMB000 RMB000 Land use right 7,361 7,361 Less: Accumulated amortisation (1,465 ) (1,316 ) 5,896 6,045 2015 2014 2013 RMB000 RMB000 RMB000 Amortisation expense 149 149 141 |
12. Short term borrowings (Tabl
12. Short term borrowings (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG TIANLAN | |
Short term borrowings | 2015 2014 RMB000 RMB000 Bank loan borrowed by the Company (note i) 40,000 92,900 Bank loan borrowed by a subsidiary of the Company (note ii) 5,000 5,000 45,000 97,900 (i) The bank loan is denominated in Renminbi and repayable within 1 year. The bank loan borrowed by the Company as of December 31, 2015 bear interest at fixed rates 4.62% to 6.47% (2014: 5.88% to 6.90%) per annum. Interest paid during the year ended December 31, 2015 was approximately RMB3,768,000 (2014: RMB4,688,000 and 2013: RMB3,704,000). (ii) The bank loan is denominated in Renminbi and repayable within 1 year. The bank loan borrowed by a subsidiary of the Company as of December 31, 2015 bear interest at fixed rates 7.50% (2014: 7.50%) per annum and are secured by the subsidiarys office premises and leasehold improvements and land use right. Interest paid during the year ended December 31, 2015 was approximately RMB369,000 (2014: RMB377,000). |
13B. Other payables and accru59
13B. Other payables and accrued expenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG TIANLAN | |
Other payables and accrued expenses | 2015 2014 RMB000 RMB000 Deposit received from customers 26,749 36,126 Accrued expenses 12,104 11,391 Other payables 1,118 64,471 Deferred income 799 1,437 Amount due to a related company 5 13 40,775 113,438 |
14B. Long Term Borrowing (Table
14B. Long Term Borrowing (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG TIANLAN | |
Long Term Borrowing | 2015 2014 RMB000 RMB000 Loan borrowed by the Company 170,732 - |
16. Stock options (Tables)
16. Stock options (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock Options Tables | |
Schedule stock option activity | 2015 2014 2013 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 20,692 3.44 - - - - Granted - - 20,692 3.44 - - Cancelled/Expired - - - - - - Exercised - - - - - - Outstanding, end of year 20,692 3.44 20,692 3.44 - - Exercisable, end of year - - - - - - |
20A. Future Minimum rental re62
20A. Future Minimum rental receivable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ZHEJIANG JIAHUAN | |
Schedule of future minimum operating leases | 2015 2014 RMB000 RMB000 Within 1 year 750 715 After 1 year but within 5 years 785 1,535 After 5 years - - 1,535 2,250 |
22. Segment information (Tables
22. Segment information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information Tables | |
Segment information | 2015 2014 2013 US$000 US$000 US$000 Revenue Trading and manufacturing 12,256 11,647 10,986 Engineering 6,046 7,175 7,616 18,302 18,822 18,602 Operating loss Trading and manufacturing (187 ) (214 ) (241 ) Engineering (1,624 ) (640 ) 106 Unallocated corporate expenses (147 ) (117 ) (120 ) (1,958 ) (971 ) (255 ) 2015 2014 2013 US$000 US$000 US$000 Depreciation: Trading and manufacturing 46 67 74 Engineering 10 21 34 56 88 108 Capital Expenditures, Gross Trading and manufacturing 11 2 31 Engineering 10 8 20 21 10 51 2015 2014 US$000 US$000 Assets Trading and manufacturing 5,050 5,664 Engineering 16,220 17,735 21,270 23,399 Liabilities Trading and manufacturing 2,468 2,929 Engineering 2,346 2,940 4,814 5,869 |
Geographical analysis of revenue | Geographical analysis of revenue by customer location is as follows: 2015 2014 2013 US$000 US$000 US$000 Revenue - The PRC 9,327 10,950 12,392 Hong Kong 8,726 6,177 5,919 Others 249 1,695 291 18,302 18,822 18,602 Geographical analysis of long-lived assets is as follows: 2015 2014 US$000 US$000 Hong Kong 501 532 The PRC 272 279 773 811 |
Major suppliers | Details of individual suppliers accounting for more than 5% of the Groups purchases are as follows: 2015 2014 2013 Supplier A 39 % 33 % 20 % Supplier B 11 % 11 % 8 % Supplier C 11 % 11 % 17 % Supplier D 6 % 7 % 7 % Supplier E 5 % 6 % 7 % Supplier F 3 % 8 % 8 % Details of individual customers accounting for more than 5% of the Groups revenue are as follows: 2015 2014 2013 Customer A 11 % - - Customer B 10 % - - Customer C 6 % - - Customer D 6 % - - |
1. Organisation and principal64
1. Organisation and principal activities (Details) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | |||
Euro Tech (Far East) Limited | ||||
Percentage of equity ownership | 100.00% | |||
Euro Tech (China) Limited | ||||
Percentage of equity ownership | 100.00% | |||
Euro Tech Trading (Shanghai) Limited | ||||
Percentage of equity ownership | 100.00% | |||
Shanghai Euro Tech Limited | ||||
Percentage of equity ownership | 100.00% | |||
Shanghai Euro Tech Environmental Engineering Company Limited | ||||
Percentage of equity ownership | 100.00% | |||
Chongqing Euro Tech Rizhi Technology Co., Ltd | ||||
Percentage of equity ownership | 100.00% | |||
Rizhi Euro Tech Instrument (Shaanxi) Co., Ltd | ||||
Percentage of equity ownership | 100.00% | |||
Guangzhou Euro Tech Environmental Equipment Co., Ltd | ||||
Percentage of equity ownership | 100.00% | |||
Yixing Pact Environmental Technology Co., Ltd | ||||
Percentage of equity ownership | 58.00% | |||
Pact Asia Pacific Limited | ||||
Percentage of equity ownership | 58.00% | |||
Zhejiang Tianlan Environmental Protection Technology Co. Ltd. | ||||
Percentage of equity ownership | 20.00% | |||
Zhejaing Jia Huan Electronic Co. Ltd | ||||
Percentage of equity ownership | 20.00% | |||
Hangzhou Tianlan Environmental Engineering and Design Company Limited | ZHEJIANG TIANLAN | ||||
Percentage of equity ownership | 100.00% | 100.00% | ||
Hangzhou Tianlan Environmental Protection Equipments Company Limited | ZHEJIANG TIANLAN | ||||
Percentage of equity ownership | 51.00% | 51.00% | ||
Shihezi Tianlan Environmental Protection Technology Company Limited | ZHEJIANG TIANLAN | ||||
Percentage of equity ownership | 100.00% | 100.00% | ||
Da Tong Tianlan Environmental Protection Technology Service | ZHEJIANG TIANLAN | ||||
Percentage of equity ownership | 100.00% | 100.00% | [1] | |
Hangzhou Tianlan Environmental Testing Technology Company Limited | ZHEJIANG TIANLAN | ||||
Percentage of equity ownership | 100.00% | [2] | 0.00% | |
Jinhua Jiahuan Puzhau | ZHEJIANG JIAHUAN | ||||
Percentage of equity ownership | 0.00% | [3] | 80.00% | |
Zhejiang Jiahuan Xinyu Environmental | ZHEJIANG JIAHUAN | ||||
Percentage of equity ownership | 100.00% | 100.00% | ||
[1] | The Company was incorporated on November 10, 2014. | |||
[2] | The Company was incorporated on October 28, 2015. | |||
[3] | The Company has been deregistered on September 1, 2015. |
2. Summary of significant acc65
2. Summary of significant accounting policies (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Office premises | |
Useful lives | 47 to 51 years |
Leasehold improvements | |
Useful lives | over terms of the leases or the useful lives whichever is less |
Furniture, fixtures and office equipment | |
Useful lives | 3 to 5 years |
Motor Vehicles | |
Useful lives | 4 years |
Testing Equipment | |
Useful lives | 3 years |
ZHEJIANG TIANLAN Land Use Right | |
Useful lives | Over terms of the leases |
ZHEJIANG TIANLAN Office Premises | |
Useful lives | 47-50 years, with 5% residual value |
ZHEJIANG TIANLAN Leasehold improvements | |
Useful lives | over terms of the leases or the useful lives whichever is less, with 5% residual value |
ZHEJIANG TIANLAN Plant and machineries | |
Useful lives | 5 to 10 years, with 5% residual value |
ZHEJIANG TIANLAN Furniture, fixtures and office equipment | |
Useful lives | 3 to 5 years, with 5% residual value |
ZHEJIANG TIANLAN Motor vehicles | |
Useful lives | 1 to 8 years, with 5% residual value |
ZHEJIANG JIAHUAN Land use right | |
Useful lives | 50 years |
ZHEJIANG JIAHUAN Buildings | |
Useful lives | 20 years |
ZHEJIANG JIAHUAN Plant and machinery | |
Useful lives | 5 to 20 years |
ZHEJIANG JIAHUAN Office equipment | |
Useful lives | 3 to 10 years |
ZHEJIANG JIAHUAN Motor vehicles | |
Useful lives | 5 to 10 years |
2. Summary of significant acc66
2. Summary of significant accounting policies (Details Narrative 1) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Research and Development Costs | ¥ 852 | ¥ 631 | ¥ 427 |
Advertising and promotional expenses | 17 | 44 | 12 |
ZHEJIANG JIAHUAN | |||
Research and Development Costs | 6,982 | 4,981 | |
ZHEJIANG TIANLAN | |||
Research and Development Costs | 18,895 | 21,796 | 15,018 |
Advertising and promotional expenses | ¥ 24 | ¥ 11 | ¥ 25 |
3. Other income, net (Details)
3. Other income, net (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2013CNY (¥) | Dec. 31, 2013USD ($) | ||
Exchange (loss)/gain, net | ¥ (75) | ¥ (12) | ¥ (18) | ||||
Rental income | 84 | 77 | 72 | ||||
Other income, net | 9 | 65 | 54 | ||||
Total | $ | $ 9 | $ 65 | $ 54 | ||||
ZHEJIANG JIAHUAN | |||||||
Government grant | 200 | 73 | 0 | ||||
Rental income | [1] | 901 | 850 | 665 | |||
Interest income | 44 | 17 | 32 | ||||
Sundry income | 263 | 135 | 0 | ||||
Other income, net | 1,408 | 1,075 | 697 | ||||
Total | 1,408 | 1,075 | 697 | ||||
ZHEJIANG TIANLAN | |||||||
Gain on disposal of intangible asset | 0 | 150 | 23 | ||||
Gain on disposal of property, plant and equipment | 0 | 7 | 41 | ||||
Subsidy income | 2,617 | 4,163 | 6,893 | ||||
Sales of scrapped materials | 6 | 6 | 18 | ||||
Others | 150 | 269 | 449 | ||||
Total | ¥ 2,773 | ¥ 4,595 | ¥ 7,424 | ||||
[1] | Rental income under operating leases is recognized on a straight-line basis over the term of the relevant lease. |
4. Income taxes (Details)
4. Income taxes (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Profit/(loss before) income taxes/(benefit): The PRC and Hong Kong | ¥ (1,904) | ¥ (879) | ¥ (157) |
The provision for income taxes consists of: | |||
Current tax expenses: The PRC and Hong Kong | (72) | 8 | 47 |
Total current provision | (72) | 8 | 47 |
Deferred tax benefit: The PRC and Hong Kong | 25 | 10 | 26 |
Total deferred provision | 25 | 10 | 26 |
ZHEJIANG TIANLAN | |||
The provision for income taxes consists of: | |||
Current PRC EIT Domestic | 3,351 | 3,950 | 3,110 |
Total current provision | 3,351 | 3,950 | 3,110 |
Deferred tax benefit: | (177) | (1,391) | (447) |
Total deferred provision | ¥ (177) | ¥ (1,391) | ¥ (447) |
4. Income taxes (Details 1)
4. Income taxes (Details 1) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2013CNY (¥) | Dec. 31, 2013USD ($) | |
Income before income taxes | $ | $ (1,904) | $ (879) | $ (157) | |||
Computed tax using respective companies’ statutory tax rates | ¥ (177) | ¥ (194) | ¥ (49) | |||
Change in valuation allowances | 455 | 93 | 124 | |||
Under(over) -provision for income tax in prior years | (69) | 0 | 0 | |||
Non deductible expenses | (256) | 119 | (2) | |||
Total provision for income tax at effective tax rate | (47) | 18 | 73 | |||
ZHEJIANG JIAHUAN | ||||||
Income before income taxes | 5,797 | 5,194 | 2,327 | |||
Computed tax using respective companies’ statutory tax rates | 1,119 | 1,299 | 582 | |||
Under(over) -provision for income tax in prior years | 189 | (278) | 0 | |||
Tax effect on revenue not subject to tax | (447) | (537) | (20,983) | |||
Non deductible expenses | 0 | 0 | 20,455 | |||
Others | 0 | 0 | (35) | |||
Total provision for income tax at effective tax rate | 861 | 484 | 19 | |||
ZHEJIANG TIANLAN | ||||||
Income before income taxes | 24,927 | 14,776 | 7,961 | |||
Computed tax using respective companies’ statutory tax rates | 3,767 | 2,216 | 1,194 | |||
Under(over) -provision for income tax in prior years | 0 | (2,418) | (123) | |||
Temporary differences | (177) | 1,575 | (445) | |||
Tax effect on revenue not subject to tax | (1,068) | (695) | (242) | |||
Non deductible expenses | 596 | 90 | 2,279 | |||
Tax effect of unused tax losses not recognized | 56 | 0 | 0 | |||
Total provision for income tax at effective tax rate | ¥ 3,174 | ¥ 768 | ¥ 2,663 |
4. Income taxes (Details 2)
4. Income taxes (Details 2) - CNY (¥) ¥ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
The components of deferred tax assets are as follows: | ||
Tax losses | ¥ 1,159 | ¥ 1,131 |
Temporary differences | 1 | 4 |
Less: Valuation allowances | (958) | (908) |
Net deferred tax assets | 202 | 227 |
ZHEJIANG TIANLAN | ||
The components of deferred tax assets are as follows: | ||
Tax losses | 0 | 0 |
Allowance for doubtful debts | 4,527 | 4,350 |
Net deferred tax assets | ¥ 4,527 | ¥ 4,350 |
4. Income taxes (Details 3)
4. Income taxes (Details 3) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2013CNY (¥) | Dec. 31, 2013USD ($) | |
Income taxes | $ | $ (47) | $ 18 | $ 73 | |||
ZHEJIANG JIAHUAN | ||||||
Income taxes | ¥ | ¥ 861 | ¥ 484 | ¥ 19 |
5. Net income per ordinary sh72
5. Net income per ordinary share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net Income Per Ordinary Share Tables | |||
Weighted average number of ordinary shares for the purposes of basic net income per share | 2,063,738 | 2,069,223 | 2,069,223 |
Effect of dilutive potential ordinary shares: Stock options | 0 | 0 | 0 |
Weighted average number of ordinary shares for the purposes of diluted net income per share | 2,063,738 | 2,069,223 | 2,069,223 |
6. Accounts receivable, net (De
6. Accounts receivable, net (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2013CNY (¥) |
Accounts receivable | $ | $ 4,557 | $ 4,316 | |||
Less: Allowance for doubtful debts | ¥ (57) | ¥ (48) | |||
Net | $ | $ 4,500 | $ 4,268 | |||
ZHEJIANG JIAHUAN | |||||
Accounts receivable | 99,864 | 74,024 | |||
Less: Allowance for doubtful debts | (32) | (131) | ¥ (8,000) | ||
Net | 99,832 | 73,893 | |||
ZHEJIANG TIANLAN | |||||
Accounts receivable | 238,325 | 185,443 | |||
Less: Allowance for doubtful debts | (30,418) | (28,835) | |||
Net | ¥ 207,907 | ¥ 156,608 |
6. Accounts receivable, net (74
6. Accounts receivable, net (Details 1) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts receivable | $ 4,500 | $ 4,268 |
Current | ||
Accounts receivable | 2,762 | 864 |
30 - 59 days past due | ||
Accounts receivable | 633 | 1,226 |
60 - 89 days past due | ||
Accounts receivable | 635 | 23 |
Greater than 90 days past due | ||
Accounts receivable | $ 470 | $ 2,155 |
6. Accounts receivable, net (75
6. Accounts receivable, net (Details 2) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for doubtful debts: Balance at beginning | ¥ (48) | |
Balance at end | (57) | ¥ (48) |
ZHEJIANG JIAHUAN | ||
Allowance for doubtful debts: Balance at beginning | (131) | (8,000) |
Recovered | 99 | 7,869 |
Balance at end | ¥ (32) | ¥ (131) |
7. Prepayments and other curr76
7. Prepayments and other current assets (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
ZHEJIANG JIAHUAN | ||
Prepayments and other receivables | ¥ 13,039 | ¥ 11,333 |
Deposits | 4,433 | 3,067 |
Prepayments and other current assets | 17,472 | 14,400 |
ZHEJIANG TIANLAN | ||
Contracts costs incurred plus estimated earnings | 160,634 | 207,632 |
Less: Progress billings | (62,994) | (53,723) |
Cost and estimated earnings in excess of billings | ¥ 97,640 | ¥ 153,909 |
7A. Long term investments (Deta
7A. Long term investments (Details) - ZHEJIANG JIAHUAN - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Long term investment: Unlisted investment Amortized cost | ¥ 69 | ¥ 69 |
Gains Gross unrealized | 0 | 0 |
Losses Gross unrealized | 0 | 0 |
Long term investment: Unlisted investment Fair Value | ¥ 69 | ¥ 69 |
8. Inventories (Details)
8. Inventories (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) |
Raw materials | $ | $ 131 | $ 146 | ||
Work in progress | $ | 39 | 38 | ||
Finished goods | $ | 387 | 359 | ||
Inventory | $ | $ 557 | $ 543 | ||
ZHEJIANG JIAHUAN | ||||
Raw materials | ¥ 5,603 | ¥ 3,763 | ||
Work in progress | 7,840 | 9,840 | ||
Finished goods | 8,020 | 18,646 | ||
Inventory | 21,463 | 32,249 | ||
ZHEJIANG TIANLAN | ||||
Raw materials | 6,586 | 9,121 | ||
Work in progress | 5,525 | 6,360 | ||
Finished goods | 0 | 573 | ||
Inventory | ¥ 12,111 | ¥ 16,054 |
8. Inventories (Details Narrati
8. Inventories (Details Narrative) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Inventories Details Narrative | ||
Provision for obsolete and slow moving inventories | ¥ 5 | ¥ 8 |
9. Property, plant and equipm80
9. Property, plant and equipment (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) |
Building and leasehold improvements | $ | $ 1,866 | $ 1,866 | ||
Leasehold improvements | $ | 157 | 160 | ||
Furniture, fixtures and office equipment | $ | 635 | 637 | ||
Motor vehicles | $ | 155 | 155 | ||
Testing equipment | $ | 30 | 30 | ||
Gross | $ | 2,843 | 2,848 | ||
Less: Accumulated depreciation | $ | (2,070) | (2,037) | ||
Net | $ | $ 773 | $ 811 | ||
ZHEJIANG JIAHUAN | ||||
Motor vehicles | ¥ 979 | ¥ 1,124 | ||
Buildings | 34,493 | 34,493 | ||
Plant and machineries | 7,011 | 7,780 | ||
Office equipment | 1,148 | 2,936 | ||
Gross | 43,631 | 46,333 | ||
Less: Accumulated depreciation | (19,843) | (20,475) | ||
Net | 23,788 | 25,858 | ||
ZHEJIANG TIANLAN | ||||
Building and leasehold improvements | 56,696 | 47,091 | ||
Furniture, fixtures and office equipment | 9,919 | 9,629 | ||
Motor vehicles | 3,780 | 3,682 | ||
Plant and machineries | 114,617 | 715 | ||
Construction in progress | 0 | 115,645 | ||
Gross | 185,012 | 176,762 | ||
Less: Accumulated depreciation | (23,281) | (14,838) | ||
Net | ¥ 161,731 | ¥ 161,924 |
9. Property, plant and equipm81
9. Property, plant and equipment (Details 1) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2013CNY (¥) | Dec. 31, 2013USD ($) | |
Depreciation charge | $ | $ 56 | $ 88 | $ 108 | |||
ZHEJIANG JIAHUAN | ||||||
Depreciation charge | ¥ 2,296 | ¥ 2,408 | ¥ 2,461 | |||
ZHEJIANG TIANLAN | ||||||
Depreciation charge | ¥ 8,473 | ¥ 2,985 | ¥ 2,956 |
10. Interests in affiliates (De
10. Interests in affiliates (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Balance Sheet: | |||
Current assets | $ 8,512 | $ 11,136 | |
Total assets | 21,270 | 23,399 | |
Total liabilities | 4,814 | 5,869 | |
Total shareholders’ equity | 15,146 | 15,743 | |
Operating results: | |||
Operating profits | (1,958) | (971) | $ (255) |
Net (loss)/profits | (616) | (123) | $ (18) |
Jia Huan | |||
Balance Sheet: | |||
Current assets | 22,693 | 21,264 | |
Non-current assets | 4,717 | 5,288 | |
Total assets | 27,410 | 26,552 | |
Total liabilities | (13,627) | (12,675) | |
Total shareholders’ equity | 13,783 | 13,877 | |
Operating results: | |||
Net sales | 18,481 | 16,162 | |
Operating profits | 1,312 | 1,024 | |
Net (loss)/profits | 788 | 762 | |
Tianlan | |||
Balance Sheet: | |||
Current assets | 57,432 | 61,708 | |
Non-current assets | 26,587 | 28,287 | |
Total assets | 84,019 | 89,995 | |
Total liabilities | (58,149) | (64,572) | |
Total shareholders’ equity | 25,870 | 25,423 | |
Operating results: | |||
Net sales | 66,899 | 64,131 | |
Operating profits | 4,260 | 2,637 | |
Net (loss)/profits | $ 3,458 | $ 2,266 |
10A. Intangible assets, net (De
10A. Intangible assets, net (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
ZHEJIANG JIAHUAN | |||
Software | ¥ 591 | ¥ 0 | |
Gross | 591 | 0 | |
Less: Accumulated amortisation | (83) | 0 | |
Net | 508 | 0 | |
Amortisation expense | 83 | 0 | ¥ 0 |
ZHEJIANG TIANLAN | |||
Patents | 2,400 | 2,400 | |
Others | 165 | 165 | |
Gross | 2,565 | 2,565 | |
Less: Accumulated amortisation | (1,017) | (824) | |
Net | 1,548 | 1,741 | |
Amortisation expense | ¥ 193 | ¥ 239 | ¥ 395 |
11. Land use right, net (Detail
11. Land use right, net (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
ZHEJIANG JIAHUAN | |||
Land use right | ¥ 7,987 | ¥ 7,987 | |
Less: Accumulated amortisation | (1,536) | (1,373) | |
Net | 6,451 | 6,614 | |
Amortisation expense | 163 | 163 | ¥ 163 |
ZHEJIANG TIANLAN | |||
Land use right | 7,361 | 7,361 | |
Less: Accumulated amortisation | (1,465) | (1,316) | |
Net | 5,896 | 6,045 | |
Amortisation expense | ¥ 149 | ¥ 149 | ¥ 141 |
12. Short term borrowings (Deta
12. Short term borrowings (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
ZHEJIANG TIANLAN | |||
Bank loan | ¥ 45,000 | ¥ 97,900 | |
ZHEIJIANG Bank loan borrowed by the Company | |||
Bank loan | [1] | 40,000 | 92,900 |
ZHEIJIANG Bank loan borrowed by a subsidiary of the Company | |||
Bank loan | [2] | ¥ 5,000 | ¥ 5,000 |
[1] | The bank loan is denominated in Renminbi and repayable within 1 year. The bank loan borrowed by the Company as of December 31, 2015 bear interest at fixed rates 4.62% to 6.47% (2014: 5.88% to 6.90%) per annum. Interest paid during the year ended December 31, 2015 was approximately RMB3,768,000 (2014: RMB4,688,000 and 2013: RMB3,704,000). | ||
[2] | The bank loan is denominated in Renminbi and repayable within 1 year. The bank loan borrowed by a subsidiary of the Company as of December 31, 2015 bear interest at fixed rates 7.50% (2014: 7.50%) 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, 2015 was approximately RMB369,000 (2014: RMB377,000). |
13B. Other payables and accru86
13B. Other payables and accrued expenses (Details) - ZHEJIANG TIANLAN - CNY (¥) ¥ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deposit received from customers | ¥ 26,749 | ¥ 36,126 |
Accrued expenses | 12,104 | 11,391 |
Other payables | 1,118 | 64,471 |
Deferred income | 799 | 1,437 |
Amount due to a related company | 5 | 13 |
Other payables and accrued expenses | ¥ 40,775 | ¥ 113,438 |
14B. Long Term Borrowing (Detai
14B. Long Term Borrowing (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
ZHEJIANG TIANLAN | ||
Loan borrowed by the Company | ¥ 170,732 | ¥ 0 |
16. Stock options (Details)
16. Stock options (Details) - Stock Options - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Number of options | |||
Outstanding, beginning of year | 20,692 | 0 | 0 |
Granted | 0 | 20,692 | 0 |
Cancelled/Expired | 0 | 0 | 0 |
Exercised | 0 | 0 | 0 |
Outstanding, end of year | 20,692 | 20,692 | 0 |
Exercisable, end of year | 0 | 0 | 0 |
Weighted average exercise price | |||
Options Outstanding, Beginning | $ 3.44 | $ 0 | $ 0 |
Options Granted | 0 | 3.44 | 0 |
Options cancelled/ expired | 0 | 0 | 0 |
Options Exercised | 0 | 0 | 0 |
Options Outstanding, Ending | 3.44 | 3.44 | 0 |
Options Exercisable, Ending | $ 0 | $ 0 | $ 0 |
17. Pension plan (Details Narra
17. Pension plan (Details Narrative) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Aggregate contributions to pension plans and retirement benefit schemes | ¥ 458 | ¥ 378 | ¥ 353 |
ZHEJIANG JIAHUAN | |||
Aggregate contributions to pension plans and retirement benefit schemes | 1,594 | 1,324 | |
ZHEJIANG TIANLAN | |||
Aggregate contributions to pension plans and retirement benefit schemes | ¥ 3,850 | ¥ 3,027 | ¥ 2,516 |
20A. Future Minimum rental re90
20A. Future Minimum rental receivable (Details) - ZHEJIANG JIAHUAN - CNY (¥) ¥ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Within 1 year | ¥ 750 | ¥ 715 |
After 1 year but within 5 years | 785 | 1,535 |
After 5 years | 0 | 0 |
Total | ¥ 1,535 | ¥ 2,250 |
22. Segment information (Detail
22. Segment information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2013CNY (¥) | Dec. 31, 2013USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Revenue | ||||||||
Trading and manufacturing | ¥ 12,256 | ¥ 11,647 | ¥ 10,986 | |||||
Engineering | 6,046 | 7,175 | 7,616 | |||||
Revenue | $ | $ 18,302 | $ 18,822 | $ 18,602 | |||||
Operating (loss)/income | ||||||||
Trading and manufacturing | (187) | (214) | (241) | |||||
Engineering | (1,624) | (640) | 106 | |||||
Unallocated corporate expenses | (147) | (117) | (120) | |||||
Operating expenses | $ | $ (1,958) | $ (971) | $ (255) | |||||
Depreciation: | ||||||||
Trading and manufacturing | 46 | 67 | 74 | |||||
Engineering | 10 | 21 | 34 | |||||
Depreciation | 56 | 88 | 108 | |||||
Capital Expenditures, Gross | ||||||||
Trading and manufacturing | 11 | 2 | 31 | |||||
Engineering | 10 | 8 | 20 | |||||
Total | 21 | 10 | ¥ 51 | |||||
Assets | ||||||||
Trading and manufacturing | 5,050 | 5,664 | ||||||
Engineering | 16,220 | 17,735 | ||||||
Total assets | $ | $ 21,270 | $ 23,399 | ||||||
Liabilities | ||||||||
Trading and manufacturing | 2,468 | 2,929 | ||||||
Engineering | ¥ 2,346 | ¥ 2,940 | ||||||
Total | $ | $ 4,814 | $ 5,869 |
22. Segment information (Deta92
22. Segment information (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue | $ 18,302 | $ 18,822 | $ 18,602 |
Geographical analysis of long-lived assets | 773 | 811 | |
The PRC | |||
Revenue | 9,327 | 10,950 | 12,392 |
Geographical analysis of long-lived assets | 272 | 279 | |
Hong Kong | |||
Revenue | 8,726 | 6,177 | 5,919 |
Geographical analysis of long-lived assets | 501 | 532 | |
Others | |||
Revenue | $ 249 | $ 1,695 | $ 291 |
22. Segment information (Deta93
22. Segment information (Details 2) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Supplier A | |||
Supplier accounting for more than 5% of Group's purchases | 39% | 33% | 20% |
Supplier B | |||
Supplier accounting for more than 5% of Group's purchases | 11% | 11% | 8% |
Supplier C | |||
Supplier accounting for more than 5% of Group's purchases | 11% | 11% | 17% |
Supplier D | |||
Supplier accounting for more than 5% of Group's purchases | 6% | 7% | 7% |
Supplier E | |||
Supplier accounting for more than 5% of Group's purchases | 5% | 6% | 7% |
Supplier F | |||
Supplier accounting for more than 5% of Group's purchases | 3% | 8% | 8% |
22. Segment information (Deta94
22. Segment information (Details 3) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Customer A | |||
Customers accounting for more than 5% of the Group’s revenue | 11% | 0% | 0% |
Customer B | |||
Customers accounting for more than 5% of the Group’s revenue | 10% | 0% | 0% |
Customer C | |||
Customers accounting for more than 5% of the Group’s revenue | 6% | 0% | 0% |
Customer D | |||
Customers accounting for more than 5% of the Group’s revenue | 6% | 0% | 0% |