Questor Technology Inc.

Questor Technology Inc.

April 30, 2007 23:04 ET

Questor Technology Inc. Announces Financial Results for the Year Ended December 31, 2006

CALGARY, ALBERTA--(CCNMatthews - April 30, 2007) - The management of Questor Technology Inc. (hereinafter the "Company" or "we") (TSX VENTURE:QST) is pleased to announce the results of its audited financial statements for the year ended December 31, 2006. The complete financial statements, including management's discussion and analysis of the results are filed on SEDAR at

Financial and Operating Highlights

(in thousands of dollars except
percentage amounts) 2006 2005 Change
Revenue 3,223 2,142 51%
EBITDA(1) 638 531 20%
Net earnings before income taxes 471 255 85%
Net earnings 1,196 347 245%
Interest 34 73 -54%
Future income tax benefit 724 92 687%
Amortization and depreciation 133 203 -34%

(1) In addition to providing earnings measures in accordance with Canadian
Generally Accepted Accounting Principles ("GAAP"), the Company
presents EBITDA as a supplemental earnings measure as it is used by
the chief operating decision makers of the Company to measure
operating profitability. EBITDA is equal to earnings before interest,
taxes, depreciation and amortization including amortization included
in direct costs. Management uses EBITDA to establish performance
benchmarks. EBITDA is a non-GAAP financial measure that does not have
any standardized meaning prescribed by GAAP, and may not be comparable
to similar measures presented by other issuers.

The Questor team delivered improved financial and operational results for the year ended December 31, 2006, continuing a five-year record of strong and consistent growth. Revenue for the year ended December 31, 2006 increased by 51% or $1,081,346 to $3,223,454 from $2,142,108 for the same period in 2005. The positive impact of the revenue growth in 2006 resulted in a 20% increase in EBITDA to $638,386 from $531,338 in 2005 and an 85% increase in net earnings before income taxes to $471,131 from $255,010 in 2005. The net earnings for the year ended December 31, 2006 was $1,195,614 compared to $347,010 for the same period in 2005, an increase of 245%. Earnings per share increased in 2006 to $0.05 from $0.01 in 2005.

Please see link below for a comparison of Revenue and EBITDA year-over-year:

A selection of financial information from the Company's audited financial statements for the last three years ended December 31, 2006, 2005, and 2004 are presented below:

Statements of Operations

(in thousands of dollars except
percentage and earning per
share amounts) 2006 Change 2005 Change 2004

Revenue 3,223 51% 2,142 20% 1,778
Direct costs 1,950 135% 830 -5% 877
Gross profit 1,273 -3% 1,312 46% 901

General and administrative 753 -16% 895 26% 711
Interest 34 -54% 73 508% 12
Net earnings before income taxes 471 85% 255 84% 139
Future income tax benefit 724 687% 92 100% -
Net earnings 1,196 245% 347 150% 139
Earnings per share
Basic 0.05 0.01 0.01
Diluted 0.05 0.01 0.01

Balance Sheets

(in thousands of dollars except
percentage amounts) 2006 Change 2005 Change 2004
Cash - -100% 177 29% 137
Total assets 3,486 36% 2,562 15% 2,238
Bank overdraft 157 100% - -% -
Total long-term financial
liabilities 57 14% 50 117% 23
Shareholders' equity 2,669 86% 1,436 34% 1,076

Overall Performance

Questor's three-year strategic business plan, adopted in early 2005 focused on five significant areas for growth: field service; international sales; waste heat recovery; expansion to other industries; and strategic alliances. The Company has made progress in each of these areas. As a result, the overall performance and operational results for the year ended December 2006 compared to 2005 significantly improved as demonstrated by the following highlights:

(i) Revenue in 2006 increased by $1,081,346 or 51% to $3,223,454 from $2,142,108 in 2005 as sales of incinerators, and rentals of incinerators and related services increased by $638,679 and $495,218, respectively, and gains on sales of rental incinerators decreased by $52,551 as fewer rental units were sold in 2006.

(ii) The revenue growth in 2006 positively affected net earnings before income taxes by $216,121 or 85% to $471,131 from $255,010 in 2005. The improved results in 2006 were due principally to a reduction of the general expenses. Direct costs increased in 2006 compared to 2005 because of the additional expenses incurred with the opening of the office in Grande Prairie in late 2005. The office however, has provided an excellent opportunity for the Company to assist the customers by providing exceptional field service and generating additional business revenue.

(iii) Net earnings were positively impacted by the recording of a $724,483 non-cash future income tax benefit for the year ended December 31, 2006 compared to $92,000 in 2005, and as a result, for the year ended December 31, 2006 net earnings were $1,195,614 compared to $347,010 for the same period in 2005. The Company estimated as at December 31, 2006, that all of its future income tax asset will more likely than not be realized due to the signing on February 6, 2007 of a US$6.6 million ($7.8 million) contract with China Petrochemical International Company Ltd. (hereinafter "SINOPEC") to supply well testing incinerators for the Puguang Gas Field development. The Company estimates that it will be in a taxable income position and have tax payable for the year ending December 31, 2007 and therefore recorded the remaining future income tax asset at December 31, 2006.


This year saw a significant shift in public concern for the environment and a need for environmental stewardship. The concerns over the health impacts of poor air quality, global warming, and climate change have resulted in a heightened focus on emissions. The public is demanding action from their governments to address air quality issues. Rigorous standards are being set in today's regulatory environment to address these issues. This has created a significant and growing market opportunity for Questor, both internationally and domestically. Flares are unable to meet the new, more demanding air quality regulations introduced in many international and U.S. jurisdictions. Questor's incinerator provides technology to our clients to ensure compliance, cost reduction, environmental protection and fostering of public confidence.

Future business prospects for the industry are difficult to predict with any degree of certainty, however, the fiscal year of 2007 has started with a continuation of the activity levels experienced in the latter half of 2006. Warm or wet weather may interfere with some projects where cold and dry conditions are a requirement for work to proceed, but weather conditions will generally only result in a delay in earning revenue as opposed to a cancellation of the work. The addition of the Grande Prairie service operation will continue to mitigate the effects of these weather-induced stoppages, as they will be able to continue servicing field burners regardless of the weather.

The Company has recently announced the signing of a $US 6.6 million ($7.8 million) contract to supply well testing incinerators to SINOPEC for the Puguang Gas Field development in 2007. This contract will be completed in the second quarter of 2007. Over the past several years, the Company has increased the number of strategic relationships with various international organizations. These relationships assisted in expanding our operations internationally. Our business development initiatives for 2007 are to further develop these relationships and generate additional international opportunities. We hope to test an incinerator in 2007 to evaluate the potential for waste heat recovery. Opportunities to expand into other industries will continue to be pursued. Questor will continue to develop strategic alliances in order to maximize our value.

The company is committed to delivering value to our shareholders and our customers. Our results are due to a team effort and I want to express my appreciation for the extraordinary efforts of the entire Questor team. We also thank our Board of Directors for their continued stewardship and guidance in our decision making. Finally, we thank you, our shareholders, for your continuing confidence in the Questor team. Questor will continue to work to earn that confidence and deliver on our strategic business plan. We are optimistic about the outlook for 2007 and look forward to sharing more successes with you throughout the coming year.

Forward-Looking Statements

This press release contains forward-looking statements under the heading "Outlook". Actual events or results may differ materially from those reflected in the Company's forward looking statements due to a number of risks, uncertainties and other factors affecting the Company's business and the exploration, development and production activities of the oil and gas and energy industries. These risks, uncertainties and others factors, include but are not limited to, fluctuations in oil and gas and energy commodity prices, changes in legislation, exchange rates, state of domestic and international economies, alternatives energy sources, levels of cash flow to the oil and gas and energy industries not be achieved, fluctuations in the level of oil and gas and energy industries capital expenditures on production and well-testing, demand for the Company's incinerator technology and services, industry competition, uncertainties as to the Company's ability to implement its business strategy, political and economic conditions, the Company's ability to attract and retain staff, and other factors many of which are beyond the control of individual companies and the industry in general. Questor disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.

2005 Management Discussion and Analysis

The 2005 MD&A has been amended because through an oversight, the original MD&A did not include a statement on the assessment of the disclosure controls and procedures. The disclosure controls operated effectively through 2005 and all material information that was required to be disclosed by the Company was, other than the lack of disclosure oversight in the original MD&A. The revised MD&A for the year ended December 31, 2005 has been filed on SEDAR at

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