Questor Technology Inc.
TSX VENTURE : QST

Questor Technology Inc.

April 25, 2013 11:13 ET

Questor Technology Inc. Announces 2012 Financial Results

CALGARY, ALBERTA--(Marketwired - April 25, 2013) -

THIS DOCUMENT IS NOT INTENDED FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES.

Questor Technology Inc. ("Questor" or the "Company") (TSX VENTURE:QST) announced today it's financial and operating results for the year ended December 31, 2012. The Company's audited annual financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS").

The Company reported a profit of $1,040,356 ($0.042 per basic share) compared to a profit of $1,190,404 ($0.048 per basic share) for the year ended December 31, 2011. The reduction in profit was primarily due to the impact of recording a significant charge for allowance for doubtful accounts in 2012 and a one-time Other revenue item recorded in 2011. Comparatively lower administration expenses and net foreign exchange gains partially offset the impacts of those two items.

FINANCIAL HIGHLIGHTS SUMMARY
(Stated in Canadian dollars except per share amounts)
For the years ended December 31 2012 2011 Increase
(decrease
)
Revenue 6,684,475 6,093,189 591,286
Gross profit(1) 3,078,180 2,883,387 194,793
EBITDA(1) 1,723,363 1,797,030 (73,667 )
Profit and total comprehensive income 1,040,356 1,190,404 (150,048 )
Cost of sales as a percent of revenue(1) 53.9 % 52.7 % 1.2 %
Cash generated from operations before movements in non-cash working capital(1) 1,826,443 1,793,638 32,805
Total assets 9,798,449 9,025,953 772,496
Non-current liabilities 272,976 156,034 116,942
Shares outstanding(2)
Basic 24,869,255 24,746,411 122,844
Diluted 25,144,794 24,796,499 348,295
Earnings per share Basic 0.042 0.048 (0.006 )
Diluted 0.041 0.048 (0.007 )
(1) Non-IFRS financial measure. Please see discussion in the Non-IFRS Financial Measures section of Questor's Management's Discussion and Analysis for the year ended December 31, 2012.
(2) Weighted average.

"Despite the challenging times and relative slowdown in industry activity, the Questor team delivered a 10 percent increase in revenues in 2012 over 2011, generating the second highest annual revenue in the Company's history and increased gross profit by 7 percent to achieve earnings of $0.042 per share. Revenues were up in all of the business segments for the year. We continued to penetrate the U.S. market in both the sale of incinerators and use of incineration equipment on a rental basis and saw sales of units in the Canadian market jump by 51%. The anticipated fourth quarter delivery of a large capacity unit to the U.S. market was deferred by our client to the first quarter of 2013" said Audrey Mascarenhas, President and Chief Executive Officer. "In 2012 we invested in our rental fleet and inventory using cash generated from operations to continue to grow revenues into 2013."

"Questor's product quality and combustion expertise are becoming more recognized on a daily basis globally" she continued. "Our incineration technology is unique in its ability to allay public concerns regarding air quality and is capable of meeting emissions standards across a wide range of applications. Recent emissions legislation introduced in the United States and Europe are expected to continue to increase interest in our incinerators as companies look for solutions to flaring and emissions control."

To assist in this growth Questor announces that Mr. John Hankins has joined the team in the role of Vice President of Business development. John brings a wealth of experience to Questor in business development, most recently with Calgary Economic Development.

Mr. Michael West has kindly agreed to have his name stand for election as Director at Questor's Annual General Meeting on June 4, 2013. Mr. West will bring considerable expertise to our Board guiding management through the Company's anticipated growth. Michael's past roles include President and CEO of CE Franklin Ltd and Vice President Sales and Operations for National Oilwell Varco.

"We are well positioned to pursue growth opportunities in North America and Europe in the coming year," concluded Ms. Mascarenhas.

2012 OPERATIONAL HIGHLIGHTS

Relative to the Company's strategic priorities, the following selected events and achievements demonstrate Questor's progression in 2012:

  • Generated the highest annual revenue in the Company's history - $6,684,475 - aside from 2007 where a one-time significant sale of incinerators to China occurred.

  • Demonstrated the Company's technical expertise and competence in the destruction of low heat content gases through the deployment of incineration equipment and related technology to shale gas and oil sands developments and to amine, dehydration and other crude oil and natural gas processing applications. As a result, certain customers have identified Questor's technology as best practice and specify the use of the Company's solutions in their tenders to third parties for field equipment.

  • Exploited the growing demand for non-permanent applications arising from the industry's focus on shale gas opportunities investing $0.8 million in 2012 in addition to $1.4 million in 2011 in rental incinerator fleet additions and modifications including trailerization of one of the Company's largest units.

  • Delivered in first quarter 2012 the first of the Company's incineration equipment into Russia. The Russian market holds strong potential for Questor as the country focuses on opportunities to reduce waste gas flaring. An additional order for a unit is expected to be delivered in second quarter 2013 and discussions are ongoing for future sales.

  • Advanced the development and commercialization of a process to recover waste heat from incineration and convert the heat to power. The Company experimented with a variety of designs at its test facility in Grande Prairie, Alberta. The first such application was installed in third quarter 2011 and has been the basis for the development of customized designs for demonstration projects with potential customers throughout 2012.

  • Established a marketing arrangement with Global Industrial Dynamics B.V. ("GI Dynamics") to jointly market Questor's incineration equipment in Europe, Russia, China and Australia. GI Dynamics is a technology and service provider focused on industrial projects in natural gas processing, waste handling and renewable technologies. The company is headquartered in The Netherlands with offices in China and Australia. The Managing Director of GI Dynamics made a presentation regarding Questor's clean air technologies at the Gas Processors Association (GPA) Europe Annual Conference 2012 in Berlin, Germany on May 24, 2012.

  • Built market awareness and recognition for Questor's expertise in matters relating to air quality through presentations made by invitation at several events worldwide including:

    • ACAMP (Alberta Centre for Advanced MNT Products) Cleantech Technology Seminar 2012 in Calgary, Alberta on March 8, 2012 on the topic of "Clearing the Air! Safely, Economically and Efficiently".

    • CERBA (Canada Eurasia Russian Business Association) International Conference on Canada-Eurasia-Russia Cooperation on Energy Efficiency and Sustainable Development of the Regions, in Vancouver, British Columbia on March 14, 2012 on the topic of "Innovative Technologies in Energy Efficiency and Environment Protection".

    • Country Special Canada Forum on the Far North: Economic Opportunities, Environmental Challenges and Scientific Exploration held in conjunction with the IFAT ENTSORGA Trade Show and Conference in Munich, Germany on May 9, 2012 on the topic of "New Technological and Regulatory Approaches to Addressing Environmental Challenges around Northern Development in Alberta".

    • The 5th International Petroleum and Petrochemical Leadership and Innovation Summit held in Dongying, Shandong Province, China from September 17 - 19, 2012.

    • The Canadian Society for Unconventional Resources 14th Annual Unconventional Resources Conference Frac to the Future, held October 3 - 4, 2012 in Calgary, Alberta.

    • The 19th International Petroleum Environmental Conference held October 30, 31 and November 1, 2012 in Denver, Colorado, USA.

    • Unconventional Gas Aberdeen 2012 Conference in Aberdeen, Scotland on November 28, 2012.

  • Copies of these presentations are available on the Company's website.

SUBSEQUENT TO DECEMBER 31, 2012

At December 31, 2012, the Company had confirmed incinerator sales orders of $1.2 million. Since the beginning of 2013, confirmed incinerator sales orders for an additional $2.0 million have been received. Of the $3.2 million of associated revenue to be recorded in relation to these orders, $1.2 million will be recognized in first quarter 2013 and $2.0 million in second quarter 2013.

Ms. Mascarenhas conducted a webinar for the Society of Profession Engineers connecting globally with their members on the topic of "a Sustainable Solution to the Climate Change Dilemma - Eliminate the Flare".

Audrey will also make a presentation May 7th at the CSPG 2013 GeoConvention entitled "It's Not Just About Rocks" and at the Western Energy Summit May 10th discussing the key role that technology plays in Energy development.

The Company was selected for Alberta Venture's 2012 Fast Growth 50 list, an annual ranking honouring fifty of the fastest growing companies in Alberta. This was the fourth year in succession that Questor was selected.

On March 15, 2013 Questor was awarded the Alberta Export Award for Technology and Media, an award sponsored jointly by the Canadian Manufacturers and Exporters and Economic Development Canada and presented to companies who have made an outstanding contribution to the economy in Alberta through the export of products and services.

The Company announced that effective April 24, 2013, subject to regulatory approval, the grant of share options to select officers and employees entitling the purchase of up to 450,000 common shares at $0.53 per share, exercisable for a period of five years and vesting in accordance with the provisions of Questor's share option plan.

Shareholders are invited to attend the Company's Annual General Meeting to be held on Tuesday, June 4, 2013 at 3:00 p.m. MDT in the Company's Corporate Offices at 1121, 940 - 6th Avenue S.W, Calgary, Alberta. In addition to the formal business items, management will be presenting an overview of Questor's results for the financial year ended December 31, 2012 and first quarter ended March 31, 2013 and discussing the Company's strategic initiatives for 2013.

Questor's audited financial statements and notes thereto and management's discussion and analysis for the year ended December 31, 2012 will be available shortly on the Company's website at www.questortech.com and through SEDAR at www.sedar.com.

ABOUT QUESTOR TECHNOLOGY INC.

Questor is an international environmental oilfield service company founded in late 1994 and headquartered in Calgary, Alberta, Canada with a field office located in Grande Prairie, Alberta, Canada. The Company is focused on clean air technologies with activities in Canada, the United States, Europe and Asia. Questor designs and manufactures high efficiency waste gas incinerators for sale or for use on a rental basis and also provides combustion-related oilfield services. The Company's proprietary incinerator technology destroys noxious or toxic hydrocarbon gases which ensures regulatory compliance, environmental protection, public confidence and reduced operating costs for customers. Questor is recognized for its particular expertise in the combustion of sour gas (H2S). While the Company's current customer base is primarily in the crude oil and natural gas industry, this technology is applicable to other industries such as landfills, water and sewage treatment, tire recycling and agriculture.

Questor trades on the TSX Venture Exchange under the symbol "QST".

Certain information in this news release constitutes forward-looking statements. When used in this news release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to future events based on certain material factors and assumptions and are subject to certain risks and uncertainties, including without limitation, changes in market, competition, governmental or regulatory developments, general economic conditions and other factors set out in the Company's public disclosure documents. Many factors could cause the Company's actual results, performance or achievements to vary from those described in this news release, including without limitation those listed above. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release and such forward-looking statements included in, or incorporated by reference in this news release, should not be unduly relied upon. Such statements speak only as of the date of this news release. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

QUESTOR TECHNOLOGY INC.
STATEMENTS OF FINANCIAL POSITION
Stated in Canadian dollars
As at Notes December 31
2012
December 31
2011
ASSETS
Current assets
Cash and cash equivalents 4 $ 4,405,624 $ 2,166,301
Short-term investment 4 - 1,007,896
Trade and other receivables 5, 23 2,304,478 2,852,578
Inventories 6 670,959 766,028
Prepaid expenses and deposits 88,378 96,296
Current tax assets 25,158 73,341
Total current assets 7,494,597 6,962,440
Non-current assets
Property and equipment 7 2,295,529 2,053,972
Intangible assets 8 8,323 9,541
Total non-current assets 2,303,852 2,063,513
Total assets $ 9,798,449 $ 9,025,953
LIABILITIES AND EQUITY
Current liabilities
Trade payables, accrued liabilities and provisions 9 $ 894,206 $ 1,070,989
Deferred revenue and deposits 2,205 280,042
Current tax liabilities 17 171,907 196,572
Total current liabilities 1,068,318 1,547,603
Non-current liabilities
Deferred tax liabilities 17 97,319 94,935
Lease inducement 24 152,746 61,099
Total non-current liabilities 250,065 156,034
Total liabilities 1,318,383 1,703,637
Capital and reserves
Issued capital 11 5,521,001 5,458,215
Reserves 12 676,834 622,226
Retained earnings 2,282,231 1,241,875
Total equity 8,480,066 7,322,316
Total liabilities and equity $ 9,798,449 $ 9,025,953
Approved by the Board of Directors:
Gerald DeSorcy, Director Audrey Mascarenhas, Director
QUESTOR TECHNOLOGY INC.
STATEMENTS OF COMPREHENSIVE INCOME
Stated in Canadian dollars except per share data
For the years ended December 31 Notes 2012 2011
Revenue 13 $ 6,684,475 $ 6,093,189
Cost of sales 7, 15 (3,606,295 ) (3,209,802 )
Gross profit 3,078,180 2,883,387
Administration expenses 15 (1,621,055 ) (1,548,813 )
Write-off of property and equipment (27,865 ) (39,437 )
Depreciation of property and equipment 7 (41,316 ) (31,342 )
Amortization of intangible assets 8 (1,218 ) (1,218 )
Net foreign exchange gains/(losses) 10,603 (18,392 )
Other income 13 23,997 324,593
Profit before tax 1,421,326 1,568,778
Income tax expense 17 (380,970 ) (378,374 )
Profit and total comprehensive income $ 1,040,356 $ 1,190,404
Earnings per share 18
Basic $ 0.042 $ 0.048
Diluted $ 0.041 $ 0.048
QUESTOR TECHNOLOGY INC.
STATEMENTS OF CHANGES IN EQUITY
Stated in Canadian dollars
Issued capital Reserves Retained earnings Total equity
Balance at January 1, 2011 $ 5,404,966 $ 593,944 $ 51,471 $ 6,050,381
Profit and total comprehensive income - - 1,190,404 1,190,404
Recognition of share-based payments - 54,531 - 54,531
Issue of ordinary shares under employee share option plan 53,249 (26,249 ) - 27,000
Balance at January 1, 2012 $ 5,458,215 $ 622,226 $ 1,241,875 $ 7,322,316
Profit and total comprehensive income - - 1,040,356 1,040,356
Recognition of share-based payments - 79,520 - 79,520
Issue of ordinary shares under employee share option plan 62,786 (24,912 ) - 37,874
Balance at December 31, 2012 $ 5,521,001 $ 676,834 $ 2,282,231 $ 8,480,066
QUESTOR TECHNOLOGY INC.
STATEMENTS OF CASH FLOWS
Stated in Canadian dollars
For the years ended December 31 Notes 2012 2011
Cash flows from (used in) operating activities
Profit and total comprehensive income for the year $ 1,040,356 $ 1,190,404
Adjustments for:
Income tax expense 17 380,970 378,374
Write-off of property and equipment 7 27,865 39,437
Depreciation of property and equipment 7 300,819 227,034
Amortization of intangible assets 8 1,218 1,218
Net unrealized foreign exchange gains (5,775 ) (102,361 )
Expense recognized in respect of equity-settled share-based payments 11, 16 79,520 54,531
Write-downs of inventories to net realizable value 6 1,470 5,001
1,826,443 1,793,638
Movements in non-cash working capital 21 1,609,381 (2,076,211 )
Cash generated from (used in) operations 3,435,824 (282,573 )
Income taxes paid (461,059 ) (278,710 )
Net cash generated from (used in) operating activities 2,974,765 (561,283 )
Cash flows (used in) from investing activities
Payments for property and equipment (770,781 ) (1,411,014 )
Proceeds from disposal of property and equipment 7 - 3,200
Interest paid - -
Net cash used in investing activities (770,781 ) (1,407,814 )
Cash flows from financing activities
Proceeds from issue of ordinary shares under employee share option plan 11,12,16 37,874 27,000
Net cash from financing activities 37,874 27,000
Net increase (decrease) in cash 2,241,859 (1,942,097 )
Cash at beginning of the year 2,166,301 3,995,669
Effects of exchange rate changes on the balance of cash held in foreign currencies (2,535 ) 112,729
Cash at end of the year $ 4,405,624 $ 2,166,301

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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