Plastec Technologies, Ltd.
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 – November 13, 2012 – 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.”
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Plastec Technologies, Ltd.
November 13, 2012
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 | % |
Page 3
Plastec Technologies, Ltd.
November 13, 2012
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.
CONTACT:
Plastec Technologies, Ltd.
Eli D. Scher, Director
eli@plastec.com.hk
HL Ning, Chief Financial Officer
ning@plastec.com.hk
INVESTOR RELATIONS:
The Equity Group Inc.
Adam Prior, Vice President
(212) 836-9606
aprior@equityny.com
Katherine Yao, Account Executive
kyao@equityny.com
Page 4
Plastec Technologies, Ltd.
November 13, 2012
| 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$4.7 | |
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Plastec Technologies, Ltd.
November 13, 2012
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED BALANCE SHEETS
(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)
| | | As at | | | As at | |
| | | September 30, | | | April 30, 2012 | |
| | | HK$ | | | 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$0.001 par value; 100,000,000 shares authorized, 14,292,228 and
14,352,903 shares issued and outstanding as of September 30, 2012 and April 30, 2012, respectively) | | | 111 | | | | 112 | |
| Additional paid-in capital | | | 75,128 | | | | 77,967 | |
| Accumulated other comprehensive income | | | 14,866 | | | | 15,514 | |
| Retained earnings | | | 659,562 | | | | 618,454 | |
| Total Plastec Technologies, Ltd. Shareholders' equity | | | 749,667 | | | | 712,047 | |
| | | | | | | | | |
| Total liabilities and shareholders' equity | | | 1,230,040 | | | | 1,193,729 | |
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Plastec Technologies, Ltd.
November 13, 2012
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)
| | | For the 9 months ended | |
| | | September 30, | |
| | | 2012 | | | 2011 | |
| | | HK$ | | | 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 | ) | | | - | |
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Plastec Technologies, Ltd.
November 13, 2012
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.
