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10. Interests in affiliates
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Interests in affiliates

Investments in affiliates are accounted for using the equity method of accounting.

 

The Company is holding 19.7% equity interests in Zhejiang Tianlan Environmental Protection Technology Co. Ltd. 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 People’s Republic of China (“PRC”) on November 17, 2015.

 

The Group interest in Blue Sky has been counted for as an affiliate using the equity method as the Group has representation in both the Board and Executive Committee of Blue Sky, and the ability to participate in the decision-making process.

 

During the year, the Group’s equity in Blue Sky was diluted subsequent to the issuance of new ordinary shares by Blue Sky to other shareholders. A net profit on deemed disposal of an affiliate of USD24,000 had been recognized in the consolidated statement of operations and comprehensive income for that year.

 

A summary of the financial information of the affiliate, Zhejiang Tianlan Environmental Protection Technology Co. Ltd, is set forth below:

 

    2016     2015  
Balance Sheet:   US$’000     US$’000  
             
Current assets     46,297       57,432  
                 
Non-current assets     25,847       26,587  
Total assets     72,144       84,019  
                 
Total liabilities     (45,372 )     (58,149 )
                 
Total shareholders’ equity     26,772       25,870  

 

    2016     2015  
Operating results:   US$’000     US$’000  
             
Net sales     43,226       66,899  
                 
Operating income     3,841       4,260  
                 
Net income     3,473       3,458  

 

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:

 

    2016     2015  
Balance Sheet:   US$’000     US$’000  
             
             
Current assets     22,021       22,693  
                 
Non-current assets     4,079       4,717  
Total assets     26,100       27,410  
                 
Total liabilities     (11,694 )     (13,627 )
                 
Total shareholders’ equity     14,406       13,783  

 

    2016     2015  
Operating results:   US$’000     US$’000  
             
Net sales     16,684       18,481  
                 
Operating income     1,586       1,316  
                 
Net income     1,564       788