Questor Technology Inc.
TSX VENTURE : QST

Questor Technology Inc.

August 28, 2012 20:55 ET

Questor Technology Inc. Announces Second Quarter 2012 Financial Results

CALGARY, ALBERTA--(Marketwire - Aug. 28, 2012) -

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 its financial and operating results for the three and six month periods ended June 30, 2012. The Company reported a profit of $99,440 ($0.004 per basic share) for the three months ended June 30, 2012 compared to a profit of $209,002 ($0.008 per basic share) for the same three-month period last year. Profit for the six months ended June 30, 2012 was $586,878 ($0.024 per basic share) compared to a profit of $89,461 ($0.004 per basic share) for the six months ended June 30, 2011.

FINANCIAL HIGHLIGHTS SUMMARY
(Stated in Canadian dollars except per share amounts)
Three months ended June 30, 2012 Six months ended June 30, 2012
2012 2011 Increase
(decrease
) 2012 2011 Increase
(decrease
)
Revenue 1,188,004 1,206,199 (18,195 ) 3,418,879 2,104,075 1,314,804
Gross profit(1) 448,598 458,555 (9,957 ) 1,502,298 756,167 746,131
EBITDA(1) 199,775 303,411 (103,636 ) 927,104 202,935 724,169
Profit and total comprehensive income 99,440 209,002 (109,562 ) 586,878 89,461 497,417
Cost of sales as a percent of revenue(1) 62.2 % 62.0 % 0.2 % 56.1 % 64.1 % (8.0 )%
Cash generated from operations before movements in non-cash working capital(1) 178,490 193,074 (14,584 ) 953,475 148,509 804,966
Total assets 8,727,857 7,572,410 1,155,447 8,727,857 7,572,410 1,155,447
Non-current liabilities 194,131 85,240 108,891 194,131 85,240 108,891
Shares outstanding(2)
Basic 24,857,370 24,707,370 150,000 24,857,370 24,707,370 150,000
Diluted 25,253,889 24,844,360 409,529 25,179,460 24,782,243 397,217
Earnings per share - Basic 0.004 0.008 (0.004 ) 0.024 0.004 0.020
Earnings per share - Diluted 0.004 0.008 (0.004 ) 0.023 0.004 0.019

(1) Non-IFRS financial measure. Please see discussion in the Non-IFRS Financial Measures section of the Company's Management's Discussion and Analysis for the three and six month periods ended June 30, 2012.

(2) Weighted average.

The Company's operating performance in the second quarter of each year was reasonably comparable although administration expenses were lower in second quarter 2012 and net foreign exchange gains were recorded in the period compared to net foreign exchange losses in the same period of 2011. The variance was the result of a one-time recovery of fabrication costs for an incinerator order that was cancelled by the customer in second quarter 2011. In the absence of this non-recurring revenue, second quarter 2012 results are favourable relative to 2011 results for the same quarter.

The substantial increase to profitability in the first half of 2012 is due to higher revenues arising from differences in the volume and mix of incinerator sales in each period and to the stronger margins achieved in 2012. Higher utilization of the rental incinerator fleet and lower administration expenses in the first half of 2012 also contributed to the positive profit variance. Profit further benefited from the net foreign exchange gains recorded compared to the net foreign exchange losses in the same period of 2011. Partially offsetting this favourable result was higher income tax expense for the six months ended June 30, 2012 and the aforementioned non-recurring other income recorded in second quarter 2011.

"We are continuing to deliver strong, profitable results," said Audrey Mascarenhas, President and Chief Executive Officer. "Our revenue in the first six months of 2012 is $1.3 million higher than the same period last year, an increase of 62.5 per cent. On a comparative basis, gross profit has nearly doubled and earnings per basic share is six times higher than it was in the corresponding period of last year. This is particularly noteworthy because second quarter 2011 earnings reflect a $0.3 million non-recurring revenue amount. We currently have confirmed incinerator sales orders which, when combined with incinerator sales revenue achieved to date, are equivalent to the total incinerator sales revenue reported for 2011.

Tough new emission standards in the United States and Europe is creating demand for Questor's clean air solutions and we are pursuing expansion of the Company's presence in those markets. We anticipate the economic and operational benefits of our technology will lead to greater market penetration of our products and services," concluded Ms. Mascarenhas.

In relation to the Company's market awareness and brand recognition initiatives, Ms. Mascarenhas presented on the topic of "Clearing the Air" at the European Union-Canada Business Forum on Energy held during the Global Petroleum Show in Calgary, Alberta on June 13, 2012. She also participated in a Calgary Economic Development led investment mission of Calgary companies to Hong Kong in June 2012. In the coming weeks, Ms. Mascarenhas will make a presentation at the 5th International Petroleum and Petrochemical Leadership and Innovation Summit to be held in Dongying, Shandong Province, China from September 17 - 19, 2012 and at the Canadian Society for Unconventional Resources 14th Annual Unconventional Resources Conference in Calgary, Alberta on October 4, 2012. A copy of each presentation is or will be made available on the Company's website.

Questor's unaudited condensed financial statements and notes thereto and management's discussion and analysis for the three and six month periods ended June 30, 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 oil and 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.
CONDENSED STATEMENTS OF FINANCIAL POSITION
Stated in Canadian dollars
Unaudited
As at June 30
2012
December 31
2011
ASSETS
Current assets
Cash and cash equivalents $ 5,039,438 $ 2,166,301
Short-term investment - 1,007,896
Trade and other receivables 1,075,952 2,852,578
Inventories 454,397 766,028
Prepaid expenses and deposits 52,978 96,296
Current tax assets 18,929 73,341
Total current assets 6,641,694 6,962,440
Non-current assets
Property and equipment 2,077,231 2,053,972
Intangible assets 8,932 9,541
Total non-current assets 2,086,163 2,063,513
Total assets $ 8,727,857 $ 9,025,953
LIABILITIES AND EQUITY
Current liabilities
Trade payables, accrued liabilities and provisions $ 577,309 $ 1,070,989
Deferred revenue and deposits - 280,042
Current tax liabilities 16,716 196,572
Total current liabilities 594,025 1,547,603
Non-current liabilities
Deferred tax liabilities 87,209 94,935
Lease inducement 106,922 61,099
Total non-current liabilities 194,131 156,034
Total liabilities 788,156 1,703,637
Capital and reserves
Issued capital 5,458,215 5,458,215
Reserves 652,733 622,226
Retained earnings 1,828,753 1,241,875
Total equity 7,939,701 7,322,316
Total liabilities and equity $ 8,727,857 $ 9,025,953
QUESTOR TECHNOLOGY INC.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Stated in Canadian dollars except per share data
Unaudited
For the three months ended
June 30
For the six months ended
June 30
2012 2011 2012 2011
Revenue $ 1,188,004 $ 1,206,199 $ 3,418,879 $ 2,104,075
Cost of sales (739,406 ) (747,644 ) (1,916,581 ) (1,347,908 )
Gross profit 448,598 458,555 1,502,298 756,167
Administration expenses (364,217 ) (415,578 ) (717,661 ) (820,815 )
Net foreign exchange gains (losses) 51,749 (40,745 ) 17,336 (79,032 )
Depreciation of property and equipment (10,463 ) (8,148 ) (20,785 ) (11,036 )
Amortization of intangible assets (304 ) (304 ) (609 ) (609 )
Write-off of property and equipment (6,226 ) (16,845 ) (8,994 ) (18,458 )
Other income 7,208 274,644 11,913 278,361
Profit before tax 126,345 251,579 783,498 104,578
Income tax (expense) income
Current (30,389 ) (4,147 ) (204,346 ) (4,147 )
Deferred 3,484 (38,430 ) 7,726 (10,970 )
Profit and comprehensive income $ 99,440 $ 209,002 $ 586,878 $ 89,461
Earnings per share
Basic $ 0.004 $ 0.008 $ 0.024 $ 0.004
Diluted $ 0.004 $ 0.008 $ 0.023 $ 0.004
QUESTOR TECHNOLOGY INC.
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Stated in Canadian dollars
Unaudited
Issued capital Reserves Retained earnings Total equity
Balance at January 1, 2012 $ 5,458,215 $ 622,226 $ 1,241,875 $ 7,322,316
Profit and total comprehensive income - - 586,878 586,878
Recognition of share-based payments - 30,507 - 30,507
Issue of ordinary shares under employee share option plan - - - -
Balance at June 30, 2012 $ 5,458,215 $ 652,733 $ 1,828,753 $ 7,939,701
Balance at January 1, 2011 $ 5,404,966 $ 593,944 $ 51,471 $ 6,050,381
Loss and total comprehensive loss - - 89,461 89,461
Recognition of share-based payments - 31,930 - 31,930
Issue of ordinary shares under employee share option plan - - - -
Balance at June 30, 2011 $ 5,404,966 $ 625,874 $ 140,932 $ 6,171,772
QUESTOR TECHNOLOGY INC.
CONDENSED STATEMENTS OF CASH FLOWS
Stated in Canadian dollars
Unaudited
For the six months ended June 30 2012 2011
Cash flows from (used in) operating activities
Profit and total comprehensive income $ 586,878 $ 89,461
Adjustments for:
Income tax expense 196,620 15,117
Write-off of property and equipment 8,994 18,458
Depreciation of property and equipment 142,997 97,748
Amortization of intangible assets 609 609
Net unrealized foreign exchange gains (13,685 ) (105,845 )
Expense recognized in respect of equity-settled share-based payments 30,507 31,930
Write-downs of inventories to net realizable value 555 1,031
953,475 148,509
Movements in non-cash working capital 2,688,931 (738,354 )
Cash generated from (used in) operations 3,642,406 (589,845 )
Income taxes paid (371,549 ) (215,000 )
Net cash generated from (used in) operating activities 3,270,857 (804,845 )
Cash flows (used in) from investing activities
Payments for property and equipment (408,549 ) (958,786 )
Proceeds from disposal of property and equipment - 3,200
Net cash used in investing activities (408,549 ) (955,586 )
Cash flows from financing activities - -
Net increase (decrease) in cash 2,862,308 (1,760,431 )
Cash and cash equivalents at beginning of the period 2,166,301 3,995,669
Effects of exchange rate changes on the balance of cash held in foreign currencies 10,829 117,141
Cash and cash equivalents at end of the period $ 5,039,438 $ 2,352,379

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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