ProSep Inc.

ProSep Inc.

March 12, 2009 23:59 ET

ProSep reports record financial results for 2008

MONTREAL, March 12 - ProSep Inc. (TSX: PRP), dedicated to providing
process solutions to the oil and gas industry, today announced its financial
results for the three and twelve-month period ending December 31, 2008. All
amounts are reported in Canadian dollars unless otherwise stated.



Selected Highlights

Achieved record operational and financial results:
- Reported record revenues of $52 million for the year ending
December 31, 2008 compared with revenues of $6 million for the
six-month period ending December 31, 2007(1).
- Announced over $50 million(2) in new contracts during the year to
supply process equipment to large national and international oil
and gas ("O&G") producers.
- Increased sales backlog to $28 million at January 1, 2009.
- Reported first annual positive EBITDA at $3 million for the year
ending December 31, 2008, a substantial improvement from the
negative $4 million EBITDA for the six-month period ending
December 31, 2007.
- Achieved positive cash flow from operations of $0.8 million before
changes in non-cash working capital items.
- Completed a $5.1 million financing in the form of a convertible
loan and amended a $4 million unsecured debenture to provide
$0.75 million in additional liquidities and better manage foreign
exchange exposure by converting debt currency.
- Completed successful integration of Pure Group and TORR Canada and
realised over $8 million of annual cost savings.

Strengthened operations and management:
- Completed reorganization of the Company in three efficient
business units and implemented a new strategic plan:
- Opened an office in the Middle-East and hired key employees
across all locations.
- Centralized product development activities in Norway; the
world's leading O&G technology hub;
- Changed Company name from TORR Canada Inc. to ProSep Inc. to
reflect the diversified product offering and new global
operations.
- Appointed David Laidley, Chairman Emeritus of Deloitte & Touche
LLP, to the Board of Directors.
- Appointed Bruno Ducharme, Chairman and CEO of TIW Capital
Partners, to the Board of Directors.
- Named Petter Hovland, P. Eng., as President of ProPure AS and
General Manager for the European and Middle-Eastern markets.
- Named Patrice Daignault, CA, as Chief Financial Officer and
Corporate Secretary.
- Received Deloitte Technology Green 15 Award in recognition of the
quality of the Company's process solutions.
- Obtained qualification of the ProSalt from Saudi Aramco and
positioned the TORR™ and ProMix technologies in the
qualification process.

----------------------------------
(1) Corresponding period of previous year: December 31, 2007 period
represents six months of operations pursuant to change in Company
year-end from June 30 to December 31 in 2007.
(2) Sales are usually announced in USD, a total of US$41.3 million was
announced in 2008 or over $50 million CAD at average exchange rate of
$1.25 USD/CAD.


"We are proud of our 2008 results. During the year, we achieved strong
revenue growth and record financial performance. Our strategy of diversifying
our product offering and expanding our global reach has worked very well in
2008. The successful integration of Pure Group and subsequent reorganisation
has put us on the road to profitability," said Jacques L. Drouin, President
and CEO of ProSep Inc. "We are entering 2009 with a solid foundation. Our
strong sales backlog combined with a well-diversified client base, new team of
leading industry experts, expanded product offering and global sales team,
should allow us to continue delivering promising results," said Mr. Drouin.

Financial Results

As previously announced, the Company acquired Pure Group AS in October,
2007. Management believes that any comparisons with periods prior to the
acquisition may not be meaningful. On December 31, 2007, ProSep changed its
year-end from June 30 to December 31. Consequently, twelve-month operational
and financial results for the period ending December 31, 2008 are compared to
a six-month operational period. The following discusses 2008 year-end results
and fourth quarter financial highlights.

For the quarter ending December 31, 2008, ProSep reported revenues of
$14.8 million, up from $5.7 million during the corresponding quarter of 2007.
For the twelve-month period ending December 31, 2008 ProSep reported revenues
of $51.6 million, a significant increase from $5.8 million generated during
the six-month period ending December 31, 2007. Revenues came from several
contracts to supply conventional and proprietary gas, oil and water treatment
systems to large International Oil and Gas Companies as well as National Oil
and Gas Companies. ProSep's equipment has been delivered and installed on
oilfields around the world.

For the quarter ending December 31, 2008, ProSep reported gross margins
of $4.4 million or 31% of revenues compared to $0.7 million or 12% of revenues
for the corresponding quarter of 2007. Gross margins were $15.8 million or 31%
of revenues for the twelve-month period ending December 31, 2008 compared to
$0.6 million or 11% of revenues for the six-month period ending December 31,
2007. 2008 gross margins improved substantially from the six-month period of
2007, positively impacted by a more efficient business model and a new
expanded product base. A warranty provision of $2.6 million was also reversed
during the twelve-month period ending December 31, 2008 related to the
successful delivery of the seven TORR™ water treatment systems in Kuwait,
of which $1.3 million was reversed during the fourth quarter of 2008.

For the quarter ending December 31, 2008, ProSep reported EBITDA of $0.8
million or 5% of revenues compared to a negative EBITDA of $3.5 million for
the corresponding quarter of 2007. EBITDA for the twelve month period ending
December 31, 2008 was $3 million or 6% of revenues, compared to a negative
EBITDA of $4.6 million for the six-month period ending December 31, 2007.

Sales and marketing expenses were $1.9 million or 4% of revenues for the
twelve-month period ending December 31, 2008 and $0.6 million or 11% of
revenues for the six-month period ending December 31, 2007. The majority of
these expenses relates to salaries, marketing and travel activities.

Research and development expenses were $1.2 million or 2% of revenues for
the twelve-month period ending December 31, 2008 and $0.3 million or 5% of
revenues for the six-month period ending December 31, 2007. These higher
levels in 2008 reflect our acquisition of Pure Group and its important R&D
center in Bergen, Norway. These expenses consist mostly of salaries and are
dedicated to expanding the Company's product offering.

Based on the assessment of fair value of the ABCP held by the Company,
ProSep recognized during the twelve-month period ending December 31, 2008, a
charge of $1.4 million of which $0.9 million was taken during the fourth
quarter of 2008. Total impairment charges of $3.2 million were taken on this
investment since its acquisition, representing 35% of the original cost. On
January 21, 2009, The Pan-Canadian Investors Committee for Third-Party
Structured Asset-Backed Commercial Paper implemented the Asset Back Commercial
Paper ("ABCP") restructuring Plan. Pursuant to this agreement, the Company
received long-term floating rate notes against which National Bank of Canada
("NBC") has provided the Company with a long-term credit facility and a
guaranty for approximately 60% of the original ABCP value.

For the quarter ending December 31, 2008 ProSep reported net income of
$0.03 million compared to a net loss of $5 million for the fourth quarter of
2007. For the twelve month period ending December 31, 2008, the Company
reported a net loss of $1.6 million or $0.03 per share. This compares to a net
loss of $8 million or $0.15 per share for the six-month period ending December
31, 2007.

Basic and diluted earnings (loss) per share was calculated using the
weighted-average number of common shares outstanding during the period:
62,877,078 shares for the twelve-month period ending December 31, 2008 and
53,036,426 shares for the six-month period ending December 31, 2007.

At December 31, 2008, ProSep held cash and cash equivalents of $7.6
million.

"Although these results are not showing any softening of demand for our
process solutions, some independent O&G companies have recently announced
significant reductions in their capital expenditures. In order to face a
possible reduction of demand for our products, we will further strengthen our
operations. We will continue to focus on optimizing our working capital
management, balance sheet structure and cost monitoring," said Mr. Drouin. "I
believe we can continue to take advantage of market opportunities by expanding
our portfolio of products, strengthening our presence in the Middle-East and
focusing on selling value added solutions to our clients."



Selected Financial Highlights

-------------------------------------------------------------------------
Six-month
period
Year ended ended
December 31 December 31,
(000s) 2008 2007
-------------------------------------------------------------------------
Revenue $51,604 $5,785
-------------------------------------------------------------------------
Gross margin $15,870 $628
-------------------------------------------------------------------------
Gross margin percentage of sales 31% 11%
-------------------------------------------------------------------------
EBITDA $3,020 ($4,601)
-------------------------------------------------------------------------
EBITDA percentage of sales 6% n/a
-------------------------------------------------------------------------
Net loss ($1,625) ($8,075)
-------------------------------------------------------------------------
Basic and diluted loss per share ($0.03) ($0.15)
-------------------------------------------------------------------------
Weighted average number of shares
(basic and diluted) 62,877 53,036
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Working capital(1) $944 $952
-------------------------------------------------------------------------
Total Assets $69,496 $60,434
-------------------------------------------------------------------------
Long term liabilities(2) $20,695 $20,584
-------------------------------------------------------------------------
Shareholder equity $19,531 $18,672
-------------------------------------------------------------------------
(1) Excluding ABCP short term demand loan
(2) Including ABCP related National Bank loan


ProSep's complete annual audited financial statements are available on
the Company's website at www.prosepinc.com.

ProSep filed its annual audited consolidated financial statements for the
twelve month period ending December 31, 2008 and related management discussion
and analysis with securities regulatory authorities. The material will be
available through SEDAR at www.sedar.com and on the Company's website,
www.prosepinc.com.

Conference Call and Webcast Details

ProSep will host a conference call on Thursday, March 12 at 8:30 a.m.
(ET) to discuss its 2008 year-end financial results. To access the conference
call by telephone, dial 416-644-3423 or 1-800-731-5319. Please connect
approximately 15 minutes prior to the beginning of the call to ensure
participation.

A live audio webcast of the conference call will be available at
www.newswire.ca. Please connect at least 15 minutes prior to the conference
call to ensure adequate time for any software download that may be required to
join the webcast. The webcast will be archived at www.prosepinc.com for 30
days.



Note: Earnings before interest, taxes, depreciation and amortization
(EBITDA) is a non-GAAP measure and the Company defines it as earnings or
loss from operations excluding depreciation and amortization, financial
charges and income taxes.


About ProSep Inc.

ProSep Inc. is dedicated to providing process solutions to the oil and
gas industry. ProSep designs, develops, manufactures and commercializes
technologies to separate oil, water and gas generated by oil and gas
production. For more information, please visit www.prosepinc.com.

Caution concerning forward-looking statements

This press release may contain forward-looking statements, including
statements regarding the business and anticipated financial performance of
ProSep Inc.. These statements are subject to a number of risks and
uncertainties that may cause actual results to differ materially from those
contemplated by the forward-looking statements. Some of the factors that could
cause such differences include but are not limited to legislative or
regulatory developments, competition, technological change, changes in
government and economic policy, inflation and general economic conditions in
geographic areas where ProSep Inc. operates. These and other factors should be
considered carefully and undue reliance should not be placed on the
forward-looking statements. ProSep Inc. does not undertake to update any
forward-looking statements.

%SEDAR: 00009317EF

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