Securities registered or to be registered pursuant to Section 12(b)
of the Act:
Securities registered or to be registered pursuant to Section 12(g)
of the Act:
Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act: None
Indicate the number of outstanding shares of each of the Issuer’s
classes of capital or common stock as of the close of the period covered by the annual report: 12,938,128 Ordinary Shares, par value
U.S.$0.001 per share, as of December 31, 2020
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer”,
“accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Indicate by check mark which basis of accounting the registrant has
used to prepare the financial statements included in this filing:
This Annual Report on Form 20-F (this “Form
20-F”) contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical
facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
These forward-looking statements include information
about our possible or assumed future results of operations or our performance. Words such as “expects,” “intends,”
“plans,” “believes,” “anticipates,” “estimates,” and variations of such words and similar
expressions are intended to identify the forward-looking statements. Although we believe that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations will prove to be correct. These statements involve known and
unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies,
many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements.
We undertake no obligation to publicly update or
revise any forward-looking statements contained in this Form 20-F, or the documents to which we refer you in this Form 20-F, to reflect
any change in our expectations with respect to such statements or any change in events, conditions or circumstances on which any statement
is based.
This report should be read in conjunction with
our audited consolidated financial statements and the accompanying notes thereto for the fiscal year ended December 31, 2020, which are
included in Item 18 to this Form 20-F.
As disclosed in our various previous filings, on
November 14, 2015, we entered into a Share Transfer Agreement (the “Agreement”) with Shanghai Yongli Belting Co., Ltd. (“SYB”)
and its wholly-owned subsidiary, Shanghai Yongjing Investment Management Co., Ltd. (“SYIM”). Pursuant to the Agreement, SYIM
was to purchase, through a wholly-owned Hong Kong subsidiary, the entirety of our shareholding interests in Plastec for an aggregate purchase
price of RMB 1,250,000,000 (or US$192,307,692), in cash (the “Transfer Price”). Of the Transfer Price, RMB 875,000,000 (or
US$134,615,385) was payable within 60 days after the China Securities Regulatory Commission approved of the Issuance (as defined in the
Agreement) and SYB’s receipt of the funds raised through the Issuance, the latter of which was confirmed by SYB to have happened
by July 29, 2016. Accordingly, payment of the initial portion of the Transfer Price was made to us on September 21, 2016.
The remaining RMB 375,000,000 (or US$57,692,308)
of the Transfer Price (the “Remaining Amount”) was deposited into a bank account designated solely for the purpose of the
transaction, supervised and administered by SYB and us jointly, with tranches of which made payable to us upon Plastec achieving certain
performance targets for the years ended December 31, 2016, 2017 and 2018. See below for further information.
On October 11, 2016, the parties consummated the
transactions contemplated by the Agreement after the fulfillment of certain other conditions, as described in the Agreement. As a result,
we no longer own Plastec.
Following consummation of the transactions described
above, our only operations have generally been to (i) complete the construction of a manufacturing plant in Kai Ping, China which was
disposed of and transferred to Plastec upon its establishment on April 20, 2018 as described below, (ii) collect rental income from certain
property we used to own and which was being leased to one of Plastec’s subsidiaries until November 2019 when the former subsidiary
of ours that held the property was disposed of to an unaffiliated third party as described below, (iii) collect the payments upon Plastec
achieving the performance targets for the years ended December 31, 2016 through 2018 as described in the Agreement and below; and (iv)
to explore other investment opportunities.
By a letter dated May 10, 2017, SYB confirmed and
acknowledged to us that Plastec’s audited net profit (on a consolidated basis, after deducting non-recurring gains and losses) for
the year ended December 31, 2016 was HK$183,958,100, which was in excess of the performance target for the year ended December 31, 2016,
set at HK$161,211,000 in the Agreement, by HK$22,747,100 or approximately 14.1%. Accordingly, we were paid a further sum of RMB 113,250,000
(or US$17,423,077) of the Remaining Amount on June 1, 2017 and in accordance with the terms of the Agreement.
By a letter dated March 28, 2018, SYB confirmed
and acknowledged to us that Plastec’s audited net profit (on a consolidated basis, after deducting non-recurring gains and losses)
for the year ended December 31, 2017 was HK$183,124,000, which was in excess of the performance target for the year ended December 31,
2017, set at HK$177,088,000 in the Agreement, by HK$6,036,000 or approximately 3.4%. Accordingly, we were paid a further sum of RMB 124,380,000
(or US$19,135,385) of the Remaining Amount on May 25, 2018 and in accordance with the terms of the Agreement.
By a letter dated April 26, 2019, SYB confirmed
and acknowledged to us that Plastec’s audited net profit (on a consolidated basis, after deducting non-recurring gains and losses)
for the year ended December 31, 2018 was HK$262,954,000, which was in excess of the performance target for the year ended December 31,
2018, set at HK$195,408,000 in the Agreement, by HK$67,546,000 or approximately 34.6%. Accordingly, we were paid a further sum of RMB
137,370,000 (or US$21,133,846) of the Remaining Amount on May 30, 2019 and in accordance with the terms of the Agreement.
In accordance with the terms and spirit of the
Agreement, we caused Viewmount Developments Limited, a wholly owned subsidiary of ours (“Viewmount”), to enter into a Share
Transfer Agreement with Plastec (a wholly owned subsidiary of SYB since October 11, 2016) on March 30, 2018 (the “Manufacturing
Plant Transfer Agreement”), pursuant to the terms and conditions of which Viewmount was to transfer the ownership interests in certain
of its former subsidiaries holding the newly established manufacturing plant in Kai Ping, China through their PRC subsidiaries to Plastec
for a total consideration of approximately HK$70,000 (or US$8,974), representing the actual registered capital injected by Viewmount into
the relevant subsidiaries.
On April 20, 2018, the parties consummated the
transactions contemplated by the Manufacturing Plant Transfer Agreement. The parties also settled all account payables owed by the relevant
subsidiaries to Viewmount at the closing, totaling HK$258,910,000 (or US$33,193,590).
On November 15, 2019, Viewmount entered into an
agreement (“Assets Disposal Agreement”) with an unaffiliated third party (the “Purchaser”), pursuant to which
Viewmount was to transfer the ownership interests in its then wholly-owned subsidiary holding the right to use certain parcels of land
in Shenzhen together with premises built thereon to the Purchaser for HK$47,964,570.65 (or US$6,149,304) in cash, net of all relevant
expenses, charges and taxes.
On November 20, 2019, the parties consummated the
transactions contemplated by the Assets Disposal Agreement; on which date Viewmount also received from the Purchaser HK$112,035,429.35
(or US$14,363,517) representing all amounts due from the former subsidiary disposed of.
The aforesaid disposals represented a strategic
shift and had a major effect on our results of operations. Accordingly, assets and liabilities, revenues and expenses, and cash flows
related to the disposed business lines have been reclassified as discontinued operations in the consolidated financial statements for
the years ended December 2020, 2019 and 2018. The consolidated balance sheets as of December 31, 2019, the consolidated statements of
operations and comprehensive income and the consolidated statements of cash flows for the years ended December 31, 2019 and 2018 have
been adjusted retrospectively to reflect this strategic shift.
PART I
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ITEM 1.
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IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.
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Not Applicable.
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ITEM 2.
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OFFER STATISTICS AND EXPECTED TIMETABLE.
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Not Applicable.
A. Selected Financial Data
The selected financial data previously required
by this Item 3.A has been omitted in reliance on SEC Release No. 33-10890, Management's Discussion and Analysis, Selected Financial
Data, and Supplementary Financial Information.
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
An investment in our securities involves a high
degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this
Form 20-F before making a decision to invest in our securities.
Risks Relating to Our Business
We have limited scope of operation after divestment of our ownership
interest in Plastec and, accordingly, you will have no or little basis on which to evaluate our prospect as a going concern.
Following divestment of our ownership interest
in Plastec, our only operations have generally been to (i) complete the construction of our manufacturing plant in Kai Ping, China which
was disposed of and transferred to Plastec upon its establishment on April 20, 2018 pursuant to the terms of the Manufacturing Plant Transfer
Agreement, (ii) collect rental income from certain property we used to own and which was being leased to one of Plastec’s subsidiaries
until November 2019 when the former subsidiary of ours that held the property was disposed of to an unaffiliated third party pursuant
to the terms of the Assets Disposal Agreement, (iii) collect the payments upon Plastec achieving the performance targets for the years
ended December 31, 2016 through 2018 as described in the Agreement; and (iv) explore other investment opportunities. As of the date hereof,
we have no plans, arrangements or understandings of what long term, if at all, operations in which we might be engaged or business objective
by which we might adopt and, accordingly, you will have no or little basis on which to evaluate our prospect as a going concern.
We do not have any sources of operating revenues.
Currently, we do not have any sources of operating
revenues. As a result, there would be substantial doubt regarding our ability to remain as a going concern from a long-term perspective.
We face uncertainties with respect to indirect transfers of equity
interests in PRC resident enterprises by their non-PRC holding companies.
On February 03, 2015, the PRC State Administration
of Taxation, or SAT, issued the Announcement of the State Administration of Taxation on Several Issues concerning the Enterprise Income
Tax Deriving from the Indirect Transfers of Properties among Non-Resident Enterprises, or “Announcement 7”, which was further
amended on December 1, 2017 and December 29, 2017. According to Announcement 7, where a non-resident enterprise indirectly transfers equities
and other property of a Chinese resident enterprise (Indirect Transfer) to evade its obligation of paying enterprise income tax by implementing
arrangements that are not for bona fide commercial purpose , such Indirect Transfer shall, in accordance with the PRC Enterprise Income
Tax Law, be re-identified and recognized as a direct transfer of equities and other property of the Chinese resident enterprise and shall
be taxed. The equities and other property of a Chinese resident enterprise mentioned above, or Chinese Taxable Property, refers to: (i)
the assets of an "establishment or place" situated in the PRC; (ii) real property situated in the PRC; and (iii) equity interest
in Chinese resident enterprises. The Announcement 7 has also elaborated how to determine that an Indirect Transfer has “a reasonable
commercial purpose” and specified the legal consequences for failing to withhold and pay tax. If the transfer of interests of our
wholly-owned subsidiary which holds the Chinese taxable property, i.e, the real property, be considered by the relevant tax authorities
to be devoid of “a reasonable commercial purpose” , Announcement 7 may be interpreted and the entity or individual that has
the direct liability for the relevant payment obligation to the equity transferor shall be identified as the withholding agent and obligated
to pay the tax. Pursuant to the Announcement of the SAT on Matters Concerning Withholding of Income Tax of Non-resident Enterprises at
Source (“Announcement 37”), issued by SAT on October 17, 2017 with effect from December 1, 2017, if the withholding agent
fails to withhold the tax that should have been withheld, the competent tax authority shall order the withholding agent to withhold the
tax payable, and pursue the liability of the withholding agent according to the law; where there is a need to pursue tax payments from
the taxpayer, it shall be handled by the competent tax authority at the place where the tax is accrued. Although we have agreed in the
Assets Disposal Agreement that the Purchaser shall bear all the relevant taxes and charges, the failure or delay of the payment of tax
by the Purchaser as the withholding agent may result in extra expenses of valuable resources for us to comply with Announcement 7, Announcement
37 or other related tax rules, which may have a material adverse effect on our business, results of operations and financial condition.
We are vulnerable to foreign currency exchange risk exposure.
Our foreign currency exchange risk arises from
the fact that our financial statements are expressed in Hong Kong dollars. Our balance sheet uses the relevant prevailing period end exchange
rate to convert all foreign currency amounts into Hong Kong dollars and our statement of comprehensive income records various payments
and receipts using the relevant prevailing exchange rate on the date of each transaction. The different exchange rates prevailing at different
times will give rise to foreign currency exchange exposures. In addition, the current peg of the exchange rate between the Hong Kong dollar
and the U.S. dollar may be de-pegged or subject to an increased band of fluctuation. Fluctuations in the Hong Kong dollar exchange rates
against other currencies may negatively impact our financial condition.
We intend to explore other currently unidentified investment
opportunities and, accordingly, we are unable to currently ascertain the merits or risks of any such investment opportunity.
We intend to explore other currently unidentified
investment opportunities to supplement our current minimal operations. Accordingly, there is no current basis for you to evaluate the
possible merits or risks of any investment opportunity we may ultimately pursue. Although our management will endeavor to evaluate the
risks inherent in any particular investment opportunity, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors or not be exposed to potential risks which could have a material and adverse effect on ability to manage our business. Further,
as a result of our current minimal operations, limited resources for want of operating revenues and the need to maintain adequate control
of our costs and expenses, we may not be able to attract, train, motivate and recruit suitably qualified personnel to explore or effect
any investment opportunity thereby making it difficult for you to evaluate our long term business, financial performance and prospects.
If we do not succeed in launching new business upon any investment opportunity to supplement our current minimal operations, our future
results of operations and growth prospects may be materially and adversely affected.
Our search for other unidentified investment opportunities may
be materially adversely affected by the coronavirus (COVID-19) pandemic or other adverse geopolitical events .
The COVID-19 pandemic has
adversely affected, and other events (such as geopolitical tensions, terrorist attacks, natural disasters or a significant outbreak of
other infectious diseases) could adversely affect, the economies and financial markets worldwide, and the business of any potential company
with which we look to do potential business in the future. Furthermore, concerns relating to COVID-19 could continue to restrict travel
and limit the ability to have meetings with potential companies. The extent to which COVID-19 impacts our operations will depend on future
developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of
COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other events (such
as geopolitical tensions, terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) continue for an
extensive period of time, our operations may be materially adversely affected.
In addition, our ability to consummate a transaction
may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events (such as geopolitical
tensions, terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), including as a result of increased
market volatility, a decline in real activity, decreased market liquidity in third-party financing being unavailable on terms acceptable
to us or at all.
Risks Related to Us and Our Securities
Because we are incorporated under the laws of the Cayman Islands,
you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be
limited.
We are a company incorporated under the laws of
the Cayman Islands, and substantially all of our assets are located outside the United States. In addition, our directors and officers
are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are located
outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our
directors or executive officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs are governed by our second
amended and restated memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands (as the same may be
supplemented or amended from time to time), or the “Companies Act,” and the common law of the Cayman Islands. The rights of
shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors
to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands
is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions
of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and
the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes
or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities
laws as compared to the United States, and certain states, such as Delaware, have more fully developed and judicially interpreted bodies
of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal
court of the United States.
There is also uncertainty as to whether the courts
of the Cayman Islands would:
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recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or
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entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.
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The uncertainty relates to whether a judgment obtained
from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as
penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment
against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination
in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such
judgments would be enforceable in the Cayman Islands. The courts of the Cayman Islands would recognize as a valid judgment a final and
conclusive judgment in personam obtained in the federal or state courts in the United States under which a sum of money is payable (other
than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other
penalty) and would give a judgment based thereon provided that: (a) such courts had proper jurisdiction over the parties subject to such
judgment; (b) such courts did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by
fraud; (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e) no new admissible evidence
relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance
with the correct procedures under the laws of the Cayman Islands.
As a result of all of the above, shareholders may
have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling
shareholders than they would as public shareholders of a United States company.
We may be treated as a passive foreign investment company (“PFIC”),
which could result in adverse U.S. federal income tax consequences to U.S. investors.
In general, we would be treated as a PFIC for any
taxable year in which either (1) at least 75% of our gross income (looking through certain 25% or more-owned corporate subsidiaries) is
passive income or (2) at least 50% of the average value of our assets (looking through certain 25% or more-owned corporate subsidiaries)
is attributable to assets that produce, or are held for the production of, passive income. Passive income generally includes, without
limitation, dividends, interest, rents, royalties, and gains from the disposition of passive assets. If we are determined to be a PFIC
for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder of our ordinary shares, the U.S. holder
may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements. As a result of
the disposition of all of our shareholdings in Plastec in October 2016 and based on the expected composition (and estimated values) of
the assets and the nature of the income of us and our subsidiaries and our current plans of operation, we are expected to be treated as
a PFIC. However, our actual PFIC status for any taxable year will not be determinable until after the end of such taxable year. Accordingly,
there can be no assurance with respect to our status as a PFIC for our current taxable year or any subsequent taxable year. We urge U.S.
investors to consult their own tax advisors regarding the possible application of the PFIC rules.
A national securities exchange may not list our securities, or
if a national securities exchange does grant such listing, it could thereafter delist our securities, which could limit investors’
ability to make transactions in our securities and subject us to additional trading restrictions.
We may consider applying to have our ordinary shares
listed on a national securities exchange if circumstances permit. However, there is no assurance that such an application will be made
or that we will be successful in our efforts to have our securities listed. If a national securities exchange does not list our securities
or if it grants such listing and thereafter delists our securities, we could face significant material adverse consequences, including:
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A limited availability of market quotations for our securities;
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A reduced liquidity with respect to our securities;
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A determination that our ordinary shares are “penny stocks” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares;
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A limited amount of news and analyst coverage for us; and
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A decreased ability to issue additional securities or obtain additional financing in the future.
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If our ordinary shares become subject to the SEC’s penny
stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be
adversely affected.
If at any time we have net tangible assets of $5,000,000
or less and our ordinary shares have a market price per share of less than $5.00, transactions in our ordinary shares may be subject to
the “penny stock” rules promulgated under the Securities Exchange Act of 1934. Under these rules, broker-dealers who recommend
such securities to persons other than institutional accredited investors must:
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make a special written suitability determination for the purchaser;
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receive the purchaser’s written agreement to the transaction prior to sale;
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provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and
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obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed.
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If our ordinary shares become subject to these
rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely
affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.
If we fail to maintain an effective system of internal controls,
we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our ordinary
shares may be adversely affected.
Our reporting obligations as a public company will
place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We are a relatively
young company with limited accounting personnel and other resources with which to address our internal controls and procedures. In addition,
we must implement financial and disclosure control procedures and corporate governance practices that enable us to comply, on a stand-alone
basis, with the Sarbanes-Oxley Act of 2002 and related Securities and Exchange Commission, or the SEC, rules. For example, we will need
to further develop accounting and financial capabilities, including the establishment of an internal audit function and development of
documentation related to internal control policies and procedures. Failure to quickly establish the necessary controls and procedures
would make it difficult to comply with SEC rules and regulations with respect to internal control and financial reporting. We will need
to take further actions to continue to improve our internal controls. If we are unable to implement solutions to any weaknesses in our
existing internal controls and procedures, or if we fail to maintain an effective system of internal controls in the future, we may be
unable to accurately report our financial results or prevent fraud and investor confidence and the market price of our ordinary shares
may be adversely impacted.
Section 404 of the Sarbanes-Oxley Act of 2002 requires
us to perform an evaluation of our internal controls over financial reporting and file annual management assessments of their effectiveness
with the SEC. The management assessment to be filed is required to include a certification of our internal controls by our chief executive
officer and chief financial officer. In addition to satisfying requirements of Section 404, we may also make improvements to our management
information system to computerize certain manual controls, establish a comprehensive procedures manual for US GAAP financial reporting,
and increase the headcount in the accounting and internal audit functions with professional qualifications and experience in accounting,
financial reporting and auditing under US GAAP.
If we become an “accelerated filer”
or a “large accelerated filer” as those terms are defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), our auditors will be required to attest to our evaluation of internal controls over financial reporting.
Unless we successfully design and implement changes to our internal controls and management systems, or if we fail to maintain the adequacy
of these controls as such standards are modified or amended from time to time, we may not be able to comply with Section 404 of the Sarbanes-Oxley
Act of 2002. As a result, our auditors may be unable to attest to the effectiveness of our internal controls over financial reporting.
This could subject us to regulatory scrutiny and result in a loss of public confidence in our management, which could, among other things,
adversely affect the price of our ordinary shares and our ability to raise additional capital.
Our executive officers have limited experience managing a public
company subject to United States securities laws and preparing financial statements in U.S. GAAP.
Our chief executive officer and chief financial
officer, who are primarily responsible for the disclosure contained in our annual reports and financial statements filed with the SEC,
have limited experience as officers of a public company subject to United States securities laws since we are the first and only United
States public company they have managed. As a result, our executive officers chiefly in charge of our disclosure have limited experience
with United States securities laws and U.S. GAAP. Accordingly, they may not have sufficient knowledge to properly interpret the extensive
SEC financial reporting and disclosure rules or all relevant U.S. GAAP accounting standards and guidance, and may have to rely on third
party advisers for compliance. If we are unable to engage knowledgeable third party advisers or our executive officers improperly interpret
SEC financial reporting and disclosure rules and U.S. GAAP accounting standards and guidance, investor confidence and the market price
of our securities may be adversely impacted.
One of our directors and officers controls a significant amount
of our ordinary shares and his interests may not align with the interests of our other shareholders.
Kin Sun Sze-To, our Chairman of the Board of Directors,
currently has beneficial ownership of approximately 78.3% of our issued and outstanding ordinary shares. This significant concentration
of share ownership may adversely affect or reduce the trading price of our ordinary shares because investors often perceive a disadvantage
in owning shares in a company with one or several controlling shareholders. Furthermore, our directors and officers, as a group, have
the ability to significantly influence or control the outcome of all matters requiring shareholders’ approvals, including electing
directors and approving mergers or other business combination transactions. These actions may be taken even if they are opposed by our
other shareholders. This concentration of ownership and voting power may also discourage, delay or prevent a change in control of our
company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company.
Our executive officers have become affiliated with SYB following
divestment of our shareholdings in Plastec and have thereafter allocated their time in pursuit of businesses of Plastec thereby causing
conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative
impact on our ability to remain as a going concern.
Our executive officers are not required to commit
their full time to our affairs, which could create a conflict of interest when allocating their time between our operations (albeit limited
currently) and their commitments vis-à-vis Plastec as part and parcel of our divestment of our shareholdings in Plastec to SYB.
None of our executive officers is obligated to devote any specific number of hours to our affairs. If their other business affairs vis-à-vis
Plastec require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs
and could have a negative impact on our ability to remain as a going concern from a long-term perspective. Additionally, our executive
officers may become aware of business opportunities which may be appropriate for presentation to us and SYB/Plastec to which they owe
fiduciary duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should
be presented. As a result, a potential business opportunity may preferentially be presented to SYB/Plastec ahead, or instead, of to us
and we may not be afforded a realistic chance of exploring any business opportunity.
Our ability to consummate any investment opportunity will be
dependent on the efforts of our key personnel.
Our ability to successfully effect any investment
opportunity will be dependent upon the efforts of our key personnel. As indicated above, our executive officers are not required to commit
their full time efforts to our affairs. Accordingly, there is no assurance that they will spend sufficient time to our locating any potential
investment opportunity. Further, the unexpected loss of our executives could have a detrimental effect on us and our ability to realize
any potential investment opportunity.
Because of our limited resources, other companies may have a
competitive advantage in locating and consummating investment opportunities.
We expect to encounter competition from entities
having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing
for investment opportunities. Many of these entities are well established and have extensive experience in identifying and effecting investment
opportunities directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do
and our financial resources will be relatively limited when contrasted with those of many of these competitors. The foregoing may place
us at a competitive disadvantage in successfully locating and consummating any investment opportunity.
The market price for our shares may be volatile.
The market price for our shares is likely to be
highly volatile and subject to wide fluctuations in response to factors including the following:
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actual or anticipated fluctuations in our operating results and changes or revisions of our expected results;
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changes in financial estimates by securities research analysts;
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fluctuations of exchange rates between the RMB, the Hong Kong dollar and the U.S. dollar.
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Volatility in the price of our shares may result in shareholder
litigation that could in turn result in substantial costs and a diversion of our management’s attention and resources.
The financial markets in the United States and
other countries have experienced significant price and volume fluctuations, and market prices have been and continue to be extremely volatile.
Volatility in the price of our shares may be caused by factors outside of our control and may be unrelated or disproportionate to our
results of operations. In the past, following periods of volatility in the market price of a public company’s securities, shareholders
have frequently instituted securities class action litigation against such company. Litigation of this kind could result in substantial
costs and a diversion of our management’s attention and resources.
If we do not pay dividends on our shares, shareholders may be
forced to benefit from an investment in our shares only if those shares appreciate in value.
The payment of dividends in the future, of which
there can be no assurance, will be entirely within the sole discretion of our board of directors and will largely be contingent upon our
cash flow needs for future development; all of which may be adversely affected by one or more of the factors described herein. Accordingly,
we may not declare or pay additional dividends in the future. Even if the board of directors decides to pay dividends, the form, frequency
and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual
restrictions and other factors that the board may deem relevant. If we determine not to pay any dividends in the future, realization of
a gain on shareholders’ investments will depend on the appreciation of the price of our shares, and there is no guarantee that our
shares will appreciate in value.
We may need additional capital, and the sale of additional shares
or equity or debt securities could result in additional dilution to our shareholders.
We believe that our current cash and cash equivalents
will be sufficient to meet our anticipated cash needs at least for the next twelve months. We may, however, require additional cash resources
due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If
these resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain
one or more additional credit facilities. The sale of additional equity securities could result in additional dilution to our shareholders.
The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants
that would restrict our operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at
all.
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ITEM 4.
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INFORMATION ON THE COMPANY.
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A. History and Development of Our Company
Office Location
Our principal executive offices are located at
c/o Unit 01, 21/F, Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong and our telephone number at that location is
852-21917155. Our registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands and our registered office provider
is Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process
in the United States is Graubard Miller, our U.S. counsel, located at 405 Lexington Avenue, New York, New York 10174. We maintain a website
at http://www.plastec.com.hk that contains information about our company, but that information is not part of this Form 20-F.
Principal Legal Advisers
Our principal legal adviser in the United States
is Graubard Miller, located at 405 Lexington Avenue, New York, New York 10174. Our principal legal adviser in the Cayman Islands is Maples
and Calder (Cayman) LLP, located at PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands. Our principal legal adviser in the
People’s Republic of China is Jingtian & Gongcheng, located at 34/F, Tower 3, China Central Place, 77 Jianguo Road, Chaoyang
District, Beijing 100025 People’s Republic of China.
History and Development
We are a Cayman Islands company incorporated under
the Companies Act. We were formed on March 27, 2008 as an exempted company with limited liability. We were originally incorporated under
the name “GSME Acquisition Partners I” for the purpose of acquiring, through a merger, share exchange, asset acquisition,
plan of arrangement, recapitalization, reorganization or similar business combination, an operating business, or control of such operating
business through contractual arrangements, that had its principal operations located in the PRC.
On November 25, 2009, we closed our initial public
offering, or “IPO,” of 3,600,000 units with each unit consisting of one ordinary share and one warrant, or “public warrants,”
each to purchase one ordinary share at an exercise price of $11.50 per share. The units were sold at an offering price of $10.00 per unit,
generating gross proceeds of $36,000,000. We also issued to the underwriters in the IPO an aggregate of 360,000 unit purchase options,
each to purchase a unit identical to the units sold in the IPO, at an exercise price of $15.00 per unit, of which 70,375 unit purchase
options were subsequently repurchased by us in April 2012. Simultaneously with the consummation of the IPO, we consummated the private
sale of 3,600,000 warrants, or “insider warrants,” at a price of $0.50 per warrant, generating total proceeds of $1,800,000.
In connection with the IPO, our initial shareholders placed a total of 1,200,000 ordinary shares, or “initial shares”, in
escrow pursuant to an escrow agreement with Continental Stock Transfer & Trust Company, as escrow agent.
From the consummation of our IPO until August 6,
2010, we were searching for a suitable target business to acquire. On August 6, 2010, we entered into an agreement and plan of reorganization,
or “Merger Agreement,” with Plastec, each of the former Plastec shareholders and our merger subsidiary, which provided, among
other things, that our wholly owned subsidiary would merge with and into Plastec, with Plastec surviving as a wholly owned subsidiary
of ours then. The Merger Agreement was subsequently amended in September 2010 and December 2010 but continued to provide for our wholly
owned subsidiary to merge with and into Plastec, with Plastec surviving as a wholly owned subsidiary of ours then. On December 10, 2010,
we held an extraordinary general meeting of our shareholders, at which our shareholders approved the merger and other related proposals.
On December 16, 2010, we closed the merger. At the closing, we issued to the former shareholders of Plastec an aggregate of 7,054,583
ordinary shares and agreed to issue the former Plastec shareholders an aggregate of 9,723,988 earnout shares additionally upon the achievement
by Plastec of certain net income targets. Also at the closing, 2,615,732 of the public shares sold in our IPO were converted into cash
and cancelled based on the election of the holders to exercise their conversion rights. In connection with the merger, our business then
became the business of Plastec and we changed our name to “Plastec Technologies, Ltd.” On April 30, 2011, we further amended
the Merger Agreement to remove certain earnout provisions contained within it and to issue an aggregate of 7,486,845 ordinary shares to
the former Plastec shareholders. We subsequently repurchased from one of the former Plastec shareholders an aggregate of 1,570,000 shares.
In connection with the merger with Plastec, we
amended the terms of the escrow agreement with the initial shareholders to include in escrow an aggregate of 2,418,878 of the insider
warrants and to provide additional restrictions on the release from escrow of all of the securities, including the requirement to raise
certain financing by December 16, 2011. On December 16, 2011, the escrow agreement was again amended and the date on which the required
financing was needed by was extended to March 16, 2012. No funds were ultimately raised and as a result, a total of 806,293 initial shares
and the entire 2,418,878 insider warrants held in escrow were automatically repurchased by us at an aggregate consideration of $0.01 and
cancelled.
We announced the establishment of a repurchase
program in December 2011, under which and as the program was subsequently extended and expanded, we were allowed to repurchase up to $5.0
million of our ordinary shares and public warrants in both open market and privately negotiated transactions at the discretion of our
management and as market conditions allowed, or “2011 Repurchase Program.” At the completion of the 2011 Repurchase Program
on September 25, 2013, we had repurchased 832,765 ordinary shares and 85,000 public warrants thereunder.
On September 25, 2013, we also announced a new
repurchase program, under which and as the program was subsequently extended and expanded, we are allowed to repurchase up to $5.0 million
of our units, ordinary shares and public warrants in both open market and privately negotiated transactions at the discretion of our management
and as market conditions allowed, or “2013 Repurchase Program.” The 2013 Repurchase Program (as extended) is currently valid
through September 25, 2021 and so far we have repurchased 586,010 ordinary shares and 547,600 public warrants thereunder.
On November 18, 2014, all issued and outstanding
public warrants, insider warrants and unit purchase options expired and were cancelled accordingly.
On November 14, 2015, we entered into the Agreement
with SYB and its wholly-owned subsidiary, SYIM. Pursuant to the Agreement, SYIM was to purchase, through a wholly-owned Hong Kong subsidiary,
the entirety of our shareholding interests in Plastec for an aggregate purchase price of RMB 1,250,000,000 (or US$192,307,692), in cash
(the “Transfer Price”). Of the Transfer Price, RMB 875,000,000 (or US$134,615,385) was payable within 60 days after the China
Securities Regulatory Commission approved of the Issuance (as defined in the Agreement) and SYB’s receipt of the funds raised through
the Issuance, the latter of which was confirmed by SYB to have happened by July 29, 2016. Accordingly, payment of the initial portion
of the Transfer Price was made to us on September 21, 2016.
The remaining RMB 375,000,000 (or US$57,692,308)
of the Transfer Price (the “Remaining Amount”) was deposited into a bank account designated solely for the purpose of the
transaction, supervised and administered by SYB and us jointly, with tranches of which made payable to us upon Plastec achieving certain
performance targets for the years ended December 31, 2016, 2017 and 2018 (the “Performance Commitments”) as described below:
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Year ending December 31,
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Net Profit Target
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Payment Amount
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2016
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HK$161,211,000
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RMB 113,250,000 (US$17,423,077)
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2017
|
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HK$177,088,000
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RMB 124,380,000 (US$19,135,385)
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2018
|
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HK$195,408,000
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RMB 137,370,000 (US$21,133,846)
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Under the Agreement, we were obliged to use our
best efforts to cause certain of our executives to continue their offices with certain of Plastec’s subsidiaries and to enter into
services agreements with those subsidiaries for a term expiring no earlier than December 31, 2018. The parties also agreed that if Plastec’s
cumulative actual net profits for the three years ended December 31, 2018 exceeded the cumulative Performance Commitment for such period,
30% of the surplus would be distributed to Plastec’s management team, including those members designated by us, in cash as a bonus.
On October 11, 2016, the parties consummated the
transactions contemplated by the Agreement after the fulfillment of certain other conditions, as described in the Agreement. As a result,
we no longer own Plastec.
By a letter dated May 10, 2017, SYB confirmed and
acknowledged to us that Plastec’s audited net profit (on a consolidated basis, after deducting non-recurring gains and losses) for
the year ended December 31, 2016 was HK$183,958,100, which was in excess of the performance target for the year ended December 31, 2016,
set at HK$161,211,000 in the Agreement, by HK$22,747,100 or approximately 14.1%. Accordingly, we were paid a further sum of RMB 113,250,000
(or US$17,423,077) of the Remaining Amount on June 1, 2017 and in accordance with the terms of the Agreement.
By a letter dated March 28, 2018, SYB confirmed
and acknowledged to us that Plastec’s audited net profit (on a consolidated basis, after deducting non-recurring gains and losses)
for the year ended December 31, 2017 was HK$183,124,000, which was in excess of the performance target for the year ended December 31,
2017, set at HK$177,088,000 in the Agreement, by HK$6,036,000 or approximately 3.4%. Accordingly, we were paid a further sum of RMB 124,380,000
(or US$19,135,385) of the Remaining Amount on May 25, 2018 and in accordance with the terms of the Agreement.
By a letter dated April 26, 2019, SYB confirmed
and acknowledged to us that Plastec’s audited net profit (on a consolidated basis, after deducting non-recurring gains and losses)
for the year ended December 31, 2018 was HK$262,954,000, which was in excess of the performance target for the year ended December 31,
2018, set at HK$195,408,000 in the Agreement, by HK$67,546,000 or approximately 34.6%. Accordingly, we were paid a further sum of RMB
137,370,000 (or US$21,133,846) of the Remaining Amount on May 30, 2019 and in accordance with the terms of the Agreement.
B. Business Overview
Following consummation of the transactions described
above, our only operations have generally been to (i) complete the construction of a manufacturing plant in Kai Ping, China which was
disposed of and transferred to Plastec upon its establishment on April 20, 2018 as described below, (ii) collect rental income from certain
property we used to own and which was being leased to one of Plastec’s subsidiaries until November 2019 when the former subsidiary
of ours that held the property was disposed of to an unaffiliated third party as described below, (iii) collect the payments upon Plastec
achieving the performance targets for the years ended December 31, 2016 through 2018 as described in the Agreement; and (iv) to explore
other investment opportunities.
In accordance with the terms and spirit of the
Agreement, we caused Viewmount to enter into the Manufacturing Plant Transfer Agreement on March 30, 2018, pursuant to the terms and conditions
of which Viewmount was to transfer the ownership interests in certain of its former subsidiaries holding the newly established manufacturing
plant in Kai Ping, China through their PRC subsidiaries to Plastec for a total consideration of approximately HK$70,000 (or US$8,974),
representing the actual registered capital injected by Viewmount into the relevant subsidiaries.
On April 20, 2018, the parties consummated the
transactions contemplated by the Manufacturing Plant Transfer Agreement. The parties also settled all account payables owed by the relevant
subsidiaries to Viewmount at the closing, totaling HK$258,910,000 (or US$33,193,590).
On November 15, 2019, Viewmount entered into the
Assets Disposal Agreement with the Purchaser, pursuant to which Viewmount was to transfer the ownership interests in its then wholly-owned
subsidiary holding the right to use certain parcels of land in Shenzhen together with premises built thereon to the Purchaser for HK$47,964,570.65
(or US$6,149,304) in cash, net of all relevant expenses, charges and taxes.
On November 20, 2019, the parties consummated the
transactions contemplated by the Assets Disposal Agreement; on which date Viewmount also received from the Purchaser HK$112,035,429.35
(or US$14,363,517) representing all amounts due from the former subsidiary disposed of.
To date, we have not identified any investment
opportunities, the pursuit of which we believe would be advantageous to us to supplement our current minimal operations. As a result,
we cannot assure you that we will be able to locate any such investment opportunity in the future and accordingly there is no current
basis for you to evaluate the possible merits or risks of any investment opportunity we may ultimately pursue.
Although our management will endeavor to evaluate
the risks inherent in any particular investment opportunity, we cannot assure you that we will properly ascertain or assess all of the
significant risk factors or not be exposed to potential risks which could have a material and adverse effect on ability to manage our
business. Further, as a result of our current minimal operations, limited resources for want of operating revenues and the need to maintain
adequate control of our costs and expenses, we may not be able to attract, train, motivate and recruit suitably qualified personnel to
explore or effect any investment opportunity thereby making it difficult for you to evaluate our long term business, financial performance
and prospects. If we do not succeed in launching any new business upon an investment opportunity to supplement our current minimal operations,
our future results of operations and growth prospects may be materially and adversely affected arising from a lack of business diversification.
Our ability to successfully effect any investment
opportunity will also be dependent upon the efforts of our key personnel. However, our executive officers are not required to, and it
is unlikely that they will, commit and devote their full time efforts to our affairs. Accordingly, there is no assurance that they will
spend sufficient time to our locating any potential investment opportunity. Further, the unexpected loss of our executives could have
a detrimental effect on us and our ability to realize any potential investment opportunity.
Further, we expect to encounter competition from
entities having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses
competing for investment opportunities. Many of these entities are well established and have extensive experience in identifying and effecting
investment opportunities directly or through affiliates. Many of these competitors possess greater technical, human and other resources
than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. The foregoing
may place us at a competitive disadvantage in successfully locating and consummating any investment opportunity.
Properties
As of the date of this Form 20-F, we are not interested
in, nor do we own, any properties.
Executives and Directors
As of the date of this Form 20-F, we have no employees
but have two executive officers and two independent directors. These individuals are not obligated to devote any specific number of hours
to our matters and intend to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any
time period will vary based on whether an investment opportunity has been targeted and works arising therefrom. Accordingly, once management
locates a suitable investment opportunity, they will consequently spend more time to our affairs than they would prior to locating a suitable
investment opportunity and we do not intend to have any full time employees prior to that event.
Seasonality
The disclosure set forth under “Seasonality”
in Item 5 of this Form 20-F is incorporated herein by reference.
C. Organizational Structure
The
following chart illustrates the organizational structure of us and our subsidiaries as of the date of this Form 20-F .
D. Property, Plants and Equipment
The disclosure set forth under “Properties”
in Item 4.B is incorporated herein by reference.
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ITEM 4A.
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UNRESOLVED STAFF COMMENTS.
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None.
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ITEM 5.
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OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
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You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere
in this Form 20-F. This discussion may contain forward-looking statements. Our actual results may differ materially from those anticipated
in these forward-looking statements because of various factors, including those set forth under Item 3.D (“Risk Factors”)
or in other parts of this Form 20-F.
A. Operating Results
Overview
We used to be a vertically integrated plastic manufacturing
services provider providing comprehensive precision plastic manufacturing services (through our former wholly owned subsidiary, Plastec)
from mold design and fabrication and plastic injection manufacturing to secondary-process finishing as well as parts assembly to leading
international OEMs, ODMs and OBMs of consumer electronics, electrical home appliances, telecommunication devices, computer peripherals
and precision plastic toys.
Following consummation of the divestment transactions
on October 11, 2016 and pursuant to the terms of the Agreement more particularly described in Item 4.A of this Form 20-F, we no longer
own Plastec with the result that our only operations have generally been to (i) complete the construction of our manufacturing plant in
Kai Ping, China which was disposed of and transferred to Plastec upon its establishment on April 20, 2018 pursuant to the terms of the
Manufacturing Plant Transfer Agreement, (ii) collect rental income from certain property we used to own and which was being leased to
one of Plastec’s subsidiaries until November 2019 when the former subsidiary of ours that held the property was disposed of pursuant
to the terms of the Assets Disposal Agreement, (iii) collect the payments upon Plastec achieving the performance targets for the years
ended December 31, 2016 through 2018 as described in the Agreement; and (iv) to explore other investment opportunities.
To date, we have not identified any investment
opportunities, the pursuit of which we believe would be advantageous to us to supplement our current minimal operations. As a result,
we cannot assure you that we will be able to locate any such investment opportunity in the future and accordingly there is no current
basis for you to evaluate the possible merits or risks of any investment opportunity we may ultimately pursue.
Although our management will endeavor to evaluate
the risks inherent in any particular investment opportunity, we cannot assure you that we will properly ascertain or assess all of the
significant risk factors or not be exposed to potential risks which could have a material and adverse effect on ability to manage our
business. Further, as a result of our current minimal operations, limited resources for want of operating revenues and the need to maintain
adequate control of our costs and expenses, we may not be able to attract, train, motivate and recruit suitably qualified personnel to
explore or effect any investment opportunity thereby making it difficult for you to evaluate our long term business, financial performance
and prospects. If we do not succeed in launching any new business upon an investment opportunity to supplement our current minimal operations,
our future results of operations and growth prospects may be materially and adversely affected arising from a lack of business diversification.
Our ability to successfully effect any investment
opportunity will also be dependent upon the efforts of our key personnel. However, our executive officers are not required to, and it
is unlikely that they will, commit and devote their full time efforts to our affairs. Accordingly, there is no assurance that they will
spend sufficient time to our locating any potential investment opportunity. Further, the unexpected loss of our executives could have
a detrimental effect on us and our ability to realize any potential investment opportunity.
Further, we expect to encounter competition from
entities having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses
competing for investment opportunities. Many of these entities are well established and have extensive experience in identifying and effecting
investment opportunities directly or through affiliates. Many of these competitors possess greater technical, human and other resources
than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. The foregoing
may place us at a competitive disadvantage in successfully locating and consummating any investment opportunity.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements
in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect:
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•
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the reported amounts of its assets and liabilities;
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•
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the disclosure of its contingent assets and liabilities at the end of each reporting period; and
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•
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the reported amounts of revenues and expenses during each reporting period.
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We continually evaluate these estimates based on
our own experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on
available information and reasonable assumptions, which together form our basis for making judgments about matters that are not readily
apparent from other sources. Some of our accounting policies require a higher degree of judgment than others in their application. When
reading our consolidated financial statements, you should consider:
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•
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our selection of critical accounting policies;
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•
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the judgment and other uncertainties affecting the application of such policies; and
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•
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the sensitivity of reported results to changes in conditions and assumptions.
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We believe the following accounting policies involve
the most significant judgments and estimates used in the preparation of our financial statements:
Property, plant and equipment
Property, plant and equipment are stated at acquisition
cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs of bringing
the asset to its working condition and location for its intended use.
Depreciation is provided to write off the cost
less their residual values over their estimated useful lives, using the straight-line method, at the following rates per annum:
The assets’ estimated residual values,
depreciation methods and estimated useful lives are reviewed, and adjusted if appropriate, at each reporting date.
The gain or loss arising on retirement or disposal
is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the consolidated
statement of income.
All other costs, such as repairs and maintenance
are charged to the operations during the financial period in which they are incurred.
Impairment of long-lived assets
We periodically evaluates the carrying value
of long-lived assets to be held and used when events and circumstances warrant such a review. The carrying value of a long-lived asset
is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying
value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived
asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.
Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost
to dispose.
Discontinued Operations
A disposal of a component of an entity or a group
of components of an entity shall be reported in discontinued operations if the disposal represents a strategic shift that has (or will
have) a major effect on an entity’s operations. Classification as a discontinued operation occurs upon disposal or when the operation
meets the criteria to be classified as held for sale, if earlier. Where an operation is classified as discontinued, a single amount is
presented on the face of the consolidated statements of operations and comprehensive income. The amount of total current assets, total
non-current assets, total current liabilities and total non-current liabilities are presented separately on the consolidated balance sheets.
Revenues
We generated revenues from our continuing operations
in fiscal years ended December 31, 2018, 2019 and 2020 as follows, which were presented as other income in our audited financial statements:
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Fiscal Years Ended December 31,
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2018
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2019
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2020
|
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(HK$'000)
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|
|
|
|
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Amount
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|
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|
% of Total
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|
|
Amount
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|
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% of Total
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|
Amount
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% of Total
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Other income
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|
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9,954
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|
|
|
100.0
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%
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0
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|
|
|
0.0
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%
|
|
|
7
|
|
|
|
100.0
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%
|
|
|
|
|
9,954
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|
|
|
100.0
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%
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|
|
0
|
|
|
|
0.0
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%
|
|
|
7
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|
|
|
100.0
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%
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Other income
Prior to November 2019, we had rental revenues
derived from certain parcels of land (together with industrial building and premises for dormitory purpose built thereon) located in Furong
Industrial District, Furongmei Area, Shajing Street, Xinqiao Village, Bao’an District, Shenzhen City, Guangdong Province of the
PRC, which were being leased to one of Plastec’s subsidiaries under certain tenancy agreements more particularly described in the
section titled “Properties” in Item 4.B of our Annual Report on Form 20-F for the year ended December 31, 2018 filed
on May 15, 2019.
On
November 20, 2019, we completed the disposal of our former subsidiary holding the right to use the aforesaid parcels of land pursuant
to the terms of the Assets Disposal Agreement. After the retrospective adjustments for the deconsolidation of this disposal, which has
been classified as discontinued operations, we recorded no operating income for our continuing operations for the years ended December
31, 2018, 2019 and 2020 save for exchange gain of approximately HK$10.0 million for fiscal year ended December 31, 2018, and reversals
of over-provided accrued expenses of approximately HK$7,000 for fiscal year ended December 31, 2020 as well as a one-time gain of approximately
HK$29,000 for the fiscal year ended December 31, 2020 arising from disposal of our ownership interests in our then wholly-owned dormant
subsidiary with a negative net worth of approximately HK$1,600 to an unaffiliated third-party purchaser for HK$27,000 on June 29, 2020.
Operating Costs
Our operating expenses arising from our continuing
operations in fiscal years ended December 31, 2018, 2019 and 2020 consisted of the following:
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Fiscal Years Ended December 31,
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|
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2018
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|
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2019
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2020
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|
|
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(HK$'000)
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|
|
|
|
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Amount
|
|
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|
% of Total
|
|
|
|
Amount
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|
|
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% of Total
|
|
|
|
Amount
|
|
|
|
% of Total
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|
Exchange loss
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|
|
-
|
|
|
|
0.0
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%
|
|
|
11,476
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|
|
|
76.1
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%
|
|
|
-
|
|
|
|
0.0
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%
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Selling, general and administrative expenses
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|
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4,554
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|
|
|
100.0
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%
|
|
|
3,607
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|
|
|
23.9
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%
|
|
|
3,882
|
|
|
|
100.0
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%
|
|
|
|
|
4,554
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|
|
|
100.0
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%
|
|
|
15,083
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|
|
|
100.0
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%
|
|
|
3,882
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|
|
|
100.0
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%
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Selling, General and Administrative Expenses
Our selling, general and administrative expenses
consisted primarily of legal and professional expenses, directors’ compensation, insurances, transportation, motor vehicles related
expenses and exchange losses.
Income Tax
Cayman
Islands. We are incorporated in the Cayman Islands. The government of the Cayman Islands will not, under existing legislation,
impose any income tax upon the Company or its shareholders.
British
Virgin Islands. Our subsidiaries which are incorporated in the British Virgin Islands are exempted from income tax in the British
Virgin Islands on their foreign-derived income.
Hong
Kong. Our remaining Hong Kong subsidiary is subject to income tax on its profits in Hong Kong at the prevailing corporate tax
rates of 8.25% on assessable profits up to HK$2 million and 16.5% on any part of assessable profits over HK$2 million. For the years ended
December 31, 2018, 2019 and 2020, however, none of our Hong Kong subsidiaries (then and now) recorded any Hong Kong profits tax on the
basis that they did not have any assessable profits arising in or derived from Hong Kong.
Review of Results of Continuing Operations
The following table sets forth a summary of our
consolidated results of continuing operations for the periods indicated. This information should be read together with our consolidated
financial statements, including the related notes that appear elsewhere in this Form 20-F.
|
|
|
Fiscal Year ended December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
|
|
|
|
|
|
|
(HK$'000)
|
|
|
|
|
|
|
Revenues
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income/(expenses), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of a subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
29
|
|
|
Selling, general and administrative expenses
|
|
|
(4,554
|
)
|
|
|
(15,083
|
)
|
|
|
(3,882
|
)
|
|
Other income
|
|
|
9,954
|
|
|
|
-
|
|
|
|
7
|
|
|
Total operating income/(expenses), net
|
|
|
5,400
|
|
|
|
(15,083
|
)
|
|
|
(3,846
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from operations
|
|
|
5,400
|
|
|
|
(15,083
|
)
|
|
|
(3,846
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3,082
|
|
|
|
3,297
|
|
|
|
1,118
|
|
|
Income/(loss) before income tax expense
|
|
|
8,482
|
|
|
|
(11,786
|
)
|
|
|
(2,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense from continuing operations
|
|
|
(2,435
|
)
|
|
|
(729
|
)
|
|
|
(779
|
)
|
|
Net income/(loss) from continuing operations attributable to the Company’s shareholders
|
|
|
6,047
|
|
|
|
(12,515
|
)
|
|
|
(3,507
|
)
|
For the year ended December 31, 2020 compared to year ended December
31, 2019
Other
income. Other than recording a one-time nominal other income arising from reversals of over-provided accrued expenses of approximately
HK$7,000 for the fiscal year ended December 31, 2020, we recorded no operating income for our continuing operations for the fiscal years
ended December 31, 2019 and 2020.
Selling,
general and administrative expenses. Our selling, general and administrative expenses for the year ended December 31, 2020
increased by approximately HK$0.3 million or 7.6% to approximately HK$3.9 million from approximately HK$3.6 million in the year ended
December 31, 2019 mainly attributable to slightly increased legal and professional fees for the year ended December 31, 2020.
Income/(loss)
from operations. Our loss from operations for the year ended December 31, 2020 was approximately HK$3.8 million, compared to
a loss of approximately HK$15.1 million for the year ended December 31, 2019. This was mainly resulted from an exchange loss of approximately
HK$11.5 million for the year ended December 31, 2019.
Income
tax expenses. Our income tax expenses for the year ended December 31, 2020 increased by approximately HK$0.05 million
to HK$0.78 million from HK$0.73 million in the year ended December 31, 2019.
Net income/(loss).
Our net loss for the year ended December 31, 2020 was approximately HK$3.5 million, compared to net loss of approximately HK$12.5 million
for the year ended December 31, 2019.
For the year ended December 31, 2019 compared to year ended December
31, 2018
Other
income. After the retrospective adjustments for the deconsolidation of the disposed business lines arising from the disposal
of our former subsidiary that generated rental revenues in November 2019, which has been classified as discontinued operations, we recorded
no operating income for our continuing operations for the years ended December 31, 2018 and 2019 save for an exchange gain of approximately
HK$10.0 million for the fiscal year ended December 31, 2018.
Selling,
general and administrative expenses. Our selling, general and administrative expenses for the year ended December 31, 2019
decreased by approximately HK$0.9 million or 20.8% to HK$3.6 million from approximately HK$4.6 million in the year ended December 31,
2018 mainly attributable to a progressive reduction in expenses incurred in maintaining daily operations. For the year ended December
31, 2019, we recorded an exchange loss for approximately HK$11.5 million.
Income/(loss)
from operations. Our loss from operations for the year ended December 31, 2019 was approximately HK$15.1 million, in contrast
to a gain of approximately HK$5.4 million for the year ended December 31, 2018. The loss was mainly attributable to an exchange loss of
approximately HK$11.5 million for the year ended December 31, 2019, as compared with an exchange gain of approximately HK$10.0 million
for the year ended December 31, 2018.
Income
tax expenses. Our income tax expenses for the year ended December 31, 2019 decreased by approximately HK$1.7 million to HK$0.7
million from HK$2.4 million in the year ended December 31, 2018.
Net
income/(loss). Our net loss for the year ended December 31, 2019 was approximately HK$12.5 million, compared to net income
of approximately HK$6.0 million for the year ended December 31, 2018.
Liquidity and Capital Resources
Our operations have been generally funded through
a combination of net cash generated from its operations and equity capital. We believe that we have adequate working capital to finance
our operations.
Summary
of Cash Flows
|
|
|
Year Ended December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
(HK$’000)
|
|
|
Net Cash From Operating Activities
|
|
|
25,482
|
|
|
|
1,059
|
|
|
|
(2,862
|
)
|
|
Net Cash From Investing Activities
|
|
|
249,245
|
|
|
|
325,413
|
|
|
|
29
|
|
|
Net Cash From Financing Activities
|
|
|
(403,669
|
)
|
|
|
(413,761
|
)
|
|
|
-
|
|
|
|
|
|
(128,942
|
)
|
|
|
(87,289
|
)
|
|
|
(2,833
|
)
|
For the year ended December 31, 2020 compared to year ended December
31, 2019
Net
Cash From Operating Activities. For the year ended December 31, 2020, we recorded a net cash outflow from operating activities
of approximately HK$2.9 million. Compared to the year ended December 31, 2019, which we generated an overall net cash inflow from operating
activities of approximately HK$1.1 million. These were mainly attributable to net cash outflow used in continuing operations for HK$2.9
million in fiscal 2020, as compared to net cash outflow used in continuing operations for HK$10.9 million in fiscal 2019 (mainly in terms
of exchange loss).
Net
Cash From Investing Activities. For the year ended December 31, 2020, we generated a net cash inflow from investing activities
of HK$0.029 million for the proceeds received from the disposal of a wholly-owned dormant subsidiary. For the year ended December 31,
2019, we recorded a net cash inflow from investing activities of HK$325.4 million.
Net
cash generated from financing activities. For the year ended December 31, 2020, there was no net cash inflow or outflow
from financing activities. For the year ended December 31, 2019, we recorded a net cash outflow by financing activities of approximately
HK$413.8 million.
For the year ended December 31, 2019 compared to year ended December
31, 2018
Net
Cash From Operating Activities. For the year ended December 31, 2019, we generated a net cash inflow from operating activities
of HK$1.1 million. Compared to the year ended December 31, 2018, which we generated a net cash inflow from operating activities of HK$25.5
million. These were mainly attributable to net cash outflow used in continuing operations for HK$10.9 million in fiscal 2019 (mainly in
terms of exchange loss), as compared to net cash inflow HK$8.3 million provided by continuing operations at the back of an exchange gain
in fiscal 2018.
Net
Cash From Investing Activities. For the year ended December 31, 2019, we recorded a net cash inflow from investing activities
of HK$325.4 million, mainly arising from further and final payment made to us as a result of Plastec achieving the performance target
set for the year ended December 31, 2018 and settlement of account payable due to us upon disposal of our ownership interests in a former
subsidiary holding the right to use the parcels of land located in Furong Industrial District, Furongmei Area, Shajing Street, Xinqiao
Village, Bao’an District, Shenzhen City, Guangdong Province of the PRC pursuant to the terms of the Assets Disposal Agreement in
November 2019.
Net
cash generated from financing activities. For the year ended December 31, 2019, we recorded a net cash outflow by financing
activities of approximately HK$413.8 million, which comprised of a net cash outflow of HK$413.8 million for the dividends paid. Compared
to the year ended December 31, 2018, which we recorded a net cash outflow of HK$403.7 million, which was again attributable to payments
of dividends totaling HK$403.7 million.
Working capital
We
believe that we have adequate working capital for our present requirements and that our cash and cash equivalents will provide sufficient
funds to satisfy our working capital requirements for the period ending 12 months from the date of this Form 20-F. As at the year ended
December 31, 2020, we had a cash and bank balance of approximately HK$182.7 million, of which approximately HK$169.9 million was
denominated in Hong Kong Dollars and approximately HK$12.8 million equivalent was denominated in US Dollars, respectively.
Indebtedness
As of December 31, 2020, our indebtedness was nil.
As of December 31, 2020, our estimates for contractual
cash commitments, interest commitment and operating lease obligations were all nil.
Quantitative and Qualitative Disclosures About Market Risks
Market risk is a broad term for the risk of economic
loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including
interest rates, foreign exchange rates, commodity prices and/or equity prices.
Foreign
exchange risk. Up until November 2019, our income was mainly denominated in Renminbi whereas our costs and capital
expenditures were largely denominated in Renminbi and other foreign currencies. Fluctuations in currency exchange rates, particularly
among the Hong Kong dollar, U.S. dollar and Renminbi, could have a significant impact on our financial condition and results of operations,
affect our gross and operating profit margins and result in foreign exchange and operating gains or losses. After completion of the disposal
of our former subsidiary that generated rental revenues pursuant to the terms of the Assets Disposal Agreement in November 2019, we recorded
no operating income from our continuing operations. With the retrospective adjustments for the deconsolidation of this disposal, which
has been classified as discontinued operations, we recorded aggregate net foreign currency exchange gain/(loss) of approximately HK$10.0
million, HK$(11.5) million and HK$Nil for the years ended December 31, 2018, 2019 and 2020, respectively, mainly attributable to receipts
of tranches of the RMB-denominated Remaining Amount from SYB pursuant to the terms of the Agreement during fiscal years 2018 and 2019.
We currently do not plan to enter into any hedging arrangements, such as forward exchange contracts and foreign currency option contracts,
to reduce the effect of our foreign exchange risk exposure, if any. However, if we decided to enter into any such hedging activities in
the future, there is no assurance that we would be able to effectively manage our foreign exchange risk exposure.
Seasonality
We have not been subject to any seasonality in
our continuing operations in any material respect.
Subsequent Material Changes
There have been no material changes in our financial
condition and results of operations subsequent to December 31, 2020.
B. Liquidity and Capital Resources
The disclosure set forth in Item 5.A of this Form
20-F is incorporated herein by reference.
C. Research and Development, Patents and Licenses, Etc.
We do not have a department for and therefore have
not incurred any significant amount in research and development.
D. Trend Information
The disclosure set forth in Item 5.A of this Form
20-F is incorporated herein by reference.
E. Off-Balance Sheet Arrangements
The disclosure set forth in Item 5.A of this Form
20-F is incorporated herein by reference.
F. Contractual Obligations and Commitments
The disclosure set forth in Item 5.A of this Form
20-F is incorporated herein by reference.
|
ITEM 6.
|
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.
|
A. Directors and Senior Management
Our current directors and officers are:
|
Name
|
|
Age
|
|
|
Position
|
|
Kin Sun Sze-To (4)
|
|
59
|
|
|
Chairman of the Board and Chief Executive Officer and Chief Operating Officer
|
|
Ho Leung Ning (4)
|
|
60
|
|
|
Chief Financial Officer and Director
|
|
Chung Wing Lai (1) (2) (3)
|
|
73
|
|
|
Director
|
|
Joseph Yiu Wah Chow (1) (2) (3)
|
|
61
|
|
|
Director
|
|
|
(1)
|
Serves as a member of the Audit Committee.
|
|
|
(2)
|
Serves as a member of the Compensation Committee.
|
|
|
(3)
|
Serves as a member of the Nominating and Corporate Governance Committee.
|
|
|
(4)
|
Serves as a member of the Executive Committee.
|
Kin
Sun Sze-To has been our Chairman of the Board and Chief Executive Officer since the consummation of the merger in December
2010 and more recently has also served as our Chief Operating Officer since consummation of the disposal of our shareholdings in Plastec
to SYB in October 2016. From January 2018 through October 2019, he was also a non-independent director of SYB. Mr. Sze-To is responsible
for exploring, directing and reviewing our long-term investment opportunities and business development strategies. Mr. Sze-To started
his career in the specialized field of spraying and silk screening of plastics products, before diversifying and accumulating over 20
years of experience in other areas of the plastic injection and molding industry. We believe Mr. Sze-To’s past business experience
as well as his contacts and relationships make him well qualified to be a member of our board of directors. Mr. Sze-To graduated from
the Third Kaiping High School of China in 1978 and completed a 2-year Organizational Design Program for Enterprise Founders conducted
by the HSBC Business School of Peking University in 2014.
Ho
Leung Ning has served as our Chief Financial Officer and a Director of ours since the consummation of the merger in December
2010. He has also served as Deputy Vice President of SYB since August 2017. Mr. Ning is responsible for our corporate planning and financial
activities, and he has over 20 years of experience in the banking and finance industry. Prior to joining the pre-divested Plastec in 2004,
Mr. Ning was the Assistant General Manager of the Hong Kong branch of The Bank of Tokyo Mitsubishi UFJ Ltd. We believe Mr. Ning’s
past business experience and financial knowledge and understanding makes him well qualified to be a member of our board of directors.
Mr. Ning graduated from the Hong Kong Baptist University with an Honors Diploma in Economics in 1984.
Chung
Wing Lai has been a Director of ours since the consummation of the merger in December 2010. Since July 2002, Mr. Lai has
been involved in business consultancy and advisory work in the Asia Pacific region. From February 1993 to December 1994, he served as
the managing director of Seaunion Holdings Ltd. (now known as Elate Holdings Ltd.), a company listed on The Stock Exchange of Hong Kong
Ltd. From 1999 to February 2009, he was an independent non-executive director of Kingboard Copper Foil Holdings Ltd, a public listed company
on The Stock Exchange of Singapore. From June 2004 to October 2010, he was also an independent non-executive director of Kee Shing (Holdings)
Ltd. (now known as Gemini Investments (Holdings) Ltd.) a company listed on The Stock Exchange of Hong Kong Ltd. From February 2009 through
May 2016, he was an independent non-executive director of Kingboard Chemical Holdings Ltd, a public listed company on The Stock Exchange
of Hong Kong Ltd. We believe Mr. Lai’s past business experience, including serving as an independent director of a number of publicly
listed companies, makes him well qualified to be a member of our board of directors. Mr. Lai received a Bachelor-of-Laws (Honours) degree
from the University of London in 1983.
Joseph
Yiu Wah Chow has been a Director of ours since the consummation of the merger in December 2010. Mr. Chow has over 20 years
experience in auditing, accounting, and financial management. He has been a senior partner of JYC & Company, an accounting firm, since
January 2006 and a practicing director of KTC Partners CPA Limited since May 2008 as well as being a practicing director of Crowe (HK)
CPA Limited since January 2019. We believe Mr. Chow’s financial background in auditing, accounting and financial management makes
him well qualified to be a member of our board of directors and chairman of our audit committee. Mr. Chow graduated from the University
of Ulster in the United Kingdom with a Bachelor degree in Accounting in 1989. Additionally, Mr. Chow is also admitted as a member of Association
of Chartered Certified public Accountants in 1991 and a member of the Hong Kong Institute of Certified Public Accountants in 1992. He
has also been an associate member of the Taxation Institute of Hong Kong since 1992, Hong Kong Securities Institute since 1998 and Institute
of Chartered Accountants in England and Wales since 2006.
B. Compensation
Compensation of Executive Officers
Following consummation of our divestment of our
shareholdings in Plastec to SYB on October 11, 2016 and as a result of our current minimal operations, effective from November 2016 each
of our current executive officers has received monthly cash compensation in the sum of HK$10,000.
During the year ended December 31, 2020, the aggregate
amount of compensation paid to our executive officers was HK$240,000.
The following table sets forth the compensation
of our named executive officers for the year ended December 31, 2020:
|
Name and Principal Position
|
|
Year ended
December
31,
|
|
|
Salary
(HK$)
|
|
|
Total
(HK$)
|
|
|
Kin Sun Sze-To
|
|
|
2020
|
|
|
|
120,000
|
|
|
|
120,000
|
|
|
Chairman of the Board and Chief Executive Officer and Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ho Leung Ning
|
|
|
2020
|
|
|
|
120,000
|
|
|
|
120,000
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation of Non-Executive Independent Directors
Following consummation of our divestment of our
shareholdings in Plastec to SYB on October 11, 2016 and as a result of our current minimal operations, effective from November 2016 each
of our current non-executive independent directors has been paid HK$10,000 for each month that they continue to serve on our board.
During the year ended December 31, 2020, the aggregate
amount of compensation paid to our non-executive independent directors was HK$240,000.
C. Board Practices
Director Term of Office
Each director serves until our next annual general
meeting, if one is called for, and until his successor is elected and qualified. We have not entered into service or similar contracts
with our directors.
Board Committees
We have standing executive, audit, compensation
and nominating and corporate governance committees. Except for the executive committee, each of these committees is comprised entirely
of independent directors, as defined by the listing standards of the NASDAQ Stock Market. Moreover, the compensation committee is composed
exclusively of individuals intended to be, to the extent required by Rule 16b-3 of the Exchange Act, non-employee directors and will,
at such times as we are subject to Section 162(m) of the Internal Revenue Code, qualify as outside directors for purposes of Section 162(m)
of the Internal Revenue Code.
Executive Committee
Our executive committee is currently comprised
of Kin Sun Sze-To and Ho Leung Ning. While the executive committee does not have a formal written charter, the board has determined that
the executive committee’s responsibilities will be to generally manage our business affairs and exercise all powers of the board
(other than actions that would require the board to act as a whole or which actions are vested in other committees of the board or require
shareholder approval).
Audit Committee Information
Our audit committee is currently comprised of Joseph
Yiu Wah Chow and Chung Wing Lai, with Joseph Yiu Wah Chow serving as chairman. The audit committee, pursuant to the audit committee charter,
is responsible for engaging independent certified public accountants, preparing audit committee reports, reviewing with the independent
certified public accountants the plans and results of the audit engagement, approving professional services provided by the independent
certified public accountants, reviewing the independence of the independent certified public accountants, considering the range of audit
and non-audit fees, reviewing the adequacy of our internal accounting controls and reviewing all related party transactions.
Financial Experts on Audit Committee
The audit committee will at all times be composed
exclusively of “independent directors” who are “financially literate” as defined under NASDAQ listing standards.
The definition of “financially literate” generally means being able to read and understand fundamental financial statements,
including a company’s balance sheet, statement of comprehensive income and cash flow statement.
In addition, our board of directors has determined
that Joseph Yiu Wah Chow satisfies the definition of financial sophistication and also qualifies as an “audit committee financial
expert,” as defined under rules and regulations of the SEC.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee
is currently comprised of Chung Wing Lai and Joseph Yiu Wah Chow, with Chung Wing Lai serving as chairman. The nominating and corporate
governance committee is responsible for seeking, considering and recommending to the board qualified candidates for election as directors
and will approve and recommend to the full board of directors the appointment of each of our executive officers. It also periodically
prepares and submits to the board of directors for adoption the committee’s selection criteria for director nominees. It reviews
and makes recommendations on matters involving the general operation of the board and our corporate governance, and annually recommends
to the board nominees for each committee of the board. In addition, the committee annually facilitates the assessment of the board of
directors’ performance as a whole and of the individual directors and report thereon to the board.
Compensation Committee
Our compensation committee currently is comprised
of Joseph Yiu Wah Chow and Chung Wing Lai, with Joseph Yiu Wah Chow serving as chairman. The principal functions of the compensation committee
are to:
|
|
•
|
evaluate the performance of our officers;
|
|
|
•
|
review any compensation payable to our directors and officers;
|
|
|
•
|
prepare compensation committee reports; and
|
|
|
•
|
administer the issuance of any ordinary shares or other equity awards issued to our officers and directors.
|
D. Employees
We have no employees as of the date of this Form
20-F.
E. Share Ownership
The disclosure relating to the share ownership
of the persons listed in Item 6.B set forth in Item 7.A of this Form 20-F is incorporated herein by reference.
|
ITEM 7.
|
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
|
A. Major Shareholders
The following table sets forth, as of May 11, 2021,
certain information regarding beneficial ownership of our shares by each person who is known by us to beneficially own more than 5% of
our shares. The table also identifies the share ownership of each of our directors, each of our named executive officers, and all directors
and officers as a group. Except as otherwise indicated, the shareholders listed in the table have sole voting and investment powers with
respect to the shares indicated. Our major shareholders do not have different voting rights than any other holder of our shares.
Shares which an individual or group has a right
to acquire within 60 days pursuant to the exercise or conversion of options, warrants or other similar convertible or derivative securities,
if any, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed
to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and generally includes voting and investment power. Except as otherwise indicated
below, each beneficial owner holds voting and investment power directly. The percentage of ownership is based on 12,938,128 shares issued
and outstanding as of May 11, 2021.
|
Name and Address of Beneficial Owner (1)
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
|
Percent
of Class
|
|
|
Major Shareholder(s):
|
|
|
|
|
|
|
|
|
|
Kwok Wa Hung
|
|
|
1,014,753
|
(2)
|
|
|
7.8
|
%
|
|
Directors and Executive Officers:
|
|
|
|
|
|
|
|
|
|
Kin Sun Sze-To
|
|
|
10,134,283
|
(3)
|
|
|
78.3
|
%
|
|
Ho Leung Ning
|
|
|
241,971
|
(4)
|
|
|
1.9
|
%
|
|
Chung Wing Lai
|
|
|
0
|
|
|
|
0
|
%
|
|
Joseph Yiu Wah Chow
|
|
|
0
|
|
|
|
0
|
%
|
|
All directors and executive officers as a group (4 individuals)
|
|
|
10,376,254
|
|
|
|
80.2
|
%
|
|
|
(1)
|
Unless otherwise indicated, the business address of each of the individuals is Unit 01, 21/F, Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong. Unless otherwise indicated, none of the individuals have voting rights that differ from other shareholders.
|
|
|
(2)
|
The business address of Mr. Hung is c/o 16th Floor, Guangdong Finance Building, 88 Connaught Road West, Central, Hong Kong. The foregoing information is derived from a Schedule 13G/A filed with the SEC on March 03, 2015 and other information known to us.
|
|
|
(3)
|
Consists of 9,245,382 ordinary shares held by Sun Yip Industrial Company Limited and 888,901 ordinary shares held by Tiger Power Industries Limited (“Tiger Power”), each of which is an entity controlled by Mr. Sze-To. The foregoing information is derived from a Schedule 13D/A filed with the SEC on January 5, 2017.
|
|
|
|
|
|
|
(4)
|
Includes 241,971 ordinary shares held by Expert Rank Limited, an entity controlled by Mr. Ning.
|
As of May 11, 2021, there were 18 shareholders
of record holding a total of 12,938,128 of our ordinary shares. To the best of our knowledge there were 4 shareholders of record with
addresses in the United States holding 556,133 (4.3%) of our outstanding ordinary shares. The foregoing calculations include 1 unit holder
with a United States address holding 1,694 units, each consisting of 1 ordinary share. Ordinary shares held in the names of banks, brokers
and other intermediaries were assumed to be held by residents of the same country in which the bank, broker or other intermediary was
located.
B. Related Party Transactions
Our Code of Ethics and Related Person Policy
In November 2009, our board of directors adopted
a code of ethics that applies to our directors, officers and employees as well as those of our subsidiaries.
Our Code of Ethics requires it to avoid, wherever
possible, all related party transactions that could result in actual or potential conflicts of interest, except under guidelines approved
by the board of directors (or the audit committee, if one exists). Related-party transactions with respect to smaller reporting companies
such as us are defined under SEC rules as transactions in which (1) the aggregate amount involved will or may be expected to exceed the
lesser of $120,000 or one percent of the average of the smaller reporting company’s total assets at year end for the last two completed
years, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director,
(b) greater than 5 percent beneficial owner of our shares, or (c) immediate family member of the persons referred to in clauses (a) and
(b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10 percent
beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may
make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member
of his or her family, receives improper personal benefits as a result of his or her position.
Our audit committee, pursuant to its written charter,
is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. The audit committee
will consider all relevant factors when determining whether to approve a related party transaction, including whether the related party
transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances
and the extent of the related party’s interest in the transaction. No director will be able to participate in the approval of any
transaction in which he is a related party, but that director will be required to provide the audit committee with all material information
concerning the transaction. Additionally, we will require each of our directors and executive officers to complete a directors’
and officers’ questionnaire on an annual basis that elicits information about related party transactions.
These procedures are intended to determine whether
any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.
Our Related Person Transactions
There were no related party transactions involving
us or any of our subsidiaries with any of our officers and directors or their respective affiliates for the fiscal year ended December
31, 2020. We require that all ongoing and future transactions between us and any of our officers and directors or their respective affiliates
will be on terms that we believe to be no less favorable to us than are available from unaffiliated third parties. Such transactions require
prior approval by a majority of our uninterested “independent” directors or the members of our board who do not have an interest
in the transaction, in either case who have access, at our expense, to our attorneys or independent legal counsel.
C. Interest of Experts and Counsel
Not applicable.
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ITEM 8.
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FINANCIAL INFORMATION.
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A. Consolidated Statements and Other Financial Information
List of Financial Statements
See Item 18 of this Form 20-F for a list of the
financial statements filed as part of this Form 20-F.
Dividend Policy
The payment of dividends in the future will be
entirely within the sole discretion of our board of directors. Whether future dividends will be declared will depend upon our future growth
and earnings, of which there can be no assurance, and our cash flow needs for future development; all of which may be adversely affected
by one or more of the factors discussed in Item 3.D of this Form 20-F “Risk Factors”. Accordingly, we may not declare
or pay any additional dividends in the future. Even if the board of directors decides to pay dividends, the form, frequency and amount
will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions
and other factors that the board may deem relevant.
B. Significant Changes
See the notes to the financial statements included
under Item 18 of this Form 20-F.
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ITEM 9.
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THE OFFER AND LISTING.
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A. Offer and Listing Details
B. Plan of Distribution
Not applicable.
C. Markets
Our ordinary shares are quoted under the symbols
“PLTYF” on the OTC Bulletin Board.
We may consider applying to have our ordinary shares
listed on a national securities exchange, if circumstances permit. We can provide no assurance, however, that we will so apply, that any
such exchange will approve our application, if made, or that our ordinary shares will ever become so listed.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
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ITEM 10.
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ADDITIONAL INFORMATION.
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A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
The information included in Exhibit 4.14 attached
to this Annual Report on Form 20-F is incorporated herein.
C. Material Contracts
The following summarizes each material contract,
other than contracts entered into in the ordinary course of business, to which we are or any subsidiary of ours is a party for the immediately
preceding two years.
Share
Transfer Agreement. The Agreement summarized under the section titled “Development of Our Company - History and Development”
in Item 4.A of this Form 20-F is incorporated herein by reference.
Manufacturing
Plant Transfer Agreement. The Agreement summarized under the section titled “Development of Our Company – Business
Overview” in Item 4.B of this Form 20-F is incorporated herein by reference.
Assets
Disposal Agreement. The Agreement summarized under the section titled “Development of Our Company – Business
Overview” in Item 4.B of this Form 20-F is incorporated herein by reference.
D. Exchange Controls and Other Limitations Affecting Security Holders
Under Cayman Islands law, there are currently no
restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends,
interest or other payments to nonresident holders of our shares.
E. Taxation
The following summary of the material Cayman Islands,
PRC and U.S. federal income tax consequences of the acquisition, ownership, and disposition of our ordinary shares is based upon laws
and relevant interpretations thereof in effect as of the date of this Form 20-F, all of which are subject to change, possibly with retroactive
effect. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax
consequences under state, local and other tax laws, except to the extent local tax consequences are discussed under the PRC taxation section.
As used in this discussion, references to “the
company,” “we,” “our” or “us” refer only to Plastec Technologies, Ltd.
Cayman Islands Taxation
The government of the Cayman Islands will not,
under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax
upon the company or its shareholders. The Cayman Islands is not party to any double taxation treaties that are applicable to payments
made to or by us.
No Cayman Islands stamp duty will be payable by
you in respect of the issue or transfer of ordinary shares. However, an instrument transferring title to an ordinary share, if brought
to or executed in the Cayman Islands, would be subject to Cayman Islands stamp duty.
We have received an undertaking from the Governor-in-Cabinet
of the Cayman Islands, dated January 11, 2011, that, in accordance with section 6 of the Tax Concessions Act (As Revised) of the Cayman
Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to
be levied on profits, income, gains or appreciations shall apply to us or our operations and, in addition, that no tax to be levied on
profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on the ordinary
shares, or on the debentures or other obligations, of the company or (ii) by way of the withholding in whole or in part on a payment of
a dividend or other distribution of income or capital by the company to its shareholders or a payment of principal or interest or other
sums due under a debenture or other obligation of the company.
PRC Taxation
During fiscal year 2019 through closing of the
Assets Disposal Agreement on November 20, 2019, the following is a summary of the material PRC tax consequences of the acquisition, ownership
and disposition of our ordinary shares. You should consult with your own tax adviser regarding the PRC tax consequences of the acquisition,
ownership and disposition of our ordinary shares in your particular circumstances.
Income from Leasing Real Properties of Our Former
Non-PRC Subsidiaries in Shenzhen, PRC
Pursuant to the Announcement of the State Administration
of Taxation on Several Issues concerning the Administration of Income Tax on Non-Resident Enterprise, issued by SAT on April 1, 2011,
which was further amended in 2015 and 2017, a non-resident enterprise without any branch or establishment to conduct management within
the territory of China leases its immovable property such as houses or buildings in China, the enterprise income tax on the income from
the lease of the houses or buildings shall be calculated on the basis of all the rent income. The domestic tenants shall withhold the
enterprise income tax when paying the rent or when the rent is due and payable; a non-resident enterprise dispatches employees or entrust
other domestic units or individuals to conduct daily management of the aforesaid immovable property within the territory of China, such
non-resident enterprise shall be deemed to have a branch or establishment within the territory of China, and it shall, within the time
limit specified by the Enterprise Income Tax Law, file a tax return for enterprise income tax and pay it.
At all material times, a former non-PRC subsidiary
of ours engaged a PRC individual to manage its real properties in Shenzhen, PRC and to lease, receive income of leasing and pay tax for
and on its behalf.
Penalties for Failure to Pay Applicable PRC
Income Tax
A non-resident investor in us may be responsible
for paying PRC income tax on any gain realized from the sale or transfer of our ordinary shares, if such non-resident investor and the
gain satisfy the requirements under the PRC tax laws, as described above.
According to the EIT Law and its implementing rules,
the PRC Tax Administration Law (the “Tax Administration Law”) and its implementing rules, Announcement 37 and other applicable
PRC laws or regulations (collectively the “Tax Related Laws”), where any gain derived by a non-resident investor from the
sale or transfer of our ordinary shares, may be subject to any income tax in the PRC, and such non-resident investor fails to file any
tax return or pay tax in this regard pursuant to the Tax Related Laws, such investor may be subject to certain fines, penalties or punishments,
including without limitation: (1) if the non-resident investor fails to file a tax return and present the relevant information in connection
with tax payments, the competent PRC tax authorities may order it to do so within the prescribed time limit and may impose a fine up to
RMB 2,000, and in egregious cases, may impose a fine ranging from RMB 2,000 to RMB 10,000; (2) if the non-resident investor fails to file
a tax return or fails to pay all or part of the amount of tax payable, the non-resident investor may be required to pay the unpaid tax
amount payable, a surcharge on overdue tax payments (the daily surcharge is 0.05% of the overdue amount, beginning from the day the deferral
begins) and a fine ranging from 50% to 500% of the unpaid amount of the tax payable; (3) if the non-resident investor fails to file a
tax return and to pay the tax, the PRC tax authorities may order the non-resident investor to file and pay the tax payable within a prescribed
time limit, or may collect and check information about the income receivable by the non-resident investor in the PRC from other payers
(the “Other Payers”) who will pay amounts to such non-resident investor and the information about the Other Payers, and send
a “Notice of Tax Issues” to the Other Payers to collect and recover the tax payable and overdue fines imposed on such non-resident
investor from the amounts otherwise payable to such non-resident investor by the Other Payers; (4) if the non-resident investor fails
to pay the tax payable within the prescribed time limit as ordered by the PRC tax authorities, a fine ranging from 50% to 500% of the
unpaid tax payable and a surcharge on overdue tax payments (the daily surcharge is 0.05% of the overdue amount, beginning from the day
the deferral begins) may be imposed on the non-resident investor, and the PRC tax authorities may, upon approval by the director of the
tax bureau (or sub-bureau) of, or higher than, the county level, take the following compulsory measures: (i) notify in writing the non-resident
investor’s bank or other financial institution to withhold from the account thereof for payment of the amount of tax payable, and
(ii) detain, seal off, or sell by auction or on the market the non-resident investor’s commodities, goods or other property in a
value equivalent to the amount of tax payable; or (5) if the non-resident investor fails to pay all or part of the amount of tax payable
or the surcharge for the overdue tax payment, and cannot provide a guarantee to the PRC tax authorities, the tax authorities may notify
the frontier authorities to prevent the non-resident investor or its legal representative from leaving the PRC.
U.S. Taxation
With respect to the U.S. tax matters discussed,
this summary only applies to you if you are a beneficial owner of our ordinary shares and, for U.S. federal income tax purposes, all of
the following three points apply to you:
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·
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You own, directly or indirectly less than 10% of our capital stock;
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·
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You are any one of (a), (b), (c) or (d) below:
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(a)
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an individual citizen or resident of the United States,
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(b)
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a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) that is created or organized under the laws of the United States, any of its states or the District of Columbia,
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(c)
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an estate whose income is subject to U.S. federal income taxation regardless of its source, or
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(d)
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a trust if (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all of the substantial decisions of such trust or (ii) it has a valid election in place to be treated as a U.S. person; and
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·
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You hold our ordinary shares as capital assets.
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The following description of tax consequences should
be considered only as a summary and does not purport to be a complete analysis of all potential tax effects of acquiring, owning or disposing
of our ordinary shares.
Special rules may apply to U.S. expatriates, insurance
companies, tax-exempt organizations, regulated investment companies, real estate investment trusts, real estate mortgage investment conduits,
financial institutions, persons subject to the alternative minimum tax, securities broker-dealers, traders in securities that elect to
use a mark-to-market method of accounting for the securities holdings, and persons holding their ordinary shares as part of a hedging,
straddle, conversion transaction or other integrated investment, among others. Those special rules are not discussed in this Form 20-F.
This summary does not address all potential tax implications that may be relevant to you as a holder, in light of your particular circumstances.
You should consult your tax advisor concerning the overall U.S. federal, state and local and non-U.S. tax consequences of your investment
in our ordinary shares.
We have not sought, and will not seek, any ruling
from the Internal Revenue Service (or “IRS”) or any opinion of counsel with respect to the tax consequences discussed below.
Taxation of Dividends
For U.S. federal income tax purposes, the gross
amount of any dividend we pay on our ordinary shares will be included in your gross income as dividend income to the extent paid or deemed
paid out of our current or accumulated earnings and profits as calculated for U.S. federal income tax purposes. You must include the gross
amount treated as a dividend in income in the year the dividend is paid to you. Cash dividends paid on our ordinary shares will be taxable
at ordinary U.S. federal income tax rates. Dividends paid on our ordinary shares do not qualify for the lower rates of federal income
tax applicable to non-corporate U.S. holders because our shares are currently quoted only on the OTC Bulletin Board and are not treated
as readily tradable on an established securities market in the United States.
To the extent that any distributions paid exceed
our current and accumulated earnings and profits as calculated for U.S. federal income tax purposes, the distribution will be treated
as follows:
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·
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First, as a tax-free return of capital to the extent of your basis (determined for U.S. federal income tax purposes) in your ordinary shares which will reduce your adjusted tax basis of your ordinary shares. This adjustment will increase the amount of gain, or decrease the amount of loss, which you will recognize if you later dispose of those ordinary shares.
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·
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Second, the balance of the distribution in excess of your adjusted tax basis will be taxed as capital gain.
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Dividends paid by us will not give rise to any
dividends-received deduction generally allowed to a U.S. corporation under Section 243 of the Internal Revenue Code of 1986, as amended
(the “Code”).
Taxation of Capital Gains
In general, for U.S. federal income tax purposes,
you will recognize capital gain or loss if you sell or otherwise dispose of your ordinary shares based on the difference between the amount
realized on the disposition and your adjusted tax basis in the ordinary shares. Any gain or loss generally will be U.S. source gain or
loss. If you are a non-corporate holder, and you satisfy certain minimum holding period requirements, any capital gain generally will
be treated as long-term capital gain that generally is subject to U.S. federal income tax at preferential rates under current law. Long-term
capital gains realized upon a sale or other disposition of the ordinary shares generally will be subject to U.S. federal income tax at
the rate of 15%, increased to 20% on taxpayers with taxable income exceeding certain thresholds.
Unearned Income Medicare Tax
A 3.8% Medicare contribution tax will generally
apply to all or some portion of net investment income of a U.S. holder that is an individual with adjusted gross income that exceeds a
threshold amount. Net investment income includes dividend income and realized capital gains.
U.S. Information Reporting and Backup Withholding
In general, if you are a non-corporate U.S. holder
of our ordinary shares (or do not come within certain other exempt categories), information reporting requirements will apply to distributions
paid to you and proceeds from the sale, exchange redemption or disposal of your ordinary shares. U.S. holders that are corporations generally
are excluded from these information reporting and backup withholding tax rules.
Additionally, if you are a non-corporate U.S. holder
of our ordinary shares (or do not come within certain other exempt categories) you may be subject to backup withholding at the current
applicable rate with respect to such payments, unless you provide a correct taxpayer identification number (your social security number
or employer identification number), and with respect to dividend payments, certify that you are not subject to backup withholding and
otherwise comply with applicable requirements of the backup withholding rules. Generally, you will be required to provide such certification
on Internal Revenue Service Form W-9 (“Request for Taxpayer Identification Number and Certification) or a substitute Form W-9.
If you do not provide your correct taxpayer identification
number, you may be subject to penalties imposed by the Internal Revenue Service, as well as backup withholding. Backup withholding is
not an additional tax. In general, any amount withheld under the backup withholding rules should be allowable as a credit against your
U.S. federal income tax liability (which might entitle you to a refund), provided that you timely furnish the required information to
the Internal Revenue Service.
Disclosure of Information with Respect to Foreign
Financial Assets
Certain U.S. holders are required to report information
with respect to their investment in our ordinary shares not held through a custodial account with a U.S. financial institution to the
Internal Revenue Service. In general, U.S. taxpayers holding specified “foreign financial assets” (which generally would include
our ordinary shares) with an aggregate value exceeding $50,000 will report information about those assets on new IRS Form 8938, which
must be attached to the taxpayer’s annual income tax return. Higher asset thresholds apply to U.S. taxpayers who file a joint tax
return or who reside abroad. Investors who fail to report required information could become subject to substantial penalties. You should
consult your own tax advisor concerning the effect, if any, of holding your ordinary shares on your obligation to file new Form 8938.
U.S. State and Local Taxes
In addition to U.S. federal income tax, you may
be subject to U.S. state and local taxes with respect to your ordinary shares. You should consult your own tax advisor concerning the
U.S. state and local tax consequences of holding your ordinary shares.
Passive Foreign Investment Company
In general, we would be treated as a PFIC for any
taxable year in which either (1) at least 75% of our gross income (looking through certain 25% or more-owned corporate subsidiaries) is
passive income or (2) at least 50% of the average value of our assets (looking through certain 25% or more-owned corporate subsidiaries)
is attributable to assets that produce, or are held for the production of, passive income. Passive income generally includes, without
limitation, dividends, interest, rents, royalties, and gains from the disposition of passive assets.
If we were a PFIC for any taxable year during which
a taxable U.S. holder held ordinary shares, gain recognized by the U.S. holder on a sale or other disposition (including certain pledges)
of the ordinary shares would be allocated ratably over the U.S. holder’s holding period for the ordinary shares. The amounts allocated
to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount
allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate,
for that taxable year, and an interest charge would be imposed on the amount allocated to that taxable year. Further, to the extent that
any distribution received by a U.S. holder on its ordinary shares exceeds 125% of the average of the annual distributions on the ordinary
shares received during the preceding three years or the U.S. holder’s holding period, whichever is shorter, that distribution (an
“excess distribution”) would be subject to taxation in the same manner as gain, described immediately above. Certain elections
may be available that would result in alternative treatments (such as mark-to-market treatment) of the ordinary shares. In addition, each
U.S. holder of a PFIC is required to file an annual report containing such information as the U.S. Department of the Treasury may require.
If we were classified as a PFIC in any year with respect to which a U.S. holder owns ordinary shares, we would continue to be treated
as a PFIC with respect to the U.S. holder in all succeeding years during which the U.S. holder owns ordinary shares, regardless of whether
we continue to meet the tests described above. However, if we ceased to be a PFIC, a U.S. holder of our ordinary shares could avoid some
of the adverse effects of the PFIC regime by making a deemed sale election with respect to our ordinary shares.
A U.S. holder that owns (or is deemed to own) shares
in a PFIC during any taxable year of the U.S. holder, may have to file an IRS Form 8621 (whether or not a QEF or mark-to market election
is made) and such other information as may be required by the U.S. Treasury Department.
As a result of the disposition of all of our shareholdings
in Plastec in October 2016 and based on the expected composition (and estimated values) of the assets and the nature of the income of
us and our subsidiaries and our current plans of operation, we are expected to be treated as a PFIC. However, our actual PFIC status for
any taxable year will not be determinable until after the end of such taxable year. Accordingly, there can be no assurance with respect
to our status as a PFIC for our current taxable year or any subsequent taxable year. We urge U.S. investors to consult their own tax advisors
regarding the possible application of the PFIC rules.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We file annual or transition reports on Form 20-F
and furnish certain reports and other information with the SEC as required by the Exchange Act in accordance with our status as a foreign
private issuer. Such materials can be obtained on the SEC’s site on the internet at http://www.sec.gov.
We will also provide without charge to each person,
including any beneficial owner, upon written or oral request of that person, a copy of any and all of the information that has been incorporated
by reference in this Form 20-F. Please direct such requests to us, Attention Kin Sun Sze-To, c/o Unit 01, 21/F, Aitken Vanson Centre,
61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.
I. Subsidiary Information
Not applicable.
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ITEM 11.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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The disclosure set forth under “Market
Risk” in Item 5.A of this Form 20-F is incorporated herein by reference.
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ITEM 12.
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DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.
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A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
Our securities trade directly on U.S. markets and
do not trade through the use of American depositary receipts.
PART III
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ITEM 17.
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FINANCIAL STATEMENTS.
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We have provided financial statements pursuant
to Item 18.
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ITEM 18.
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FINANCIAL STATEMENTS.
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PLASTEC TECHNOLOGIES, LTD.
Consolidated Financial Statements
For the Years Ended December 31, 2020, 2019
And 2018
CONTENT
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中正達會計師事務所
Centurion ZD CPA & Co.
Certified Public Accountants (Practising)
|
Unit 1304, 13/F, Two Harbourfront, 22 Tak Fung
Street, Hunghom, Hong Kong.
香港 紅磡 德豐街22號 海濱廣場二期
13樓1304室
Tel 電話: (852) 2126 2388 Fax 傳真: (852) 2122 9078
Email 電郵: info@czdcpa.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Plastec Technologies, Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Plastec Technologies, Ltd. and its subsidiaries (the "Company") as of December 31, 2020 and 2019, the related
consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows, for each of the three years
in the period ended December 31, 2020, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
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中正達會計師事務所
Centurion ZD CPA & Co.
Certified Public Accountants (Practising)
|
Unit 1304, 13/F, Two Harbourfront, 22 Tak Fung
Street, Hunghom, Hong Kong.
香港 紅磡 德豐街22號 海濱廣場二期
13樓1304室
Tel 電話: (852) 2126 2388 Fax 傳真: (852) 2122 9078
Email 電郵: info@czdcpa.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)
Critical Audit Matters
Critical audit matters are matters arising from
the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee
and that: (1) related to accounts or disclosures that were material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Centurion ZD CPA & Co.
Certified Public Accountants
Hong Kong, China
April 29, 2021.
We have served as the Company's auditor since 2012
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED BALANCE SHEETS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
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December 31,
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December 31,
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2019
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2020
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HK$
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HK$
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ASSETS
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Current assets
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Cash and cash equivalents
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185,530
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182,697
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Deposits, prepayment and other receivables (note 4)
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1,754
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2,450
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Total current assets
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187,284
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185,147
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|
|
Property, plant and equipment, net (note 5)
|
|
|
423
|
|
|
|
60
|
|
|
Intangible assets
|
|
|
438
|
|
|
|
438
|
|
|
Total assets
|
|
|
188,145
|
|
|
|
185,645
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Other payables and accruals (note 6)
|
|
|
1,341
|
|
|
|
1,569
|
|
|
Tax payable
|
|
|
9,407
|
|
|
|
10,186
|
|
|
Total current liabilities
|
|
|
10,748
|
|
|
|
11,755
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
10,748
|
|
|
|
11,755
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (note 9)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Ordinary shares (U.S.$0.001 par value; 100,000,000 authorized, 12,938,128 and 12,938,128 shares issued and outstanding as of December 31 2019 and 2020, respectively)
|
|
|
101
|
|
|
|
101
|
|
|
Additional paid-in capital
|
|
|
26,049
|
|
|
|
26,049
|
|
|
Accumulated other comprehensive income
|
|
|
(30
|
)
|
|
|
(30
|
)
|
|
Retained earnings
|
|
|
151,277
|
|
|
|
147,770
|
|
|
Total shareholders’ equity
|
|
|
177,397
|
|
|
|
173,890
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
|
|
188,145
|
|
|
|
185,645
|
|
See accompanying notes to consolidated financial
statements.
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
|
|
|
Year ended December 31,
|
|
|
Year ended December 31,
|
|
|
Year ended December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Revenues
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income/(expenses), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of a subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
29
|
|
|
Selling, general and administrative expenses
|
|
|
(4,554
|
)
|
|
|
(15,083
|
)
|
|
|
(3,882
|
)
|
|
Other income
|
|
|
9,954
|
|
|
|
-
|
|
|
|
7
|
|
|
Total operating income/ (expenses), net
|
|
|
5,400
|
|
|
|
(15,083
|
)
|
|
|
(3,846
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from operations
|
|
|
5,400
|
|
|
|
(15,083
|
)
|
|
|
(3,846
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3,082
|
|
|
|
3,297
|
|
|
|
1,118
|
|
|
Income/(loss) before income tax expense
|
|
|
8,482
|
|
|
|
(11,786
|
)
|
|
|
(2,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense from continuing operations (note 7)
|
|
|
(2,435
|
)
|
|
|
(729
|
)
|
|
|
(779
|
)
|
|
Net income/(loss) from continuing operations attributable to the Company’s shareholders
|
|
|
6,047
|
|
|
|
(12,515
|
)
|
|
|
(3,507
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations (note 3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations (including gain of 2020: HK$Nil, 2019: HK$47,845, 2018: HK$171,809) upon disposals)
|
|
|
171,927
|
|
|
|
53,364
|
|
|
|
-
|
|
|
Income tax expenses from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations attributable to the Company’s shareholders
|
|
|
171,927
|
|
|
|
53,364
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) attributable to the Company’s shareholders
|
|
|
177,974
|
|
|
|
40,849
|
|
|
|
(3,507
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Discontinued operations
|
|
|
6,674
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
6,674
|
|
|
|
-
|
|
|
|
-
|
|
|
Comprehensive income/(loss) attributable to the Company’s shareholders
|
|
|
184,648
|
|
|
|
40,849
|
|
|
|
(3,507
|
)
|
See accompanying notes to consolidated financial
statements.
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (CONTINUED)
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Net income/(loss) per share (note 8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
Discontinued operations
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of diluted ordinary shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
Discontinued operations
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income/(loss) per share attributable from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
HK$0.47
|
|
|
|
HK$(0.97)
|
|
|
|
HK$(0.27)
|
|
|
Discontinued operations
|
|
|
HK$13.29
|
|
|
|
HK$4.13
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income/(loss) per share attributable from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
HK$0.47
|
|
|
|
HK$(0.97)
|
|
|
|
HK$(0.27)
|
|
|
Discontinued operations
|
|
|
HK$13.29
|
|
|
|
HK$4.13
|
|
|
|
-
|
|
See accompanying notes to consolidated financial
statements.
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
|
|
|
Ordinary shares
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Number of
shares
outstanding
|
|
|
Amount
|
|
|
Additional
paid-in
capital
|
|
|
other
comprehensive
income
|
|
|
Retained
earnings
|
|
|
Shareholders’
equity
|
|
|
|
|
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
Balance at January 1, 2018
|
|
|
12,938,128
|
|
|
|
101
|
|
|
|
26,049
|
|
|
|
(6,704
|
)
|
|
|
749,884
|
|
|
|
769,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
177,974
|
|
|
|
177,974
|
|
|
Dividend paid
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(403,669
|
)
|
|
|
(403,669
|
)
|
|
Reclassification adjustment relating to exchange difference upon disposals of interests in subsidiaries
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,674
|
|
|
|
-
|
|
|
|
6,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018 and
January 1, 2019
|
|
|
12,938,128
|
|
|
|
101
|
|
|
|
26,049
|
|
|
|
(30
|
)
|
|
|
524,189
|
|
|
|
550,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,849
|
|
|
|
40,849
|
|
|
Dividend paid
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(413,761
|
)
|
|
|
(413,761
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 and January 1, 2020
|
|
|
12,938,128
|
|
|
|
101
|
|
|
|
26,049
|
|
|
|
(30
|
)
|
|
|
151,277
|
|
|
|
177,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,507
|
)
|
|
|
(3,507
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020
|
|
|
12,938,128
|
|
|
|
101
|
|
|
|
26,049
|
|
|
|
(30
|
)
|
|
|
147,770
|
|
|
|
173,890
|
|
See accompanying notes to consolidated financial
statements.
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income / (loss)
|
|
|
177,974
|
|
|
|
40,849
|
|
|
|
(3,507
|
)
|
|
Less: Net income from discontinued operations
|
|
|
(171,927
|
)
|
|
|
(53,364
|
)
|
|
|
-
|
|
|
Net income/(loss) from continuing operations
|
|
|
6,047
|
|
|
|
(12,515
|
)
|
|
|
(3,507
|
)
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation
|
|
|
363
|
|
|
|
363
|
|
|
|
363
|
|
|
Gain on disposal of a subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
(29
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits, prepayment and other receivables
|
|
|
(310
|
)
|
|
|
(70
|
)
|
|
|
(696
|
)
|
|
Other payables and accruals
|
|
|
(221
|
)
|
|
|
565
|
|
|
|
228
|
|
|
Tax payables
|
|
|
2,435
|
|
|
|
729
|
|
|
|
779
|
|
|
Net cash provided by/(used in) continuing operations
|
|
|
8,314
|
|
|
|
(10,928
|
)
|
|
|
(2,862
|
)
|
|
Net cash provided by discontinued operations
|
|
|
17,168
|
|
|
|
11,987
|
|
|
|
-
|
|
|
Net cash provided by/(used in) operating activities
|
|
|
25,482
|
|
|
|
1,059
|
|
|
|
(2,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from disposals of subsidiaries (net of cash disposed of HK$27 for the year 2020, HK$93 for the year 2019 and HK$49,666 for the year 2018)
|
|
|
350,655
|
|
|
|
325,413
|
|
|
|
29
|
|
|
Net cash provided by continuing operations
|
|
|
350,655
|
|
|
|
325,413
|
|
|
|
29
|
|
|
Net cash used in discontinued operations
|
|
|
(101,410
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Net cash provided by investing activities
|
|
|
249,245
|
|
|
|
325,413
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
(403,669
|
)
|
|
|
(413,761
|
)
|
|
|
-
|
|
|
Net cash used in continuing operations
|
|
|
(403,669
|
)
|
|
|
(413,761
|
)
|
|
|
-
|
|
|
Net cash used in financing activity
|
|
|
(403,669
|
)
|
|
|
(413,761
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(128,942
|
)
|
|
|
(87,289
|
)
|
|
|
(2,833
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
|
|
|
6,674
|
|
|
|
-
|
|
|
|
-
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
395,087
|
|
|
|
272,819
|
|
|
|
185,530
|
|
|
Cash and cash equivalents, end of year
|
|
|
272,819
|
|
|
|
185,530
|
|
|
|
182,697
|
|
|
Less: cash and cash equivalents from discontinued operations
|
|
|
(69
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Cash and cash equivalents, end of year from continuing operations
|
|
|
272,750
|
|
|
|
185,530
|
|
|
|
182,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3,082
|
|
|
|
3,297
|
|
|
|
1,118
|
|
|
Income taxes paid
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration receivable
|
|
|
165,506
|
|
|
|
-
|
|
|
|
-
|
|
See accompanying notes to consolidated financial
statements.
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
1. Organization
and Business Background
Plastec Technologies, Ltd. (“Company”)
(formerly known as “GSME Acquisition Partners I”), incorporated under the laws of Cayman Islands on March 27, 2008, and its
subsidiaries (where the context permits, references to the “Company” below shall include references to its subsidiaries (collectively
as the “Group”)) had principally been engaged in the provision of integrated plastic manufacturing services from mold design
and fabrication, plastic injection manufacturing to secondary-process finishing as well as parts assembly. The
Group’s manufacturing activities had been performed in the People’s Republic of China (the “PRC” or “China”)
and Thailand during the years through October 11, 2016. The selling and administrative activities had mainly been performed in China.
On November 14, 2015, the Company entered
into a Share Transfer Agreement (the “Agreement”) with Shanghai Yongli Belting Co., Ltd. (“SYB”) and its wholly-owned
subsidiary, Shanghai Yongjing Investment Management Co., Ltd. (“SYIM”). Pursuant to the Agreement, SYIM was to purchase, through
a wholly-owned Hong Kong subsidiary (the “HK Subsidiary”), the entirety of the Company’s shareholding interests in its
then wholly-owned subsidiary, Plastec International Holdings Limited (“PIHL”) alongside the latter’s subsidiaries (collectively,
“PIHL Group”), for an aggregate purchase price of RMB 1,250,000,000 (or US$195,312,500 equivalent, adopting the exchange rate
when the transaction was first reported), in cash (the “Transfer Price”) subject to terms and conditions thereof.
The disposal of PIHL was completed
on October 11, 2016. As a result, the Company no longer owns PIHL. Thereafter, the Group’s only operations have generally been to
complete construction of a manufacturing plant at Kai Ping, China which was disposed of and transferred to PIHL upon its establishment
on April 20, 2018 as described below, collect rental income from certain property the Group used to own and which was being leased to
one of PIHL’s subsidiaries until November 2019 when the former subsidiary of the Company that held the property was disposed of
to an unaffiliated third party as described below and explore other investment opportunities.
In accordance with the terms and spirit
of the Agreement, the Company caused Viewmount Developments Limited (a wholly owned subsidiary of the Company, “Viewmount”),
to enter into a Share Transfer Agreement with PIHL (a wholly owned subsidiary of SYB since October 11, 2016) on March 30, 2018 (the “Manufacturing
Plant Transfer Agreement”), pursuant to the terms and conditions of which Viewmount was to transfer the ownership interests in certain
of its former subsidiaries holding the newly established manufacturing plant in Kai Ping, China through their PRC subsidiaries to PIHL
for a total consideration of approximately HK$70, representing the actual registered capital injected by Viewmount into the relevant subsidiaries.
On April 20, 2018, the parties consummated the transactions contemplated by the Manufacturing Plant Transfer Agreement. The parties also
settled all accounts payable owed by the relevant subsidiaries to Viewmount totaling HK$258,910.
On
November 15, 2019, Viewmount entered into an agreement (the “Assets Disposal Agreement”) with an unaffiliated third party
(the “Purchaser”), pursuant to which Viewmount was to transfer the ownership interests in its then wholly-owned subsidiary
holding the right to use certain parcels of land in Shenzhen together with premises built thereon to the Purchaser for HK$47,965 in cash,
net of all relevant expenses, charges and taxes. On November 20, 2019, the parties consummated the transactions
contemplated by the Assets Disposal Agreement; on which date Viewmount also received from the Purchaser HK$112,035 representing all amounts
due from the former subsidiary disposed of.
The aforesaid disposals represented
a strategic shift and had a major effect on the Group’s results of operations. Accordingly, assets and liabilities, revenues and
expenses, and cash flows related to the disposed business lines have been reclassified in the accompanying consolidated financial statements
as discontinued operations for all periods presented. The consolidated balance sheets as of December 31, 2018 (note 3), the consolidated
statements of operations and comprehensive income and the consolidated statements of cash flows for the years ended December 31, 2018
have likewise been adjusted retrospectively to reflect this strategic shift.
On June 29, 2020, the Company disposed
of its wholly-owned dormant subsidiary, Allied Sun Corporation Limited, with a negative net worth of approximated HK$1.6 to an unaffiliated
third party purchaser for HK$27.
As of December 31, 2020, details of
the Company’s subsidiaries are as follows:
|
Name
|
|
Date of
incorporation/
establishment
|
|
Place of
incorporation/
registration and
operation
|
|
Percentage of
equity interest
attributable to
the Company
|
|
Principal activities
|
Sun Line Industrial Limited
新麗工業有限公司
|
|
April 27, 1993
|
|
Hong Kong
|
|
100%
|
|
Dormant
|
|
|
|
|
|
|
|
|
|
|
|
Sun Ngai Spraying and Silk Print Co., Ltd.
|
|
July 25, 1995
|
|
BVI
|
|
100%
|
|
Dormant
|
|
|
|
|
|
|
|
|
|
|
|
Sun Terrace Industries Limited
|
|
March 2, 2004
|
|
BVI
|
|
100%
|
|
Dormant
|
|
|
|
|
|
|
|
|
|
|
|
Viewmount Developments Limited
|
|
November 12, 2013
|
|
BVI
|
|
100%
|
|
Investment holding
|
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
1. Organization
and Business Background (Continued)
History and Background -The Merger
Transaction with Plastec International Holdings Limited
On March 27, 2008, the Company was
established as a special purpose acquisition company whose objective was to consummate an acquisition, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more businesses located in the PRC.
On August 6, 2010, the Company entered
into an Agreement and Plan of Reorganization (the “Merger Agreement”) with GSME Acquisition Partners I Sub Limited (“GSME
Sub”), PIHL and all former shareholders of PIHL (“PIHL Shareholders”) (together, the “Parties”). Upon the
consummation of the transactions contemplated by the Merger Agreement, GSME Sub was to be merged with and into PIHL, with PIHL surviving
as a wholly-owned subsidiary of the Company (the “Merger”). The PIHL Shareholders were then entitled to receive up to an aggregate
of 16,948,053 ordinary shares, par value U.S.$0.001 per share, of the Company.
On September 13, 2010, in connection
with the Merger, the Parties entered into an Amended and Restated Agreement and Plan of Reorganization (the “Amended and Restated
Merger Agreement”) to, amongst other matters, revise the terms of the merger consideration to be paid to the PIHL Shareholders.
Pursuant to the Amended and Restated Merger Agreement, upon consummation of the Merger, the PIHL Shareholders became entitled to receive
up to an aggregate of 16,778,571 ordinary shares of the Company, of which 7,054,583 shares were issued to the PIHL Shareholders on the
closing of the Merger and the remaining of up to 9,723,988 shares (2,944,767, 3,389,610 and 3,389,611 shares for 2011, 2012 and 2013 respectively)
(the “Earnout Shares”) would have been issued to the PIHL Shareholders, if PIHL had net income as defined in the Amended and
Restated Merger Agreement in the following amounts for the indicated years ending April 30 below:
|
Year ending April 30,
|
|
Net Income
|
|
|
|
HK$
|
|
2011
|
|
130,700
|
|
2012
|
|
176,000
|
|
2013
|
|
250,000
|
At the Special Meeting held on December
10, 2010, the merger proposal was approved by the shareholders. On December 16, 2010, the Company consummated the transactions contemplated
by the Amended and Restated Merger Agreement, pursuant to which, amongst other things, PIHL became a wholly owned subsidiary of the Company
(the “Merger Transaction”). The Merger Transaction was accounted for as a reverse acquisition with PIHL being considered the
accounting acquirer in the Merger.
The completion of the Merger enabled
the PIHL Shareholders to obtain a majority voting interest in the Company. Generally accepted accounting principles in the United States
require that a company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting
purposes. Accordingly, the aforementioned Merger Transaction was accounted for as a reverse acquisition of a private operating company
(PIHL) with a non-operating public company (the Company) with significant amount of cash. The reverse acquisition process utilized the
capital structure of the Company and the assets and liabilities of PIHL were recorded at historical cost. The transaction was recorded
as a recapitalization of PIHL and thus was reflected retrospectively in PIHL’s historical financial statements. Although PIHL was
deemed to be the accounting acquirer for financial accounting and reporting purposes, the legal status of PIHL as the surviving company
did not change.
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
1. Organization
and Business Background - Continued
Under the reverse acquisition accounting,
the historical consolidated financial statements of the Company for the periods prior to December 16, 2010 were those of PIHL and its
subsidiaries. Since PIHL was deemed as accounting acquirer, PIHL’s fiscal year replaced the Company’s fiscal year. The fiscal
year end changed from October 31 to April 30. The financial statements of the Company reflected the aforementioned Merger Transaction
in the consolidated statements of shareholders’ equity through a line of “Recapitalization in connection with the reverse
merger” to present the net assets of the Company as of December 16, 2010. The net assets of the Company as of December 16, 2010
were as follows:
|
Net assets acquired:
|
|
HK$
|
|
|
Cash
|
|
|
58,160
|
|
|
Accounts payable and accrued liabilities
|
|
|
(1,524
|
)
|
|
|
|
|
|
|
|
|
|
|
56,636
|
|
On April 30, 2011, the Parties entered
into an amendment to the Amended and Restated Merger Agreement to remove the provisions of Earnout Shares and issued an aggregate of 7,486,845
ordinary shares of the Company to the PIHL Shareholders on April 30, 2011.
Purchase of securities by the
issuer
Prior to November 2011, the Company
had no plans or programs for the purchase of its outstanding securities. However, in connection with the Merger, holders of 2,615,732
of the Company public shares elected to exercise their conversion rights (for a description of these rights, see the IPO Prospectus and
the Merger Proxy Statement) and, upon the closing of the Merger, such shares were converted into an average U.S. $10.30 (including proceeds
that were originally to be from a letter of credit provided by Cohen & Company Securities, LLC but were ultimately paid by Company)
in cash and were cancelled. Under Cayman Islands law, such conversions are technically considered “repurchases.”
In
November 2011, the board of directors of Company approved a U.S.$5 million share repurchase program expiring initially in June 2012 but
which was extended twice through December 2013 and expanded to cover publicly held warrants (“2011 Repurchase Program”). Under
the 2011 Repurchase Program, the Company was permitted to make repurchases of ordinary shares and publicly held warrants from time to
time in open market or in privately negotiated transactions. The timing of repurchases under this program was dependent on a variety
of factors, including price and market conditions prevailing from time to time. The 2011 Repurchase Program was completed on September
25, 2013. On the same date, the Company announced a new U.S.$5 million repurchase plan (“2013 Repurchase Program”) approved
by the board of directors of the Company to cover repurchases of ordinary shares and publicly held warrants from time to time in open
market or in privately negotiated transactions through September 25, 2014. In May 2014, the Company announced expansion of the
scope of the 2013 Repurchase Program to include the Company’s units, with all other terms of the 2013 Repurchase Program remained
unchanged. In August 2014, the Company announced a 12-month extension of the 2013 Repurchase Program (as expanded) through September 25,
2015. In August 2015, the Company announced a further 12-month extension of the 2013 Repurchase Program (as expanded) through September
25, 2016, under which period, all warrants, insider or public, expired on November 18, 2014. In August 2016, the Company announced a further
12-month extension of the 2013 Repurchase Program (as expanded) through September 25, 2017. On August 9, 2017, the Company announced a
further 12-month extension of the 2013 Repurchase Program (as expanded) through September 25, 2018. On August 17, 2018, the Company announced
a further 12-month extension of the 2013 Repurchase Program (as expanded) through September 25, 2019. On August 26, 2019, the Company
announced a further 12-month extension of the 2013 Repurchase Program (as expanded) through September 25, 2020. On August 20, 2020, the
Company announced a further 12-month extension of the 2013 Repurchase Program (as expanded) through September 25, 2021. The
timing of repurchases under the 2013 Repurchase Program will depend on a variety of factors, including price and market conditions prevailing
from time to time, and the program may be suspended, modified or discontinued without notice at any time.
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
1. Organization
and Business Background - Continued
The following table summarizes the
Company’s repurchases of securities under the 2011 and 2013 Repurchase Programs:
|
Period*
|
|
|
Total number of
publicly held
warrants purchased as
part of the publicly
announced
repurchase plans
|
|
|
Total number of
ordinary shares
purchased as part of
the publicly
announced repurchase
plans
|
|
|
Total number of units
purchased as part of the
publicly announced
repurchase plans
|
|
|
February 2012
|
|
|
|
-
|
|
|
|
4,000
|
|
|
|
-
|
|
|
June 2012
|
|
|
|
-
|
|
|
|
60,675
|
|
|
|
-
|
|
|
January 2013
|
|
|
|
-
|
|
|
|
600,000
|
|
|
|
-
|
|
|
June 2013
|
|
|
|
80,000
|
|
|
|
94,100
|
|
|
|
-
|
|
|
August 2013
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
September 2013
|
|
|
|
-
|
|
|
|
73,990
|
|
|
|
-
|
|
|
October 2013
|
|
|
|
-
|
|
|
|
586,010
|
|
|
|
-
|
|
|
August 2014
|
|
|
|
547,600
|
|
|
|
-
|
|
|
|
-
|
|
* Each period covers the full calendar
month indicated. There were no repurchases made in omitted months. Repurchases for September 2013 and earlier months were under the 2011
Repurchase Program. Repurchases for October 2013 onward were under the 2013 Repurchase Program. As of the date hereof, the approximate
dollar value of securities that may be purchased under the Company’s current repurchase program stood at U.S.$1,431,918.
In addition to the purchases made pursuant
to the 2011 and 2013 Repurchase Programs, the Company also repurchased 1,570,000 ordinary shares held by Sun Yip Industrial Company Limited,
an entity controlled by Mr. Sze-To, pursuant to a purchase agreement on December 1, 2011 at a price of U.S.$7.5 per share or approximately
U.S.$11.8 million in cash, which shares were cancelled.
Further, pursuant to the mandatory
redemption terms of an escrow agreement (as amended on December 16, 2011), a total of 806,293 ordinary shares held in escrow on account
of the Company’s initial shareholders were automatically repurchased by the Company at the close of business on March 16, 2012 for
an aggregate consideration of U.S.$0.01, which redeemed shares were likewise cancelled.
2. Summary
of Significant Accounting Policies
Principles of consolidation
The consolidated financial statements,
prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”), include
the assets, liabilities, revenues, expenses and cash flows of all subsidiaries. All significant intercompany balances, transactions and
cash flows are eliminated on consolidation.
Discontinued operations
A disposal of a component of an entity
or a group of an entity shall be reported in discontinued operations if the disposal represents a strategic shift that has (or will have)
a major effect on an entity’s operations. Classification as a discontinued operations occurs upon disposal or when the operation
meets the criteria to be classified as held for sale, if earlier. Where an operation is classified as discontinued, a single amount is
presented on the face of the consolidated statements of operations and comprehensive income. The amount of total current assets, total
non-current assets, total current liabilities and total non-current liabilities are presented separately on the consolidated balance sheets.
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
2. Summary
of Significant Accounting Policies - Continued
Foreign currency translation
The functional currency of the Company
is United States Dollar. The functional currency of the subsidiaries other than the former subsidiaries in the PRC is Hong Kong dollar.
The former subsidiaries in the PRC have their local currency, Renminbi, as their functional currencies.
In the individual financial statements
of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity using
the exchange rates prevailing at the dates of the transactions. At the reporting date, monetary assets and liabilities denominated in
foreign currencies are translated at the foreign exchange rates prevailing at the reporting date. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the reporting date retranslation of monetary assets and liabilities are recognized in
the consolidated statement of income. Aggregate net foreign currency transaction gain/(loss) were HK$9,954, HK$(11,476) and HK$Nil for
the years ended December 31, 2018, 2019 and 2020, respectively.
Non-monetary items carried at fair
value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined
and are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
In the consolidated financial statements,
all individual financial statements originally presented in a currency different from the Company’s reporting currency have been
converted into Hong Kong dollars. Assets and liabilities have been translated into Hong Kong dollars at the closing rates at the reporting
date. Income and expenses have been converted into the Hong Kong dollars at the exchange rates prevailing at the transaction dates, or
at the average rates over the reporting period provided that the exchange rates do not fluctuate significantly. Any differences arising
from this procedure have been recognized in other comprehensive income and accumulated separately in the shareholders’ equity.
Use of estimates
The preparation of consolidated financial
statements in conformity with the US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts
of revenues and expenses during the reporting periods. The most significant estimates relate to allowances for doubtful accounts, inventory
valuation, useful lives of property, plant and equipment, valuation allowance for deferred tax assets and contingencies. Actual results
could differ from those estimates made by management.
Cash and cash equivalents
Cash and cash equivalents include cash
at bank and in hand and demand deposits with banks with original maturities of three months or less that are readily convertible into
known amounts of cash and which are subject to an insignificant risk of changes in value.
Allowance for doubtful account
The Group regularly monitors and assesses
the risk of not collecting amounts owed to the Group by debtors, if applicable. This evaluation is based upon a variety of factors including:
ongoing credit evaluations of its debtors’ financial condition, an analysis of amounts current and past due along with relevant
history and facts particular to the debtors. Other receivables are written off if reasonable collection efforts are not successful.
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
2. Summary
of Significant Accounting Policies - Continued
Property, plant and equipment
Property, plant and equipment are stated
at acquisition cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs
of bringing the asset to its working condition and location for its intended use.
Depreciation is provided to write off
the cost less their residual values over their estimated useful lives, using the straight-line method, at the following rates per annum:
Motor vehicles 20%
The assets’ estimated residual
values, depreciation methods and estimated useful lives are reviewed, and adjusted if appropriate, at each reporting date.
The gain or loss arising on retirement
or disposal is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the consolidated
statement of income.
All other costs, such as repairs and
maintenance are charged to the operations during the financial period in which they are incurred.
Impairment of long-lived assets
The Group periodically evaluates the
carrying value of long-lived assets to be held and used when events and circumstances warrant such a review. The carrying value of a long-lived
asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its
carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the
long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the
risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced
for the cost to dispose.
Intangible asset
Intangible asset consist of acquired
golf club membership. Intangible asset with an indefinite useful life is not amortized.
Fair value of financial instruments
The Group has no financial instruments
that are measured at fair value.
The carrying amounts of cash and cash
equivalents, short term bank deposits, accounts receivable and accounts payable, approximate their fair value due to the short-term maturities
of such instruments.
Revenues recognition
Rental income receivable under operating
leases is recognized in profit or loss in equal instalments over the periods covered by the lease term, except where an alternative basis
is more representative of the pattern of benefits to be derived from the use of the leased assets. Lease incentives granted are recognized
in profit or loss as an integral part of the aggregate net lease payments receivable.
Comprehensive income
The Group presents comprehensive income
in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220
“Comprehensive Income”. FASB ASC 220 states that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in the consolidated financial statements. The components of comprehensive income were the
net income for the periods and the foreign currency translation adjustments.
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
2. Summary
of Significant Accounting Policies - Continued
Income taxes
The Company accounts for income taxes
in accordance with FASB ASC 740 “Income taxes”, which requires an entity to recognize deferred tax assets and liabilities
using the asset and liability method. Under this method, deferred income taxes are recognized for all temporary differences at enacted
rates and classified as current or non-current based upon the classification of the related asset or liability in the consolidated financial
statements. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that
some portion of, or all, the deferred tax asset will not be realized.
FASB ASC 740 clarifies the accounting
for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement
attribute for the financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return. It
also provides accounting guidance on de-recognition, classification, interest or penalties, accounting in interim periods, disclosure
and transition. Interest and penalties from tax assessments, if any, are included in income taxes in the consolidated statement of income.
Earnings per share
Basic net income per share is computed
by dividing net income available to ordinary shares by the weighted average number of ordinary shares outstanding during the period. Diluted
net income per share gives effect to all dilutive potential ordinary shares outstanding during the period. The weighted average number
of ordinary shares outstanding is adjusted to include the number of additional ordinary shares that would have been outstanding if the
dilutive potential ordinary shares had been issued. In computing the dilutive effect of potential ordinary shares, the average stock price
for the period is used in determining the number of treasury shares assumed to be purchased with the proceeds from the exercise of derivative
securities.
Dividends
Dividends are recorded in the period
in which they are approved by the Company’s Board of Directors.
Contingencies
From time to time, the Group is subject
to claims arising in the conduct of its business, including claims relating to employees and public authorities, if applicable. In determining
whether liabilities should be recorded for pending litigation claims, an assessment of the claims is made and the likelihood that the
Group will be able to defend itself successfully against such claims is evaluated. When it is believed probable that the Group will not
prevail in a particular matter, an estimate is made of the amount of liability based, in part, on advice of legal counsel.
Recent accounting pronouncements
adopted
In December 2019, the FASB issued ASU
No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The FASB issued this update
as part of its initiative to reduce complexity in accounting standards. The amendments in this ASU simplify the accounting for income
taxes by removing certain exceptions to the general principles in Topic 740 and also improve consistent application of other areas by
clarifying and amending existing guidance. ASU 2019-12 is effective for the Company in fiscal 2022 and early adoption is permitted. Certain
amendments of this ASU may be adopted on a retrospective basis, modified retrospective basis or prospective basis. The adoption of this
standard did not have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU No.
2016-13, Measurement of Credit Losses on Financial Instruments, which establishes ASC 326, Financial Instruments - Credit Losses. The
ASU revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected
loss methodology. The ASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent
a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In November 2018, the
FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. This ASU clarifies that receivables
from operating leases are accounted for using the lease guidance and not as financial instruments. In May 2019, the FASB issued ASU No.
2019-05, Targeted Transition Relief, which amends ASC 326. This ASU provides an option to irrevocably elect to measure certain individual
financial assets at fair value instead of amortized cost. The Company is currently evaluating the impact this guidance will have on its
financial statements. The adoption of this standard did not have a material impact on its consolidated financial statements.
Other accounting standards that have been issued or proposed
by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact
on the Company’s consolidated financial statements upon adoption.
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
|
|
3.
|
Discontinued Operations
|
On April 20, 2018, the Company, via
Viewmount, completed disposals of its certain former subsidiaries holding ownership interests in the newly established manufacturing plant
in Kai Ping, China to PIHL for a total consideration of approximately HK$70, representing the actual registered capital injected by Viewmount
into the relevant former subsidiaries alongside settlement of all accounts payable owed by the relevant former subsidiaries to Viewmount
at the closing (totaling HK$258,910).
On November 20, 2019, the Company,
via Viewmount, completed disposal of its former subsidiary holding the right to use certain parcels of land in Shenzhen together with
premises built thereon to an unaffiliated third party for HK$47,965 in cash (net of all relevant expenses, charges and taxes) alongside
settlement of all accounts payable owed by the relevant former subsidiary to Viewmount at the closing (totaling HK$112,035).
The disposals represented a strategic
shift and had a major effect on the Group’s results of operations. The disposed entities are accounted as discontinued operations
in the consolidated financial statements for the years ended December 31, 2018 and 2019. Gains of HK$171,809 and HK$47,845 for the years
ended December 31, 2018 and 2019, respectively, were recognized on the disposals including in net income from discontinuing operations.
Consolidated statements of operations
and comprehensive income
|
|
|
For the year ended December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
|
|
HK$
|
|
|
HK$
|
|
|
Revenues
|
|
|
-
|
|
|
|
-
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
Other revenues
|
|
|
16,754
|
|
|
|
14,398
|
|
|
Selling, general and administrative expenses
|
|
|
(16,660
|
)
|
|
|
(8,879
|
)
|
|
Gain on disposal of subsidiaries
|
|
|
171,809
|
|
|
|
47,845
|
|
|
Interest income
|
|
|
24
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax
|
|
|
171,927
|
|
|
|
53,364
|
|
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
171,927
|
|
|
|
53,364
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
Exchange gain on translation of financial statements of foreign operations
|
|
|
6,674
|
|
|
|
-
|
|
|
Income from discontinued operations attributable to shareholders of the Company
|
|
|
178,601
|
|
|
|
53,364
|
|
4. Deposits,
Prepayment and Other Receivables
Deposits, prepayment and other receivables
consist of the following:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Prepaid insurance and others
|
|
|
470
|
|
|
|
494
|
|
|
Other receivables
|
|
|
1,284
|
|
|
|
1,956
|
|
|
|
|
|
1,754
|
|
|
|
2,450
|
|
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
5. Property,
Plant and Equipment
Property, plant and equipment consist
of the following:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
Motor vehicles
|
|
|
1,814
|
|
|
|
1,814
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
(1,391
|
)
|
|
|
(1,754
|
)
|
|
Property, plant and equipment, net
|
|
|
423
|
|
|
|
60
|
|
Depreciation of property, plant and
equipment from operating activities were HK$363, HK$363 and HK$363 during the years ended December 31, 2018, 2019 and 2020, respectively.
6. Other
Payables and Accruals
Other payables and accruals consist
of the following:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Accrued salaries, wages and bonus
|
|
|
40
|
|
|
|
40
|
|
|
Accrued audit and professional fees
|
|
|
1,301
|
|
|
|
1,529
|
|
|
|
|
|
1,341
|
|
|
|
1,569
|
|
7. Income
Taxes
The Company and its subsidiaries are
subject to taxation in various jurisdictions including Hong Kong. Pursuant to the rules and regulations of the Cayman Islands, the Company
is not subject to any income tax in the Cayman Islands. The income of its subsidiaries which are incorporated in the BVI is not subject
to taxation in the BVI under the current BVI law. The subsidiaries operating in Hong Kong are subject to income taxes as described below.
The subsidiaries operating in Hong
Kong were subject to a two-tiered profits tax rates regime at the rate of 8.25% for the first HK$2,000 assessable profits and at 16.5%
over HK$2,000 assessable profits for the years ended December 31, 2018, 2019 and 2020, respectively.
As of December 31, 2019 and 2020, board
of directors considered that the Company had accounted for the uncertain tax positions affecting its consolidated financial position,
results of operations or cash flows, and will continue to evaluate for any uncertain position in future. The Company’s tax positions
related to open tax years are subject to examination by the relevant tax authorities.
The provision for income taxes consists
of the following:
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Current tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Hong Kong
|
|
|
-
|
|
|
|
138
|
|
|
|
147
|
|
|
- Other countries
|
|
|
2,435
|
|
|
|
591
|
|
|
|
632
|
|
|
|
|
|
2,435
|
|
|
|
729
|
|
|
|
779
|
|
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
7. Income
Taxes (Continued)
Reconciliations between the provision
for income taxes computed by applying the Hong Kong profits tax to income before income tax expense are as follows:
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Provision for income taxes at Hong Kong profits tax rates
|
|
|
40
|
|
|
|
(2,867
|
)
|
|
|
76
|
|
|
Current tax in other jurisdictions
|
|
|
2,039
|
|
|
|
591
|
|
|
|
632
|
|
|
Effect of income not chargeable for tax purpose
|
|
|
(12
|
)
|
|
|
-
|
|
|
|
(15
|
)
|
|
Effect of expenses not deductible for tax purpose
|
|
|
-
|
|
|
|
-
|
|
|
|
60
|
|
|
Tax effect of unused tax losses not recognized
|
|
|
368
|
|
|
|
3,005
|
|
|
|
26
|
|
|
|
|
|
2,435
|
|
|
|
729
|
|
|
|
779
|
|
8. Net
Income/(loss) Per Share
The following table sets forth the
computation of basic and diluted income per share for the years indicated:
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Basic and diluted income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) for the year attributable to the Company’s ordinary shareholders
|
|
|
177,974
|
|
|
|
40,849
|
|
|
|
(3,507
|
)
|
|
- Continuing operations
|
|
|
6,047
|
|
|
|
(12,515
|
)
|
|
|
(3,507
|
)
|
|
- Discontinued operations
|
|
|
171,927
|
|
|
|
53,364
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of basic and diluted ordinary shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Continuing operations
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
- Discontinued operations
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of basic and diluted ordinary shares used in calculating income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Continuing operations
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
- Discontinued operations
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
12,938,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income/(loss) per share
|
|
|
HK$13.76
|
|
|
|
HK$3.16
|
|
|
|
HK$(0.27)
|
|
|
- Continuing operations
|
|
|
HK$ 0.47
|
|
|
|
HK$(0.97)
|
|
|
|
HK$(0.27)
|
|
|
- Discontinued operations
|
|
|
HK$13.29
|
|
|
|
HK$4.13
|
|
|
|
-
|
|
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
9. Commitments and Contingencies
Capital commitment
As of December 31, 2019 and 2020, no
capital commitment was expected.
Legal Proceeding
As of December 31, 2020, the Group
is not aware of any material outstanding claim and litigation against them.
10. Operating
Segment and Geographical Information
The Company uses the management approach
model for segment reporting. The management approach model is based on the way a Company’s management organizes segments within
the Group for making operating decisions and assessing performance. The Group does not allocate any assets and liabilities to the three
geographic segments as management does not use the information to measure the performance of the reportable segments.
(i) The
location of the Group’s identifiable assets other than acquired intangible asset and liabilities by business operations from continuing
operations are as follows:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Identifiable assets
|
|
|
|
|
|
|
|
|
|
Hong Kong
|
|
|
184,061
|
|
|
|
181,561
|
|
|
United States
|
|
|
3,646
|
|
|
|
3,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,707
|
|
|
|
185,207
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable liabilities
|
|
|
|
|
|
|
|
|
|
Hong Kong
|
|
|
10,748
|
|
|
|
11,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,748
|
|
|
|
11,755
|
|
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
10. Operating
Segment and Geographical Information (Continued)
(ii) Reconciliations of reportable
segment assets and liabilities from continuing operations:
|
|
|
Year ended
December 31
|
|
|
Year ended
December 31
|
|
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
187,284
|
|
|
|
185,147
|
|
|
Non-current financial assets
|
|
|
423
|
|
|
|
60
|
|
|
Consolidated total assets before intangible asset
|
|
|
187,707
|
|
|
|
185,207
|
|
|
Intangible asset
|
|
|
438
|
|
|
|
438
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total assets
|
|
|
188,145
|
|
|
|
185,645
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Liabilities excluding tax liabilities
|
|
|
1,341
|
|
|
|
1,569
|
|
|
Tax liabilities
|
|
|
9,407
|
|
|
|
10,186
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total liabilities
|
|
|
10,748
|
|
|
|
11,755
|
|
11. Cash
dividend
On March 29, 2018, the Company approved
and declared a final cash dividend of US$1.50 per ordinary share on its total 12,938,128 outstanding shares as of the close of trading
on April 12, 2018, resulting in payments totaling US$19,407,192 to shareholders. Such dividend was recorded as a reduction to retained
earnings at the declaration date.
On August 17, 2018, the Company approved
and declared a special cash dividend of US$2.50 per ordinary share on its total 12,938,128 outstanding shares as of the close of trading
on August 31, 2018, resulting in payments totaling US$32,345,320 to shareholders. Such dividend was recorded as a reduction to retained
earnings at the declaration date.
On June 7, 2019, the Company approved
and declared a special cash dividend of US$2.50 per ordinary share on its total 12,938,128 outstanding shares as of the close of trading
on June 21, 2019, resulting in payments totaling US$32,345,320 to shareholders. Such dividend was recorded as a reduction to retained
earnings at the declaration date.
On November 21 2019, the Company approved
and declared a special cash dividend of US$1.60 per ordinary share on its total 12,938,128 outstanding shares as of the close of trading
on December 5, 2019, resulting in payments totaling US$20,701,005 to shareholders. Such dividend was recorded as a reduction to retained
earnings at the declaration date.
12. Subsequent
Events
The Company has evaluated all other
subsequent events through April 29, 2021, the date these consolidated financial statements were issued, and determined that there were
no other subsequent events or transaction, apart from the above described events, that required recognition or disclosures in the financial
statements.
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
13. Condensed financial
information of Plastec Technologies, Ltd.
The condensed financial statements
of Plastec Technologies, Ltd. have been prepared in accordance with accounting principles generally accepted in the United States of America.
Balance Sheets
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
152,340
|
|
|
|
149,529
|
|
|
Prepaid expenses and other receivables
|
|
|
468
|
|
|
|
1,130
|
|
|
Total current assets
|
|
|
152,808
|
|
|
|
150,659
|
|
|
Investment in subsidiaries
|
|
|
-
|
|
|
|
-
|
|
|
Total assets
|
|
|
152,808
|
|
|
|
150,659
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accrued liabilities
|
|
|
1,257
|
|
|
|
1,415
|
|
|
Amount due to subsidiary
|
|
|
18,650
|
|
|
|
18,650
|
|
|
Tax payable
|
|
|
7,874
|
|
|
|
8,506
|
|
|
Total current liabilities
|
|
|
27,781
|
|
|
|
28,571
|
|
|
NET CURRENT ASSETS
|
|
|
125,027
|
|
|
|
122,088
|
|
|
TOTAL ASSETS AND LIABILITIES
|
|
|
125,027
|
|
|
|
122,088
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Ordinary shares (US$0.001 par value; 100,000,000 authorized, 12,938,128 and 12,938,128 shares issued and outstanding as of December 31, 2019 and 2020, respectively)
|
|
|
101
|
|
|
|
101
|
|
|
Retained earnings
|
|
|
124,926
|
|
|
|
121,987
|
|
|
Total shareholders’ equity
|
|
|
125,027
|
|
|
|
122,088
|
|
Statements of
operations and comprehensive income
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Revenues
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Other income
|
|
|
16,573
|
|
|
|
6,192
|
|
|
|
967
|
|
|
Gain on disposal of a subsidiary
|
|
|
165,506
|
|
|
|
-
|
|
|
|
-
|
|
|
Administrative expenses
|
|
|
(3,564
|
)
|
|
|
(14,507
|
)
|
|
|
(3,274
|
)
|
|
Income/(loss) before income tax expense
|
|
|
178,515
|
|
|
|
(8,315
|
)
|
|
|
(2,307
|
)
|
|
Income tax expense
|
|
|
(4,155
|
)
|
|
|
(591
|
)
|
|
|
(632
|
)
|
|
Total comprehensive income/(loss)
|
|
|
174,360
|
|
|
|
(8,906
|
)
|
|
|
(2,939
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLASTEC TECHNOLOGIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Hong Kong dollars in thousands, except number
of shares, per share data and unless otherwise stated)
13. Condensed
financial information of Plastec Technologies, Ltd. – Continued
Statements
of cash flows
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
|
HK$
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
|
|
174,360
|
|
|
|
(8,906
|
)
|
|
|
(2,939
|
)
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of a subsidiary
|
|
|
(165,506
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Change in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
312
|
|
|
|
273
|
|
|
|
(662
|
)
|
|
Accrued liabilities
|
|
|
(237
|
)
|
|
|
541
|
|
|
|
158
|
|
|
Income tax payable
|
|
|
4,155
|
|
|
|
591
|
|
|
|
632
|
|
|
Net cash provided by/(used in) operating activities
|
|
|
13,084
|
|
|
|
(7,501
|
)
|
|
|
(2,811
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale proceeds of disposal of a subsidiary, net
|
|
|
141,341
|
|
|
|
165,506
|
|
|
|
-
|
|
|
Net cash provided by investing activity
|
|
|
141,341
|
|
|
|
165,506
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in amount due from subsidiaries
|
|
|
223,200
|
|
|
|
160,046
|
|
|
|
-
|
|
|
Dividend paid
|
|
|
(403,669
|
)
|
|
|
(413,761
|
)
|
|
|
-
|
|
|
Net cash used in financing activities
|
|
|
(180,469
|
)
|
|
|
(253,715
|
)
|
|
|
-
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(26,044
|
)
|
|
|
(95,710
|
)
|
|
|
(2,811
|
)
|
|
Cash and cash equivalents, beginning of year
|
|
|
274,094
|
|
|
|
248,050
|
|
|
|
152,340
|
|
|
Cash and cash equivalents, end of year
|
|
|
248,050
|
|
|
|
152,340
|
|
|
|
149,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3,019
|
|
|
|
3,042
|
|
|
|
967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration receivable
|
|
|
165,506
|
|
|
|
-
|
|
|
|
-
|
|
The list of exhibits set forth under the “Exhibit
Index” of this Form 20-F is incorporated herein by reference.
