PLAC TECH UT : Plastec Technologies Reports Unaudited Fiscal 2012 First and Second Quarter Financial Results

FY 2012 Q1 Financial Highlights Sales of $49.3 million, an increase of 27.2% year-over-year Gross margin of 15.5% compared to 19.2% in the prior year period EBITDA of $10.1 million, up 6.8% year-over-year Net income of $3.6 million, or $0.21 per diluted share FY 2012 Q2 Financial Highlights Sales of $43.7 million, a decrease of 7.8% year-over year Gross margin of 9.7% compared to 19.7% in the prior year period EBITDA of $6.2 million, down 43.1% year-over-year Net income of $0.6 million, or $0.04 per diluted

Plastec Technologies, Ltd. (OTCBB: PLTYF (common stock), 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 its unaudited financial results for fiscal 2012 first quarter ended July 31, 2011 and second quarter ended October 31, 2011.

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).

Plastec Technologies, Ltd. Selected Financial Statements in USD ($ in millions, except per share data)
		3 months ended 7/31/2011		3 months ended 7/31/2010		3 months ended 10/31/2011		3 months ended 10/31/2010		6 months ended 10/31/2011		6 months ended 10/31/2010
Sales		49.3		38.8		43.7		47.5		93.1		86.2
Cost of Revenues		41.7		31.3		39.5		38.1		81.2		69.4
Gross Profit		7.6		7.4		4.2		9.4		11.9		16.8
Gross Profit Ratio		15.5%		19.2%		9.7%		19.7%		12.8%		19.5%
Income from Operations		5.2		5.3		1.3		6.4		6.5		11.7
Net Income		3.6		4.4		0.6		5.4		4.2		9.7
Diluted EPS		0.21		0.62		0.04		0.76		0.24		1.38
EBITDA		10.1		9.4		6.2		11.0		16.3		20.4

Mr. Kin Sun Sze-To, Chairman of Plastec, stated, "For the first fiscal half year of 2012, we were pleased to have completed a 9,000 square meter facility at our largest location in Shenzhen in September 2011, which increased our mold manufacturing capabilities by 20%. While we did see a general slowdown in market conditions and slowing trends in the new products developments of some of our major customers, we expect that China's continuing economic development coupled with a large global demand for our unique service offering in the plastics industry will continue to drive demand in the future. We believe our financial position is very strong, with approximately $31.4 million in cash as of October 31, 2011 and a continued record of generating operating cash flow while still regularly investing in our business."

Mr. Sze-To continued, "We continued to execute our diversification strategy and actively search for new clients and new orders in consumer electronics and other sectors that require high-quality, specialized plastic molding and plastic injection services. We will continue this same strategy to grow our business organically while also seeking appropriate merger and acquisition opportunities to help build on our position as an industry leader."

Fiscal Year 2012 First Quarter Financial Review

• The Company's total sales for the three months ended July 31, 2011 increased 27.2% to $49.3 million from $38.8 million.
• Plastec's gross profit margin for the three months ended July 31, 2011 decreased to 15.5% from 19.2% in the prior-year period. The decrease in gross margin was largely the result of higher cost of sales due to rising labor costs in China, increased and inflated cost of raw materials and factory overheads. The impact of the higher costs could not be mitigated in the first half of the year, but the Company expects to mitigate the effect by raising sales prices in the future.
• EBITDA for the three months ended July 31, 2011 was $10.1 million, compared to $9.4 million in the prior three-month period. A table reconciling EBITDA to net income can be found at the end of this release.
• Net income for the three months ended July 31, 2011 was $3.6 million, or $0.21 per share based on a weighted average number of diluted shares outstanding of 16.7 million, compared to net income of 4.4 million, or $0.62 per share based on 7.1 million weighted average number of diluted shares, in the prior-year period.

Fiscal Year 2012 Second Quarter Financial Review

• The Company's total sales for the three months ended October 31, 2011 decreased 7.8% to $43.7 million from $47.5 million.
• The Company's gross profit margin for the three months ended October 31, 2011 was 9.7%, compared to 19.7% in the prior-year period, largely due to the increased cost of sales as mentioned above.
• EBITDA for the three months ended October 31, 2011, was $6.2 million, compared to $11.0 million in the prior three-month period.
• Net income for the three months ended October 31, 2011 was $0.6 million, or $0.04 per share based on a weighted average number of diluted shares outstanding of 16.7 million, compared to $5.4 million, or $0.76 per share based on 7.1 million weighted average number of diluted shares, in the prior-year period.

Fiscal 2012 Six Month Financial Review

• The Company's total sales for the six months ended October 31, 2011 increased 7.9% to $93.1 million from $86.2 million. Plastec's sales grew during the period as a result of increased sales from its existing larger client base during the first three months of the fiscal year from its expanded manufacturing capacity and a decrease of second quarter was due to decreasing order from some of the Company's major customers which are in a longer phase of developing new products.
• The Company's gross profit margin during the six months ended October 31, 2011 decreased 12.8% compared to 19.5% same period last year, due to the reasons of increased cost of sales cited above.
• EBITDA for the six months ended October 31, 2011 was $16.3, compared to $20.4 in the prior year period.
• Net income for the six months ended October 31, 2011 was $4.2 million, or $0.24 per share based on a weighted average number of diluted shares outstanding of 16.7 million, compared to $9.7 million, or $1.38 per share based on 7.1 million weighted average number of diluted shares, in the prior-year period.

Balance Sheet Highlights

As of October 31, 2011, the Company had cash and cash equivalents of $31.4 million; working capital of $27.3 million, total bank borrowings of $19.8 million, and shareholders' equity of $100.8 million.

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 currently operates 6 separate, high-output, low-defect facilities (with gross floor areas of approximately 167,000 square meters) in 5 locations in Guangdong province in Southern China and Jiangsu province in Eastern China. 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 months ended July 31,
				2011 HK$		2010 HK$
Revenue				384,651		302,322
Cost of revenues				(324,982)		(244,419)
Gross profit				59,669		57,903
Operating expenses
Selling, general and administrative expenses				(19,828)		(17,457)
Other income				353		460
Gain on disposals of property, plant and equipment				76		375
Total operating expenses, net				(19,399)		(16,622)
Income from operations				40,270		41,281
Interest income				51		16
Interest expense				(722)		(664)
Income before income tax expense				39,599		40,633
Income tax expense				(11,903)		(6,394)
Net income (Note)				27,696		34,239
Other comprehensive income
Foreign currency translation adjustment				7,138		60
Comprehensive income attributable to
Plastec Technologies, Ltd.				34,834		34,299
Weighted average number of ordinary shares				16,733,196		7,054,583
Weighted average number of diluted ordinary shares				16,733,196		7,054,583
Basic earnings per share attributable to   Plastec Technologies, Ltd.				HK$1.6		HK$4.9
Diluted earnings per share attributable to   Plastec Technologies, Ltd.				HK$1.6		HK$4.9

Note: Income tax expenses for the 3 months ended July 31, 2010 included a tax adjustment for HK$2,431 for additional tax payable under enterprise income tax in China.

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 months ended October 31,				For the 6 months ended October 31,
			2011 HK$		2010 HK$		2011 HK$		2010 HK$
Revenue			341,163		370,280		725,814		672,602
Cost of revenues			(308,036)		(297,216)		(633,018)		(541,635)
Gross profit			33,127		73,064		92,796		130,967
Operating expenses
Selling, general and administrative expenses			(23,872)		(22,299)		(43,700)		(39,756)
Other income			866		135		1,219		595
Gain/(loss) on disposal of property, plant and equipment			62		(1,303)		138		(928)
Total operating expenses, net			(22,944)		(23,467)		(42,343)		(40,089)
Income from operations			10,183		49,597		50,453		90,878
Interest income			64		22		115		38
Interest expense			(719)		(689)		(1,441)		(1,353)
Income before income tax expense			9,528		48,930		49,127		89,563
Income tax expense			(4,744)		(7,138)		(16,647)		(13,532)
Net income (Note)			4,784		41,792		32,480		76,031
Other comprehensive income
Foreign currency translation adjustment			-		193		7,138		253
Comprehensive income attributable to
Plastec Technologies, Ltd.			4,784		41,985		39,618		76,284
Weighted average number of ordinary shares			16,733,196		7,054,583		16,733,196		7,054,583
Weighted average number of diluted ordinary shares			16,733,196		7,054,583		16,733,196		7,054,583
Basic earnings per share attributable to
Plastec Technologies, Ltd.			HK$0.3		HK$5.9		HK$1.9		HK$10.8
Diluted earnings per share attributable to
Plastec Technologies, Ltd.			HK$0.3		HK$5.9		HK$1.9		HK$10.8

Note: Income tax expenses for the three months and six months ended Oct 31, 2010 included tax adjustments for HK$2,431 and HK$4,862 for additional tax payable under enterprise income tax in China.

PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED BALANCE SHEETS
(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)
			As of October 31, 2011 HK$		As of April 30, 2011 HK$
			(Unaudited)		(Audited)
ASSETS
Current assets
Cash and cash equivalents			244,957		219,757
Trade receivables, net of allowances for doubtful accounts of HK$nil and HK$nil as of Oct 31 and Apr 30 2011 respectively			301,035		270,763
Inventories			109,096		117,733
Deposits, prepayment and other receivables			15,434		8,357
Total current assets			670,522		616,610
Property, plant and equipment, net			552,777		551,079
Prepaid lease payment, net			25,529		26,237
Other assets			9,079		8,001
Total assets			1,257,907		1,201,927
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank borrowings			154,447		169,710
Capital lease obligations			2,376		5,311
Trade payables			124,366		127,987
Other payables and accruals			103,891		80,811
Tax payable			72,445		56,389
Total current liabilities			457,525		440,208
Capital lease obligations			-		303
Deferred tax liabilities			14,504		15,156
Total liabilities			472,029		455,667
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, 16,733,196 shares and 16,733,196 shares issued and outstanding as of Oct 31 and Apr 30, 2011 respectively)			131		131
Additional paid-in capital			169,973		169,973
Accumulated other comprehensive income			15,244		8,106
Retained earnings			600,530		568,050
Total Plastec Technologies, Ltd. shareholders' equity			785,878		746,260
Total liabilities and shareholders' equity			1,257,907		1,201,927

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 months ended October 31,
				2011 HK$		2010 HK$
Operating activities
Net Income after taxation				32,480		76,031
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization				78,165		67,912
Net loss/(gain) on disposal of property, plant and equipment				(138)		928
Deferred tax charge				(652)		-
Change in operating assets and liabilities:
Trade receivables				(30,272)		(92,816)
Inventories				8,637		(32,474)
Deposits, prepayment and other receivables				(7,075)		3,548
Trade payables				(3,621)		10,270
Other payables and accruals				23,080		32,129
Tax payables				16,056		13,532
Net cash provided by operating activities				116,660		79,060
Investing activities
Purchase of property, plant and equipment				(73,075)		(102,512)
Proceeds from disposal of property, plant and equipment				2,127		1,268
Deposits for purchase of property, plant and equipment				(9,080)		(10,804)
Net cash used in investing activities				(80,028)		(112,048)
Financing activities
Proceeds from bank borrowings				187,277		249,377
Repayment of bank borrowings				(202,540)		(174,760)
Repayment of capital lease obligations				(3,238)		(5,323)
Dividends paid				-		(30,000)
Net cash provided by/(used in) financing activities				(18,501)		39,294
Effect of exchange rate changes on cash and cash equivalents				7,069		253
Net increase in cash and cash equivalents				18,131		6,306
Cash and cash equivalents, beginning of period				219,757		151,304
Cash and cash equivalents, end of period				244,957		157,863
Supplementary
interest paid				1,326		1,315
income tax paid				1,243		-

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
A reconciliation of Adjusted EBITDA to net income is provided below:
				3 months ended July 31,						3 months ended October 31,						6 months ended October 31,
HKD'000				2011		2010				2011		2010				2011		2010
Net income (Note)				27,267		33,404				3,856		42,960				31,123		76,364
Plus	: Interest expenses			722		664				719		689				1,441		1,353
Minus	: Interest income			(51)		(16)				(64)		(22)				(115)		(38)
Plus	: Income tax expense			11,903		6,394				4,744		7,138				16,647		13,532
Income from Operations				39,841		40,446				9,255		50,765				49,096		91,211
Plus	: Depreciation & Amortization			38,824		33,215				39,341		34,697				78,165		67,912
Adjusted EBITDA				78,665		73,661				48,596		85,462				127,261		159,123

Note: Excl. Other Incomes and gain/(loss) on disposal

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.

Plastec Technologies, Ltd.
Eli D. Scher, Director
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HL Ning, Chief Financial Officer
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