MRO Magazine

Plastec Technologies Reports 2015 Second Quarter and Six-Month Financial Results; Announces Extension of Securities Repurchase Plan Through September 2016; Interim Cash Dividend of $0.10 Per Share


August 6, 2015
By Business Wire News

HONG KONG

Plastec Technologies, Ltd. – (OTCBB: PLTYF (ordinary shares), PLTEF (units)) (“Plastec” or the “Company”), an integrated plastic manufacturing services provider that operates in the People’s Republic of China and Thailand, today reported unaudited financial results for fiscal 2015 second quarter and six-month ended June 30, 2015. See financial 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.

Financial and Operating Highlights for the Three Months Ended June 30, 2015

(All comparisons to prior year)

  • Sales of $41.4 million, an increase of 22.8% compared to $33.7 million
  • Gross margin of 21.6%, compared to 19.1%, resulting primarily from increasing orders of higher-margin product
  • Adjusted EBITDA of $6.9 million, compared to $6.4 million
  • Net income of $3.5 million, or $0.27 per diluted share based on 12.9 million diluted shares outstanding, compared to $2.3 million, or $0.18 per diluted share based on 12.9 million diluted shares outstanding

Fiscal 2015 Six-Month Financial and Operating Highlights

(All comparisons to same period of prior year)

  • Sales of $78.9 million, an increase of 14.6% compared to $68.9 million
  • Gross margin of 23.4%, compared to 21.6%
  • Adjusted EBITDA of $15.4 million, compared to $14.7 million
  • Net income of $8.0 million, or $0.62 per diluted share based on 12.9 million diluted shares outstanding, compared to $10.2 million, or $0.78 per diluted share based on 12.9 million diluted shares outstanding
  • $13.1 million in cash generated from operations for the six months ended June 30, 2015, compared to $16.6 million

Balance Sheet Highlights

  • $73.3 million in working capital at June 30, 2015, compared to $82.5 million at December 31, 2014
  • Book value per share of $8.81 at June 30, 2015

Dividends Distribution

  • In May 2015, the Company’s Board of Directors declared a special one-time cash dividend of $0.90 on each outstanding ordinary share. The special cash dividend was paid on or about June 02, 2015 to shareholders of record as of May 26, 2015.
  • The Company also announced today that its Board of Directors has declared an interim cash dividend of $0.10 per ordinary share for the fiscal 2015-second quarter ended June 30, 2015. The interim dividend will be payable on or about August 27, 2015 to shareholders of record as of August 20, 2015.

Management Comments

Mr. Kin Sun Sze-To, Chairman of Plastec, stated, “We are very glad to report solid financial results for both the second quarter and first half of fiscal 2015. The double-digit revenue growth for both periods is largely driven by the follow-up orders of higher-margin products from our existing clients. We improved our gross margin, operating income and overall profitability during the second quarter, and continue to integrate methods of achieving higher levels of productivity throughout our entire organization. With the free cash generated from our operations, we are in a strong position to balance capital improvements with our growth. As part of our business development efforts, we have expanded our mold production capacity in our current facilities and plan to establish a new plant in Guangdong Province, China. We are confident that as we continue to expand our capacity and strengthen our plastic manufacturing services, we will be able to retain and attract new multinational customers.”

Chairman Sze-To continued, “We are pleased to announce our second interim cash dividend, reflecting Plastec’s sustainable financial performance. The recurring dividends, along with the extension of Securities Repurchase Plan, indicate our continued confidence in the outlook for Plastec. As always, we are committed to actively managing our capital position as well as creating shareholder value to reward our investors for their continuous support.”

 

Selected Financial Highlights in USD ($ in millions, except number of shares and per share data)

     3 months ended
June 30, 2015
 3 months ended
June 30, 2014
 Percentage Change  6 months ended
June 30, 2015
 6 months ended
June 30, 2014
 Percentage Change
Sales$41.4$33.722.8%$78.9$68.914.6%
Cost of Revenues$32.4$27.318.9%$60.5$54.012.0%
Gross Profit$9.0$6.439.0%$18.4$14.924.0%
Gross Profit Margin21.6%19.1%2.5 pts23.4%21.6%1.8 pts
 
Income from Operations$4.0$2.745.7%$9.3$11.4(18.4%)
Operating Margin9.7%8.2%1.5 pts11.8%16.6%(4.8 pts)
 
Net Income$3.5$2.356.0%$8.0$10.2(21.1%)
Net Margin8.5%6.7%1.8 pts10.1%14.7%(4.6 pts)
 
Weighted Average Number of Diluted Ordinary Shares Outstanding12,938,12812,938,12812,938,12812,938,128
Diluted EPS$0.27$0.1850.0%$0.62$0.78(21.3%)
Adjusted EBITDA*      $6.9  $6.4  7.0%  $15.4  $14.7  4.8%

* Reconciliation table at end of release

Balance Sheet Highlights (USD in Millions)
       

6/30/2015

 

12/31/2014

 Percentage Change
Cash and Cash Equivalents $61.3 $67.8(9.5%)
Total Current Assets $121.6 $122.2(0.5%)
Total Assets$164.1$163.00.7%
Working Capital $73.3 $82.5(11.2%)
Total Liabilities $50.1 $43.415.5%
Shareholders’ Equity $114.0 $119.6(4.7%)
Total Liabilities and Shareholders’ Equity$164.1$163.00.7%
 

2015 Second Quarter and First Half Financial Review

  • Total sales for three months ended June 30, 2015 increased to $41.4 million from $33.7 million in the prior-year period. Total sales for the six months period ended June 30, 2015 were $78.9 million, compared to $68.9 million in the corresponding period in the prior year. The double-digit growth for both second quarter and first half of 2015, 22.8% and 14.6%, respectively, was primarily a result of new orders from existing clients and eliminating orders with low margins.
  • The Company’s gross profit increased 39.0% from $6.4 million to $9.0 million during the second quarter ended June 30, 2015, and gross profit margin improved to 21.6% from 19.1% for the prior-year period. For the six months period ended June 30, 2015, the Company’s gross profit was $18.4 million, or 23.4% of revenues, compared to $14.9 million, or 21.6% of revenues, in the prior year period. The increase in gross profit was attributable to better margins on products and continuing cost control effort throughout the period.
  • Income from operations was $4.0 million, or 9.7% of revenues, during the second quarter ended June 30, 2015, compared to $2.7 million, or 8.2% of revenues, in the prior-year period. For the six months period, income from operations was $9.3 million, or 11.8% of the revenues, compared to $11.4 million, or 16.6% of the revenues for the prior-year period. The decline was mainly attributable to a one-time $3.8 million gain on disposal of a subsidiary recorded in the first six months of 2014. Excluding the effect of this prior corresponding period one-off transaction, Plastec’s operating income before tax increased by 22.9%.
  • Net income for the second quarter ended June 30, 2015 was $3.5 million or $0.27 per share based on approximately 12.9 million weighted average diluted shares outstanding, compared to $2.3 million, or $0.18 per share based on approximately 12.9 million weighted average diluted shares, in the prior-year period. For the first half of 2015, the Company’s net income was $8.0 million, or $0.62 per share based on 12.9 million weighted average shares outstanding, compared to $10.2 million, or $0.78 per share based on 12.9 million weighted average shares outstanding, in the prior-year period.
  • Adjusted EBITDA for the three months ended June 30, 2015 was $6.9 million, compared to $6.4 million in the prior-year period. For the first half of 2015, adjusted EBITDA was $15.4 million, compared to $14.7 million in the prior-year period.

Extension of Securities Repurchase Plan

The Company announced today that its Board of Directors has approved a further extension of its existing securities repurchase plan (as expanded) through September 25, 2016, allowing it to purchase up to $5 million of its securities in both open market and privately negotiated transactions at the discretion of the Company’s management and as market conditions allow; which repurchase plan may be suspended, modified or discontinued without any notice at any time. As of the date of this press release, the Company had repurchased 586,010 ordinary shares, 547,600 warrants and no units under the current 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 and Thailand through its wholly owned subsidiaries. With approximately 4,800 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 3-month

period ended June 30,

 For the 6-month

period ended June 30,

2015  20142015  2014
HK$HK$HK$  HK$
 
 
Revenues 322,811 262,940 615,703 537,193
Cost of revenues (252,989)   (212,708) (471,915)   (421,255)
Gross profit 69,822 50,232 143,788 115,938
 
Operating expenses, net
Selling, general and administrative expenses (40,433) (27,650) (72,795) (57,500)
Other income 391 1,106 687 1,163
Gain/(loss) on disposal of a subsidiary (2,605) 29,557
Written-off of property, plant and equipment (829) (1,261) (440)
Gain on disposal of property, plant and equipment 2,293   364 2,430   552
Total operating expenses, net (38,578)   (28,785) (70,939)   (26,668)
 
Income from operations 31,244 21,447 72,849 89,270
 
Interest income 284 388 935 555
Interest expense (488)   (447) (800)   (868)
Income before income tax expense 31,040 21,388 72,984 88,957
 
Income tax expense (3,551)   (3,777) (10,500)   (9,781)
Net income 27,489 17,611 62,484 79,176
 
Other comprehensive income
Foreign currency translation adjustment (263)   4,581   (2,151)
Comprehensive income attributable to

Plastec Technologies, Ltd.

27,226

 

17,611

67,065

 

77,025

 
Net income per share:
 
Weighted average number of ordinary shares 12,938,128   12,938,128 12,938,128   12,938,128
 
Weighted average number of diluted

ordinary shares

12,938,128

 

12,938,128

12,938,128

 

12,938,128

 
Basic income per share

attributable to Plastec Technologies, Ltd.

HK$2.1

 

HK$1.4

HK$4.8

 

HK$6.1

 
Diluted income per share

attributable to Plastec Technologies, Ltd.

HK$2.1

 

HK$1.4

HK$4.8

 

HK$6.1

 
 

PLASTEC TECHNOLOGIES, LTD.

 

CONSOLIDATED BALANCE SHEETS

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

       
(Unaudited)

 

June 30,

(Audited)

 

December 31,

 2015  2014
HK$HK$

ASSETS

 
Current assets
Cash and cash equivalents 478,288 528,527
Trade receivables, net of allowances for doubtful accounts of HK$nil, and HK$nil as of December 31, 2014 and June 30, 2015, respectively

307,896

278,553

Inventories 102,017 96,030
Deposits, prepayment and other receivables   60,134   50,204
Total current assets 948,335 953,314
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 
Property, plant and equipment, net 293,329 283,500
Prepaid lease payments, net 18,928 19,692
Deferred tax assets 18,738 14,212
Intangible assets   438   438
Total assets   1,279,768   1,271,156
Current liabilities
Bank borrowings 47,350 21,429
Trade payables 135,442 125,854
Other payables and accruals 135,323 103,576
Tax payable   58,321   58,736
Total current liabilities 376,436 309,595
 
Bank Borrowings   14,286   28,571
Total liabilities   390,722   338,166
 
Commitments and contingencies
 
Shareholders’ equity
Ordinary shares (US$0.001 par value; 100,000,000 authorized 12,938,128 and 12,938,128 shares issued and outstanding as of December 31, 2014 and June 30, 2015, respectively)

 

101

 

101

Additional paid-in capital 26,049 26,049
Accumulated other comprehensive income 14,718 10,137
Retained earnings   848,178   896,703
Total shareholders’ equity   889,046   932,990
       
Total liabilities and shareholders’ equity   1,279,768   1,271,156
 
 

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 6-month

period ended June 30,

 2015  2014
 HK$HK$
Operating activities
Net income 62,484 79,176
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 49,105 56,106
Gain on disposal of a subsidiary (29,557)
Loss on written-off of property, plant and equipment 1,261 440
Gain on disposal of property, plant and equipment (2,430) (552)
Deferred tax credit (3,796) (1,358)
Changes in operating assets and liabilities:
Trade receivables (29,343) 18,795
Inventories (5,987) (1,045)
Deposits, prepayment and other receivables (9,931) (7,783)
Trade payables 26,966 11,101
Other payables and accruals 14,369 (4,493)
Tax payables   (882)   8,539
Net cash provided by operating activities   101,816   129,369
 
Investing activities
Purchase of property, plant and equipment (61,290) (16,577)
Proceeds from disposal of a subsidiary 43,447
Proceeds from disposal of property, plant and equipment 4,028 749
Deposits for purchase of property, plant and equipment     (2,360)
Net cash (used in)/generated from investing activities   (57,262)   25,259
 
Financing activities
Net proceeds/(repayment) from/ of bank borrowings 11,635 (11,495)
Dividends paid   (111,009)   (20,183)
Net cash used in financing activities   (99,374)   (31,678)
 
 
Net increase/(decrease) in cash and cash equivalents (54,820) 122,950
 
Effect of exchange rate changes on cash and cash equivalents 4,581 (3,079)
 
Cash and cash equivalents, beginning of period   528,527   348,901
Cash and cash equivalents, end of period   478,288   468,772
 
Supplementary disclosures of cash flow information:
Interest (received)/paid, net   (135)   317
Income taxes paid   15,178   2,602
 
 

PLASTEC TECHNOLOGIES, LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

(Hong Kong dollars in thousands)

         
Three Months EndedSix Months Ended
June 30  June 30June 30  June 30
2015  20142015  2014
HKD  HKDHKD  HKD
Net Income (note)25,63418,74660,62848,344
 
Plus Interest expenses 488 447 800 868
Minus Interest income (284) (388) (935) (555)
Plus Income tax expenses 3,551 3,777 10,500 9,781
       
Income from operations 29,389 22,582 70,993 58,438
 
Plus Depreciation and Amortization 24,243 27,556 49,105 56,106
             
Adjusted EBITDA53,632  50,138  120,098  114,544
 
Note: Excl. other income and gain/(loss) on disposals/written-off
 

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.

Plastec Technologies, Ltd.
HL Ning, Chief Financial Officer
ning@plastec.com.hk
or
Eli D. Scher, Director
eli@plastec.com.hk
or
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