Business News

Plastec Technologies, Ltd. Reports Unaudited Fiscal 2011 Second Quarter and Six Month Financial Results for Its Operating Subsidiary

Tuesday 21. December 2010 - Plastec Technologies, Ltd. (OTCBB: GSMXF, GSMEF, GSMWF) (the "Company"), an integrated plastic manufacturing services provider that operates in the People's Republic of China through its wholly owned subsidiary, Plastec International Holdings Limited ("Plastec"), today reported interim, unaudited financial results for Plastec's fiscal 2011 second quarter and six months ended October 31, 2010. These financial results reflect those of Plastec on a stand-alone basis, without adjustment, prior to its merger with the Company on December 16, 2010. See attached tables in Hong Kong Dollars (HKD). All other amounts in this press release are presented in US dollars ($USD) with a conversion rate of 1.0USD: HK$7.8.

FY 2011 Q2 Financial Highlights
Record sales of $47.5 million, an increase of 52.6% year-over-year
EBITDA of $10.8 million, up 49.7% year-over-year
Net profit of $5.7 million, an increase of 92.5% year-over-year
Fiscal 2011 Six Month Financial Highlights
Record sales of $86.2 million, an increase of 38.9% year-over-year
EBITDA of $20.3 million, up 33.9% year-over-year
Net profit of $10.3 million, an increase of 53.2% year-over-year
$10.1 million cash generated from operations for the six months ended October 31, 2010
Plastec Technologies, Ltd. (OTCBB: GSMXF, GSMEF, GSMWF) (the “Company”), an integrated plastic manufacturing services provider that operates in the People’s Republic of China through its wholly owned subsidiary, Plastec International Holdings Limited (“Plastec”), today reported interim, unaudited financial results for Plastec’s fiscal 2011 second quarter and six months ended October 31, 2010. These financial results reflect those of Plastec on a stand-alone basis, without adjustment, prior to its merger with the Company on December 16, 2010. See attached tables in Hong Kong Dollars (HKD). All other amounts in this press release are presented in US dollars ($USD) with a conversion rate of 1.0USD: HK$7.8.
Mr. Kin Sun Sze-To, Chairman of Plastec, stated, “The last several weeks have been a landmark period in our company’s history, as we completed our merger with GSME Acquisition Partners I and became part of a publicly traded company. We were very pleased with our growth and profitability during the quarter and believe that Plastec, as well as the Company as a whole, is well-positioned and capitalized to safely expand on our strong market position in the precision plastic mold fabrication and design industry.
“We remain very optimistic about the growth opportunity at each of our business segments. We continue to leverage our long-term customer relationships, many of whom have worked with Plastec for over 5 years. A number of these clients have indicated their optimistic forecast for coming years, and we have benefitted by providing our high-quality precision plastic molding services for these new product lines. Further, we are continuing to add capacity onto our existing operations, and expect to complete extensions at our largest facility in Shenzhen by September 2011. This would add approximately 20% additional capacity across our Company. Over the past three years, we have invested nearly $75 million in the expansion of our business, and believe that we are well positioned to fulfill the growing list of orders for our existing and loyal clients’ new products as well as accommodate new customers.”
Mr. Sze-To concluded, “We benefit from having a team of dedicated employees that manages an integrated company with strong relationships with top vendors in all aspects of our operations. We believe that we have the right management team in place to continue developing this segment of our business. The company’s financial situation is very strong, with approximately $20.2 million in cash as of October 31, 2010 and a continued record of generating free cash flow. We look forward to the future with confidence and will keep shareholders apprised of our progress as we develop as a public company.”
Fiscal 2011 Second Quarter and Six Month Financial Review
The Company’s total sales for the three month period ended October 31, 2010 increased 52.6% to $47.5 million from $31.1 million. Plastec’s sales grew during the period largely as a result of increased sales from its existing larger client base (primarily leading, international own brand manufacturers and OEMs of consumer electronics, telecommunication and precision plastic toys). Plastec’s top 5 customers account for approximately 74% of its revenues, and all have long-standing customer relationships with Plastec, averaging approximately 5 years. For the six months ended October 31, 2010, Plastec’s total sales were $86.2 million, an increase of 38.9% over the $62.1 million reported in the prior year period.
The Company’s gross profit margin improved during the three and six months ended October 31, 2010 due to a higher average price for its products, partially offset by increases in wages and raw material costs. As a percentage of total sales, overall gross margin improved to 19.7% for the three months ended October 31, 2010, up from 17.1% in the prior year period. Gross margin was 19.5% and 18.7% for the six months ended October 31, 2010 and 2009, respectively.
EBITDA for the three months ended October 31, 2010 increased 49.7% to $10.8 million from $7.2 million in the prior three month period, and 33.9% to $20.3 million in the first half of fiscal 2011 from $15.1 in the prior year period. A table reconciling EBITDA to net income can be found at the end of this release.
Net profit for the three months ended October 31, 2010 was $5.7 million, compared to $2.9 million in the prior year period, and $10.3 million for the six months ended October 31, 2010, compared to $6.8 million in the prior year period.
Balance Sheet Highlights
As of October 31, 2010, the Company had cash and cash equivalents of $20.2 million; working capital of $14.3 million, total bank borrowing of $25.5 million and stockholders’ equity of $81.7 million.