Questor Technology Inc. Announces Strong Second Quarter 2013 Financial Results

CALGARY, ALBERTA--(Marketwired - Aug. 28, 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 its financial and operating results for the three and six month periods ended June 30, 2013. The Company reported a profit of $634,176 ($0.025 per basic share) for the three months ended June 30, 2013 compared to a profit of $99,440 ($0.004 per basic share) for the same three-month period last year. Profit for the six months ended June 30, 2013 was $1,051,261 ($0.042 per basic share), 80 percent higher than profit of $586,878 ($0.024 per basic share) for the six months ended June 30, 2012.

FINANCIAL HIGHLIGHTS SUMMARY

(Stated in Canadian dollars except per share amounts)

		Three months ended June 30						Six months ended June 30
For the		2013		2012		Increase (decrease	)	2013		2012		Increase (decrease	)
Revenue		2,263,746		1,188,004		1,075,742		3,983,323		3,418,879		564,444
Gross profit(1)		1,177,440		448,598		728,842		2,067,881		1,502,298		565,583
EBITDA(1)		797,589		199,775		597,814		1,453,810		927,104		526,706
Profit and total comprehensive income		634,176		99,440		534,736		1,051,261		586,878		464,383
Cost of sales as a percent of revenue(1)		48.0	%	62.2	%	(14.2	%)	48.1	%	56.1	%	(8.0	%)
Cash generated from operations before movements in non-cash working capital(1)		879,007		178,490		700,517		1,541,412		953,475		587,937
Shares outstanding(2)
	Basic	25,076,601		24,857,370		219,231		25,042,177		24,857,370		184,807
	Diluted	25,729,800		25,253,889		475,911		25,621,734		25,179,460		442,274
Earnings per share - Basic		0.025		0.004		0.021		0.042		0.024		0.018
Earnings per share - Diluted		0.025		0.004		0.021		0.041		0.023		0.018

As at June 30	2013	2012	Increase (decrease	)
Total assets	11,086,002	8,727,857	2,358,145
Non-current liabilities	278,695	194,131	84,564

(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, 2013.
(2)	Weighted average.

Questor's Profit and total comprehensive income in the second quarter of 2013 improved over 500 percent compared to the same period of the prior year. A combination of volume and mix of incinerator sales and improved margins on those sales were the main drivers for the improved performance. In addition, expansion of the Company's supply chain reduced fabrication costs. The increases were partially offset by lower Incinerator and combustion services revenue and comparatively higher Administration expense in the quarter as well as higher Income tax expense on the Company's improved before tax earnings. Incinerator and combustion services revenue depends in the most part on timing of unit sales and the associated commissioning work and factors related to the incinerator rental income stream. Higher administration expenses were due in part to the addition of personnel to the team to assist in managing Questor's growth, in part to spending on improvements in the Company's information processing infrastructure and equipment and in part to higher business development expenditures incurred to increase the Company's profile in those markets where management believes the short and long term success will be.

The 80 percent increase to profitability in the six months ended June 30, 2013 is primarily driven by Questor's success in the second quarter of the current year. In the first quarter of 2013, Profit and total comprehensive income was down 14.5% from the same quarter in the prior year. The factors affecting results for the six month period are the same as those stated in the discussion on second quarter earnings above with the exception that incinerator rental income was lower in the six month period ended June 30, 2013 compared to the same period of 2012 due to an overall lower utilization rate for the units in the fleet.

"We continue to see the impact of our focus on growth pay off in strong, profitable results and with $0.28 per share available in cash on hand at the date of this news release, we are well positioned to take the next steps in our growth strategy," said Audrey Mascarenhas, President and Chief Executive Officer. "Our revenue in the first six months of 2013 is $564 thousand higher than the same period last year, an increase of 16.5 percent. On a comparative basis, gross profit improved by 38 percent and earnings per basic share is 75 percent higher than it was in the corresponding period of last year. We currently have confirmed incinerator sales orders of $5.5 million of which $3.2 million has been recognized in the first six months of the year.

Tough new emission standards in the United States and Europe are creating demand for Questor's clean air solutions and we are pursuing expansion of the Company's presence in those markets. We have seen growth in our Canadian sales as we support our customers in their quest for the social license to operate. The economic and operational benefits of our technology are leading to greater market penetration for our products and services," concluded Ms. Mascarenhas.

In relation to the Company's market awareness and brand recognition initiatives, Ms. Mascarenhas made a presentation called "Clearing the Air" in February 2013 as part of an Alberta Oil and Gas Mission to Poland and again in mid-May at the ACI Tight and Shale Gas Summit in Istanbul, Turkey. She also presented to senior executives at several major U.S. oil and gas companies in Houston in late April of 2013 with respect to the capabilities of the Company's incinerators/thermal oxidizers. On May 10^th, 2013 she made a presentation at the Western Energy Summit entitled "Climbing to New Heights with Clean Air Solutions". A further mission took Ms. Mascarenhas in late May of 2013 to Bahrain, Abu Dhabi, Dubai and Oman, where she attended meetings with corporate and government individuals who had expressed interest in Questor's technology. Audrey was invited to be a discussion leader on waste management where she presented Questor's clean air solutions at Society of Petroleum Engineers (SPE) workshops focused on Future Systems for Extreme Environments.

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, 2013 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 at 99.99% efficiency which ensures regulatory compliance, environmental protection, public confidence and reduced operating costs for customers. The technology creates an opportunity to utilize the heat generated from efficient combustion. 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.

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.

QUESTOR TECHNOLOGY INC.

CONDENSED STATEMENTS OF FINANCIAL POSITION

Stated in Canadian dollars

Unaudited

As at		June 30 2013	December 31 2012
ASSETS
Current assets
	Cash and cash equivalents	$ 5,725,432	$ 4,405,624
	Trade and other receivables	2,286,896	2,304,478
	Inventories	1,351,393	670,959
	Prepaid expenses and deposits	45,526	88,378
	Current tax assets	12,024	25,158
	Total current assets	9,421,271	7,494,597
Non-current assets
	Property and equipment	1,657,017	2,295,529
	Intangible assets	7,714	89,323
	Total non-current assets	1,664,731	2,303,852,
Total assets		$ 11,086,002	$ 9,798,449
LIABILITIES AND EQUITY
Current liabilities
	Trade payables, accrued liabilities and provisions	$ 747,661	$ 894,206
	Deferred revenue and deposits	85,854	2,205
	Current tax liabilities	372,245	171,907
	Total current liabilities	1,205,760	1,068,318
Non-current liabilities
	Deferred tax liabilities	79,355	97,319
	Lease inducement	199,340	152,746
	Total non-current liabilities	278,695	250,065
Total liabilities		1,484,455	1,318,383
Capital and reserves
	Issued capital	5,575,881	5,521,001
	Reserves	692,174	676,834
	Retained earnings	3,333,492	2,282,231
	Total equity	9,601,547	8,480,066
Total liabilities and equity		$ 11,086,002	$ 9,798,449

QUESTOR TECHNOLOGY INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Stated in Canadian dollars except per share data

Unaudited

		For the three months ended June 30				For the six months ended June 30
		2013		2012		2013		2012
Revenue		$ 2,263,746		$ 1,188,004		$ 3,983,323		$ 3,418,879
Cost of sales		(1,086,306	)	(739,406	)	(1,915,442	)	(1,916,581	)
Gross profit		1,177,440		448,598		2,067,881		1,502,298
Administration expenses		(497,657	)	(364,217	)	(851,207	)	(717,661	)
Net foreign exchange gains		47,437		51,749		92,434		17,336
Depreciation of property and equipment		(9,799	)	(10,463	)	(20,539	)	(20,785	)
Amortization of intangible assets		(304	)	(304	)	(609	)	(609	)
Loss on disposal of property and equipment		(347	)	(6,226	)	(347	)	(8,994	)
Other income		2,296		7,208		6,972		11,913
Profit before tax		719,066		126,345		1,294,585		783,498
Income tax (expense) income
	Current	(102,855	)	(30,389	)	(254,233	)	(204,346	)
	Deferred	17,965		3,484		10,909		7,726
Profit and comprehensive income		$ 634,176		$ 99,440		$ 1,051,261		$ 586,878
Earnings per share
	Basic	$ 0.025		$ 0.004		$ 0.042		$ 0.024
	Diluted	$ 0.025		$ 0.004		$ 0.041		$ 0.023

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, 2013	5,521,001	676,834		2,282,231	8,480,066
Profit and total comprehensive income	-	-		1,051,261	1,051,261
Recognition of share-based payments	-	37,970		-	37,970
Issue of ordinary shares under employee share option plan	54,880	(22,630	)	-	32,250
Balance at June 30, 2013	$ 5,575,881	$ 692,174		$ 3,333,492	$ 9,601,547
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

QUESTOR TECHNOLOGY INC.

CONDENSED STATEMENTS OF CASH FLOWS

Stated in Canadian dollars

Unaudited

For the six months ended June 30			2013		2012
Cash flows provided by (used in) operating activities
	Profit and total comprehensive income		$ 1,051,261		$ 586,878
	Adjustments for:
		Income tax expense	243,324		196,620
		Loss on disposal of property and equipment	347		8,994
		Depreciation of property and equipment	158,616		142,997
		Amortization of intangible assets	609		609
		Net unrealized foreign exchange gains	49,285		(13,685	)
		Expense recognized in respect of equity-settled share-based payments	37,970		30,507
		Write-downs of inventories to net realizable value	-		555
			1,541,412		953,475
	Movements in non-cash working capital		(150,108	)	2,688,931
	Cash generated provided by operations		1,391,304		3,642,406
	Income taxes paid		-		(371,549	)
Net cash provided by operating activities			1,391,304		3,270,857
Cash flows (used in) provided by investing activities
	Payments for property and equipment		(90,270	)	(408,549	)
	Proceeds from disposal of property and equipment		5,000		-
Net cash used in investing activities			(85,270	)	(408,549	)
Cash flows provided by financing activities
	Proceeds from issue of ordinary shares under employee share option plan		32,250		-
Net cash from financing activities			32,250		-
Net increase (decrease) in cash			1,338,284		2,862,308
Cash and cash equivalents at beginning of the period			4,405,624		2,166,301
Effects of exchange rate changes on the balance of cash held in foreign currencies			(18,476	)	10,829
Cash and cash equivalents at end of the period			$ 5,725,432		$ 5,039,438