Plastec Technologies Reports Unaudited Financial Results for the Two- and Nine-Month Transition Periods Ended September 30, 2012

Financial Highlights for the Two Months Ended September 30, 2012

  • Sales of $31.3 million; an increase of 1.3%
  • Gross margin of 17.7% compared to 11.0%
  • EBITDA of $7.0 million;
  • Net income of $3.2 million, or $0.22 per diluted share

HONG KONG--()--Plastec Technologies, Ltd. - (OTCBB: PLTYF (ordinary shares), PLTWF (warrants), PLTEF (units)) (“Plastec” or the “Company”), an integrated plastic manufacturing services provider that operates in the People’s Republic of China, announced today unaudited financial results for the two months and year-to-date ended September 30, 2012.

As previously disclosed in the Company’s Form 6-K filing with the SEC on September 11, 2012, Plastec’s Board of Directors approved a change in the Company’s fiscal year to a calendar period ending December 31st from a fiscal year ending on April 30th. The change in fiscal year end was made so that the Company’s fiscal year end would coincide with all the Company’s operating subsidiaries in the People’s Republic of China. The Company will file a transition report on Form 20-F within four months after December 31, 2012 to cover the transition period from May 1, 2012 to December 31, 2012 in order to reflect this change.

See attached tables at the end of this release in Hong Kong Dollars (HKD). All other amounts in this press release are presented in U.S. dollars (USD) with a conversion rate of US$1.0: HK$7.8 (see table below for reference).

($ in millions, except per share data)

2 months ended

9/30/2012

  2 months ended

9/30/2011

  9 months ended

9/30/2012

  9 months ended

9/30/2011

Sales $ 31.3 $ 30.9 $ 126.0 $ 132.5
Cost of Revenues $ 25.8 $ 27.5 $ 110.2 $ 113.3
Gross Profit $ 5.5 $ 3.4 $ 15.8 $ 19.2
Gross Profit Ratio 17.7 % 11.0 % 12.5 % 14.5 %

Income from Operations

$ 3.4 $ 1.5 $ 7.6 $ 11.1

Net Income

$

3.2

$

1.1

$

6.6

$

8.0

Diluted EPS $ 0.22 $ 0.07 $ 0.46 $ 0.60

Adjusted EBITDA*

$ 7.0 $ 4.8 $ 22.4 $ 25.7

* Reconciliation table at end of release

Management Comments

Mr. Kin Sun Sze-To, Chairman of Plastec, stated, “We are pleased to report improved margins and profitable results during the period, despite relatively flat sales. We remain conservative in our short-term view of the market and have focused our attention on streamlining our costs and improving our operating performance. We achieved a better margin in these two months largely due to more value added services rendered in our products. Throughout the difficult conditions of the past 18 months, we have focused on continuing to remain profitable and cost-effectively growing our business. We increased our capacity through the expansion of our largest facility in Shenzhen, and have begun preparations to establish production lines in Thailand. We have carefully selected the locations of production facilities in order to facilitate timely delivery of our products to customers, and our expansion into Thailand is an extension of this philosophy.”

Financial Review for the Two Months Ended September 30, 2012

  • The Company’s total sales for the two months ended September 30, 2012 increased 1.3% to $31.3 million from $30.9 million in the prior-year period.
  • The Company’s gross profit margin for the two months ended September 30, 2012 was 17.7%, compared to 11.0% in the prior-year period. The increase in margin for the period was largely the result of a more favorable product mix, which included higher margin secondary-process finishing services.
  • EBITDA for the two months ended September 30, 2012 was $7.0 million, compared to $4.8 million in the prior-year period.
  • Net income for the two months ended September 30, 2012 was $3.2 million, or $0.22 per share based on a weighted average number of diluted shares outstanding of approximately 14.3 million, compared to $1.1 million, or $0.07 per share based on approximately 16.7 million weighted average number of diluted shares in the prior-year period.

YTD Financial Review

  • The Company’s total sales for the nine months ended September 30, 2012 were $126.0 million, compared to $132.5 million in the prior-year period. The decrease is largely due to lower volume in the first half of calendar 2012.
  • The Company’s gross profit margin for the nine months ended September 30, 2012 was 12.5%, compared to 14.5% in the prior-year period.
  • EBITDA for the nine months ended September 30, 2012, was $22.4 million, compared to $25.7 million in the prior-year period.
  • Net income for the nine months ended September 30, 2012 was $6.6 million, or $0.46 per share based on a weighted average number of diluted shares outstanding of approximately 14.5 million, compared to $8.0 million, or $0.60 per share based on approximately 13.5 million weighted average number of diluted shares, in the prior-year period.

Balance Sheet Highlights

($ in millions)

  9/30/2012   4/30/2012   % Change
Cash and Cash Equivalents $ 28.5 $ 25.6 11.3 %
Total Current Assets 89.7 81.0 10.7 %
Total Assets 157.7 153.0 3.1 %
Working Capital 30.0 21.1 42.2 %
Total Long-term Debt 0 0 N/A
Stockholders’ Equity 96.1 91.3 5.3 %

Share Repurchase Update

In June 2012, the Company approved a six-month extension of its previously announced share repurchase plan, allowing Plastec to purchase up to $5 million of its ordinary shares in both open market and privately negotiated transactions at the discretion of the Company’s management and as market conditions allow. The Company also expanded the scope of the repurchase plan to include Plastec’s publicly-held warrants (under ticker “PLTWF”), with all other terms of the repurchase plan remaining unchanged. To date, the Company has repurchased 64,675 shares and 0 warrants under its repurchase plan.

About Plastec

Originally founded in 1993 by Chairman and CEO, Mr. Kin Sun Sze-To, Plastec is an integrated plastic manufacturing services provider that operates in the People’s Republic of China through its wholly owned subsidiaries. With approximately 5,500 employees, Plastec provides precision plastic manufacturing services from mold design and fabrication, plastic injection manufacturing to secondary-process finishing, as well as parts assembly.

Forward Looking Statements

This press release contains “forward-looking statements.” These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements.

PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)
         
For the 2 months ended For the 9 months ended
September 30, September 30,
2012 2011 2012 2011
HK$   HK$ HK$ HK$
 
Revenue 244,121 240,978 982,728 1,033,750
Cost of revenues (201,002 ) (214,354 ) (859,452 ) (883,694 )
Gross profit 43,119 26,624 123,276 150,056
 
Operating expenses
Selling, general and administrative expenses (15,721 ) (14,873 ) (65,676 ) (64,487 )
Other income 484 77 2,620 529
Gain/(loss) on disposal of property, plant and equipment

(1,262)

 

 

55   (1,203 ) 611  
Total operating expenses, net (16,499 ) (14,741 ) (64,259 ) (63,347 )
 
Income from operations 26,620 11,883 59,017 86,709
 
Interest income 45 59 145 163
Interest expense (446 ) (544 ) (1,810 ) (2,327 )
Income before income tax expense 26,219 11,398 57,352 84,545
 
Income tax expense (1,196 ) (2,611 ) (5,865 ) (21,877 )
Net income 25,023 8,787 51,487 62,668
 
Other comprehensive income
Foreign currency translation adjustment (248 ) -   (649 ) 7,138  
Comprehensive income attributable to
Plastec Technologies, Ltd. 24,775   8,787   50,838   69,806  
 
Weighted average number of ordinary shares 14,292,228 16,733,196 14,498,320 13,469,699
Weighted average number of diluted ordinary

shares

14,292,228 16,733,196 14,498,320 13,469,699
 

Basic earnings per share attributable to Plastec Technologies, Ltd.

HK$1.8   HK$0.5 HK$3.6 HK$4.7

Diluted earnings per share attributable to Plastec Technologies, Ltd.

HK$1.8   HK$0.5 HK$3.6 HK$4.7

PLASTEC TECHNOLOGIES, LTD.

CONSOLIDATED BALANCE SHEETS

(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)

 
    As at   As at

September 30, 2012

April 30, 2012

HK$ HK$
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents 222,552 199,818

Trade receivables, less allowance for doubtful amounts of HK$nil and HK$nil as of September 30 & April 30, 2012 respectively

333,755 282,869
Inventories 122,130 128,387
Deposits, prepayment and other receivables 21,335 20,514
Total current assets 699,772 631,588
 
Property, plant and equipment 495,736 524,137
Prepaid lease payments 24,107 24,753
Other assets 9,987 12,813
Intangible assets 438 438
Total assets 1,230,040 1,193,729
 
LIABILITIES AND EQUITY
Current liabilities
Bank borrowings 121,806 156,866
Capital lease obligations 25 303
Trade payables 133,593 121,964
Other payables and accruals 135,076 115,109
Tax payable 75,369 72,936
Total current liabilities 465,869 467,178
 
Deferred tax liabilities 14,504 14,504
Total liabilities 480,373 481,682
 
Commitments and contingencies - -
 
Shareholders' equity
Preferred shares (US$0.001 par value; 1,000,000 share authorized, none issued and outstanding) - -

Ordinary shares (US$0.001 par value; 100,000,000 shares authorized, 14,292,228 and 14,352,903 shares issued and outstanding as of September 30, 2012 and April 30, 2012, respectively)

111 112
Additional paid-in capital 75,128 77,967
Accumulated other comprehensive income 14,866 15,514
Retained earnings 659,562 618,454
Total Plastec Technologies, Ltd. Shareholders' equity 749,667 712,047
   
Total liabilities and shareholders' equity 1,230,040 1,193,729

PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)

 

 

For the 9 months ended
September 30,
2012   2011
HK$ HK$
 
Operating activities
Net income after taxation 51,487 62,668
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 118,375 115,903
Net loss/(gain) on disposal of property, plant and equipment 1,203 (611 )
Deferred tax charge - (652 )
Change in operating assets and liabilities:
Trade receivables (76,547 ) 1,084
Inventories 13,285 12,888
Deposits, prepayment and other receivables (8,785 ) 1,064
Trade payables 9,657 (16,699 )
Other payables and accruals 20,120 14,577
Tax payables 6,192   22,530  
 
Net cash provided by operating activities 134,987   212,752  
 
Investing activities
Purchase of property, plant and equipment (69,066 ) (123,646 )
Proceeds from disposal of property, plant and equipment 12,491 2,615
Deposits for purchase of property, plant and equipment (9,988 ) (11,786 )
 
Net cash used in investing activities (66,563 ) (132,817 )
 
Financing activities
Repurchases of shares (3,020 ) -
Proceeds from bank borrowings 240,680 250,740
Repayment of bank borrowings (268,695 ) (305,957 )
Repayment of capital lease obligations (1,526 ) (5,614 )
 
Net cash used in financing activities (32,561 ) (60,831 )
 
Effect of exchange rate changes on cash and cash equivalents (400 ) 7,066
 
Net increase in cash and cash equivalents 35,863 19,104
Cash and cash equivalents, beginning of period 187,089   228,649  
Cash and cash equivalents, end of period 222,552   254,819  
 
Supplementary
 
Interest paid 1,665 2,165
Income tax paid (327 ) -  
PLASTEC TECHNOLOGIES, LTD.  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
 
A reconciliation of EBITDA to net income is provided below
 
For the 2 months ended For the 9 months ended
September 30, September 30,
2012 2011 2012 2011
HKD'000 HKD'000 HKD'000 HKD'000
 
Net Income* 25,801 8,655 50,070 61,528
Plus: Interest expenses 446 544 1,810 2,327
Minus: Interest Income (45 ) (59 ) (145 ) (163 )
Plus: Income tax expense 1,196 2,611 5,865 21,877
       
Income from Operations 27,398 11,751 57,600 85,569
 
Plus: Depreciation and Amortization $ 26,872   $ 25,705   117,212   114,740  
 
Adjusted EBITDA   54,270     37,456   174,812   200,309  
* excl. other incomes and gain/(loss) on disposals of property, plant & equipment

This press release includes financial information (EBITDA) not derived in accordance with generally accepted accounting principles or international financial reporting standards. Plastec believes that the presentation of such financial information provides more useful information to investors as it indicates more clearly Plastec’s future performance. EBITDA was derived by taking earnings before interest expense (net), taxes, depreciation and amortization as adjusted for certain one-time non-recurring items and exclusions.

Contacts

Plastec Technologies, Ltd.
Eli D. Scher, Director
eli@plastec.com.hk
HL Ning, Chief Financial Officer
ning@plastec.com.hk
or
INVESTOR RELATIONS:
The Equity Group Inc.
Adam Prior, Vice President
212-836-9606
aprior@equityny.com
Katherine Yao, Account Executive
kyao@equityny.com

Sharing

Contacts

Plastec Technologies, Ltd.
Eli D. Scher, Director
eli@plastec.com.hk
HL Ning, Chief Financial Officer
ning@plastec.com.hk
or
INVESTOR RELATIONS:
The Equity Group Inc.
Adam Prior, Vice President
212-836-9606
aprior@equityny.com
Katherine Yao, Account Executive
kyao@equityny.com