updated 12/2/2010 9:46:08 AM ET 2010-12-02T14:46:08

Added 6 Lateral Hydraulic Drilling ("LHD") Units During Fiscal Year 2010

Total of 8 LHD Units Serving 4 Major Oil and Gas Fields as of September 30, 2010

BEIJING, Dec. 2, 2010 (GLOBE NEWSWIRE) -- SinoTech Energy Limited ("SinoTech" or the "Company") (Nasdaq:CTE), a fast-growing provider of enhanced oil recovery ("EOR") services in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended September 30, 2010.

Fourth Quarter 2010 Financial Highlights

  • Total sales in the fourth quarter of fiscal year 2010 were US$19.8 million, an increase of 102.7% from the previous quarter
  • Gross profit margin was 80.0% in the fourth quarter of fiscal year 2010, compared with 75.3% in the previous quarter
  • Adjusted net income (Non-GAAP)(1) in the fourth quarter of 2010 was US$11.4 million, an increase of 135.7% from the previous quarter
  • Adjusted EBITDA (Non-GAAP)(1) in the fourth quarter of 2010 was US$15.8 million, an increase of 144.6% from the previous quarter

Fiscal Year 2010 Financial Highlights

  • Total sales were US$45.3 million for fiscal year 2010, an increase of 18.6% from fiscal year 2009([2])
  • Gross profit margin was 77.1%, compared to 63.8% in fiscal year 2009
  • Adjusted net income (Non-GAAP)(1) in fiscal year 2010 was US$23.8 million, an increase of 27.4% from fiscal year 2009
  • Adjusted EBITDA (Non-GAAP)(1) was US$31.9 million in fiscal year 2010, an increase of 35.7% from fiscal year 2009

Recent Business Highlights

  • The Company added two new LHD units in northern China in November 2010, bringing the total number of LHD units in operation to 10
  • The Company completed its initial public offering ("IPO") of 19,736,842 American Depositary Shares ("ADSs") on November 3, 2010, raising US$124.8 million in net proceeds to the Company; pre-IPO share count was 50,000,000 ADSs; post-IPO was 65,789,474 ADSs
  • The Company signed two contracts for LHD services during fiscal year 2010 and had signed four letters of intent ("LOI") as of November 2010

"We are pleased to report strong results for fiscal year 2010, driven by solid demand from China's oil producers for our EOR technologies and an increase in our equipment installations in China," commented Mr. Guoqiang Xin, chief executive officer of SinoTech.

SinoTech's exclusive rights to use LHD technology in China, as well as its PRC patent for molecular deposition film ("MDF") technology, position it well in China's fast growing EOR market. The Company's EOR technologies, which combine high productivity and low marginal cost per barrel of oil, offer clear advantages to oil producers in China.

"The success of our projects in the Daqing oilfield and Liaoning coalfield has served to demonstrate the advantages of our LHD technology," said Mr. Xin. "Building on this, as well as our deep industry knowledge, a reliable supply and exclusive rights to use LHD equipment in China, and a strong contract pipeline, we look forward to delivering solid results in the coming quarters."

According to analysis by Douglas-Westwood, an independent provider of business research and analysis on the global energy services sector, China currently has over 120,000 mature wells that would benefit from SinoTech's LHD technology, and over 200,000 mature wells on which its MDF solution can be applied. The Chinese government is also encouraging the adoption of EOR technologies to ensure that current output levels from existing mature oil wells can be maintained or increased.

SinoTech's recent IPO will help to ensure adequate capital and enable the Company to continue to purchase new equipment and service new contracts with new and existing customers, removing a major bottleneck to further growth.

Mr. Boxun Zhang, chief financial officer of SinoTech, noted, "With a healthy pipeline of contracts and equipment on order, we have strong visibility for the year ahead. We have entered into contracts and LOIs to cover all our existing LHD equipment and we intend to continue to increase our LHD fleet size to meet solid demand for our LHD services. In November, we added two LHD units to bring the total number to 10 units, and we expect to have 16 units by the end of fiscal year 2011 and 20 by the end of March 2012. In addition, as chemical solutions gain broader market acceptance among oil producers in China, we expect to see exciting developments in our MDF business line as well."

Financial Results for the Fourth Quarter of Fiscal Year 2010

Total sales were US$19.8 million in the fourth quarter of fiscal year 2010, an increase of 102.7% from US$9.8 million in the third quarter of fiscal year 2010, and a 113.4% increase on the corresponding period in 2009, primarily due to additional sales contributions from new LHD units added in the third and fourth quarter of fiscal year 2010 as well as increased consulting service revenues in the fourth quarter of fiscal year 2010.

Cost of sales was US$4.0 million in the fourth quarter of fiscal year 2010, a 64.2% increase from US$2.4 million in the third quarter of fiscal year 2010, and a 19.1% increase from US$3.3 million in the corresponding period in 2009. The quarter-over-quarter increase was primarily due to incremental operation costs and depreciation from newly added LHD units in the fourth quarter of fiscal year 2010.

Gross profit was US$15.9 million in the fourth quarter of fiscal year 2010, an increase of 115.3% from US$7.4 million in the third quarter of fiscal year 2010, and an increase of 165.9% from US$6.0 million in the corresponding period in 2009. Gross margin was 80.0% in the fourth quarter of fiscal year 2010, compared with 75.3% in the third quarter of fiscal year 2010, and 64.2% in the corresponding period in 2009. Improvement in margins was primarily due to the high margin contribution from consulting service revenue and improved margin of LHD business in the fourth quarter of fiscal year 2010.

(USD) Sales

Q4 FY2010
Gross Profit

Margin
Sales

Q3 FY2010
Gross Profit

Margin
LHD 10,263,743 69.4% 5,159,939 64.7%
MDF 4,858,360 88.0% 4,618,097 87.2%
Others 4,697,920 94.9% -- --
Total 19,820,023 80.0% 9,778,036 75.3%

Expenses for the fourth quarter of fiscal year 2010 were US$2.8 million compared to US$2.7 million in the previous quarter and US$1.8 million in the corresponding period in 2009. The year-over-year increase was mainly due to the increased amortization expense of intangible assets and travel expenses related to business expansion.

Adjusted operating income (Non-GAAP)(1) increased 140.9% to US$14.9 million for the fourth quarter of fiscal year 2010 compared to US$6.2 million in the third quarter of fiscal year 2010, and US$5.6 million in the corresponding period in 2009. The increase was in line with the Company's fast growing sales and effective expenses control.

Other income and expenses mainly consist of changes in fair value of warrant liabilities and effective interest on bank loans (amortization of debt discount), both of which were non-cash expense items of US$16.0 million in the fourth quarter of fiscal year 2010. The Company repaid its long-term debt in November 2010 and all the warrant holders converted their warrants into common shares at the time of IPO. The Company expects to recognize one-time charges on debt extinguishment and warrant conversion in the first quarter of fiscal year 2011. The remaining impact will be minimal going forward.

Adjusted net income (Non-GAAP)(1) in the fourth quarter of fiscal year 2010 was US$11.4 million, representing a 135.7% increase from US$4.8 million in the third quarter of fiscal year 2010.

Net loss was US$6.5 million in the fourth quarter of fiscal year 2010.

Adjusted EBITDA(Non-GAAP)(1) was US$15.8 million, representing sequential growth of 144.6% or an increase of 170.7% from the corresponding period in 2009.

As of September 30, 2010, the Company had cash and cash equivalents of US$43.8 million. Accounts receivable was US$20.1 million as of September 30, 2010, compared to US$8.6 million as of September 30, 2009.

In the fourth quarter of 2010, capital expenditures totaled US$7.5 million, primarily related to the purchase of new LHD equipment.

Financial Results for the Fiscal Year Ended September 30, 2010

Total sales were US$45.3 million in fiscal year 2010, representing an increase of 18.6% from US$38.2 million in fiscal year 2009, as a result of additional sales contributions from new LHD equipment as well as an increase in consulting service revenues.

Cost of sales was US$10.4 million in fiscal year 2010, compared to US$13.8 million in fiscal year 2009. The decrease was mainly due to the reduced direct cost for MDF as a result of carving out the low-value-added service elements to third parties in fiscal year 2010.

Gross profit was US$34.9 million in fiscal year 2010, an increase of 43.2% compared to US$24.4 million in fiscal year 2009. Gross profit margin was 77.1% in fiscal year 2010, compared to 63.8% in fiscal year 2009. The improvement in margins was mainly due to the new arrangements for the Company's MDF business and a high margin contribution from consulting service revenue in fiscal year 2010.

Expenses were US$10.8 million in fiscal year 2010, compared to US$5.9 million in fiscal year 2009. The increase was primarily due to the increased amortization of intangible assets as well as consulting and professional fees.

Adjusted operating income (Non-GAAP)(1) was US$30.4 million in fiscal year 2010, an increase of 34.3% compared to US$22.6 million in fiscal year 2009.

Operating income was US$24.1 million in fiscal year 2010, an increase of 29.9%, compared to US$18.5 million in fiscal year 2009.

Adjusted net income (Non-GAAP)(1) was US$23.8 million in fiscal year 2010, an increase of 27.4% compared to US$18.6 million in fiscal year 2009.

Net loss was US$13.7 million in fiscal year 2010, compared to net income of US$14.5 million in fiscal year 2009.

In fiscal year 2010, capital expenditures, which were primarily related to the purchase of LHD equipment, totaled US$46.9 million. Depreciation and amortization expenses totaled US$7.8 million.

Adjusted EBITDA (Non-GAAP)(1) was US$31.9 million in fiscal year 2010, representing a 35.7% increase from US$23.5 million in fiscal year 2009.

Outlook for Fiscal Year 2011

For fiscal year 2011, based on current operating and business conditions, SinoTech currently expects its total sales to be in an estimated range of US$90 million to US$95 million, representing a 98.6% to 109.7% increase from fiscal year 2010. The Company intends to add six LHD units in fiscal year 2011, bringing the total number of operational LHD units to 16 by the fiscal year end of 2011. Total capital expenditures related to the procurement of new equipment to be added in fiscal year 2011 and prepayment for additional LHD units to be delivered in 2012 is expected to be in the range of US$70 million to US$80 million.

This forecast reflects SinoTech's current and preliminary view, which is subject to change.

2010 Results Preliminary and Unaudited

The results presented in this press release are preliminary and unaudited. The Company is in the process of completing its 2010 audit, and adjustments to the results set forth in this press release may be identified as a result of this process. The Company's 2010 audited financial statements will be included in its 2010 Annual Report on Form 20-F to be filed with the U.S. Securities and Exchange Commission.

Use of Non-GAAP Financial Measures

To supplement SinoTech's consolidated financial results presented in accordance with GAAP, SinoTech uses the following measures defined as non-GAAP financial measures by the SEC: adjusted net income (Non-GAAP), adjusted operating income (Non-GAAP) and adjusted EBITDA (Non-GAAP).

Adjusted operating income (Non-GAAP) refers to operating income before amortization of intangible assets.

Adjusted net income (Non-GAAP) refers to net income before amortization of intangible assets, changes in fair value of warrant liabilities and effective interest on bank loans (amortization of discount).

Adjusted EBITDA refers to earnings before current income tax expenses, deferred income tax expenses (benefits), interest income, effective interest on bank loans (amortization of discount), bank loan interest, depreciation of equipment, amortization of intangible assets and other adjustments. Other adjustments comprise of write down in value of equipment, gain on disposal of equipment, foreign exchange gain and changes in fair value of warrant liabilities.

Adjusted net income (Non-GAAP), adjusted operating income (Non-GAAP) and adjusted EBITDA (Non-GAAP) for prior periods have been reclassified so that the presentations are consistent. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

SinoTech believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and are often used as supplemental financial measures by management and by investors, research analysts and others, to assess the Company's intrinsic operating performance and return on capital as compared to those of other companies in the industry, without regard to financing or capital structure. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning and forecasting future periods. A limitation of using adjusted EBITDA (non-GAAP) is that this non-GAAP measure fails to account for tax, interest income, bank loan interest and other non-operating cash expenses. The use of adjusted EBITDA (Non-GAAP) has certain limitations because it does not reflect all items of income and expense that affect the Company's operations. Items excluded from adjusted EBITDA (Non-GAAP) are significant components in understanding and assessing the Company's operating and financial performance. Depreciation, amortization, income taxes expenses, bank loan interest and interest income as well as changes in fair value of warrant liabilities have been and may continue to be incurred in the Company's business and are not reflected in the presentation of adjusted EBITDA (Non-GAAP). Each of these items should also be considered in the overall evaluation of the Company's results. Additionally, adjusted EBITDA (Non-GAAP) does not consider capital expenditures and other investing activities and should not be considered as a measure of the Company's liquidity. Management compensates for these limitations by reconciling this non-GAAP financial measure to the most comparable U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance. The accompanying tables have more details on the reconciliations between GAAP financial measures that are comparable to non-GAAP financial measures.

Fourth Quarter and Full Year 2010 Conference Call Information

The Company has scheduled a conference call to discuss the results in this press release at 8:30 a.m. Eastern Standard Time (EST) (9:30 p.m. Beijing/Hong Kong Time) on December 2, 2010.

The dial-in details for the live conference call are as follows:

  • International dial-in number: +1-617-213-8847
  • U.S. Toll Free:            866-203-2528
  • China Toll Free (Netcom):  10800-852-1490
  • China Toll Free (Telecom): 10800-130-0399
  • Hong Kong Toll Free:       800-963-844

Participant Passcode:       82142484

A live and archived webcast of the conference call will be available on the investors section of Sinotech's website at http://ir.sinotechenergy.com/events.cfm.

A replay of the conference call will also be available until December 10, 2010 by dialing:

  • International dial-in number:  +1-617-801-6888
  • U.S. Toll Free:  888-286-8010

Passcode: 24727584

About SinoTech Energy Limited

SinoTech Energy Limited (Nasdaq:CTE) ("SinoTech") is a fast-growing provider of enhanced oil recovery ("EOR") services in China. SinoTech provides innovative EOR services to major oil companies in China using leading technologies, including certain patented lateral hydraulic drilling ("LHD") technologies, which the Company has an exclusive right to use in China, and a molecular deposition film technology, for which the Company holds a PRC patent. SinoTech also provides technical services to coalbed methane customers using the LHD technology. For more information, please visit  http://ir.sinotechenergy.com .

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this press release are forward-looking statements, including but not limited to, SinoTech's goals and strategies, its future business development, growth of its operations, financial condition and results of operations, its ability to introduce successful new services and attract new clients, growth of the EOR services market in China and worldwide, its beliefs regarding its strengths and strategies, changes in the oil services industry in China, including changes in the policies and regulations of the PRC government governing the oil services industry, its access to current or future financing arrangements, and fluctuations in general economic and business conditions in China, and other risks and uncertainties disclosed in SinoTech's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on information available to SinoTech's management as of the date hereof and on its current expectations, assumptions, estimates and projections about SinoTech and the oil and gas industry. Actual results may differ materially from the anticipated results because of such and other risks and uncertainties. SinoTech undertakes no obligation to update forward-looking statements to reflect subsequent events or circumstances, or changes in its expectations, assumptions, estimates and projections except as may be required by law.

(1) Adjusted operating income (Non-GAAP), adjusted net income (Non-GAAP) and adjusted EBITDA (Non-GAAP) are non-GAAP measures. Adjusted operating income (Non-GAAP) refers to operating income before amortization of intangible assets. Adjusted net income (Non-GAAP) refers to net income before amortization of intangible assets, changes in fair value of warrant liabilities and effective interest on bank loans (amortization of discount). Adjusted EBITDA refers to earnings before current income tax expenses, deferred income tax expenses (benefits), interest income, bank loan interest, depreciation and amortization, changes in fair value of warrant liabilities, effective interest on bank loans (amortization of discount) and other adjustments. Other adjustments comprise of gain on disposal of equipment and foreign exchange gain. The non-GAAP measures and related reconciliations to GAAP measures are described in the accompanying sections of "Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP measures" at the end of the press release.

(2) All references to "fiscal year 2009" amounts in the press release represent the addition of the amounts for the specified line items for the period from October 1, 2008 to May 5, 2009 and the period from May 6, 2009 to September 30, 2009.

SUPERPORT LIMITED AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
 
  Successor
  September 30,

2009
September 30,

2010
ASSETS    
     
CURRENT     
Cash and cash equivalents  $ 26,170,565  $ 43,826,024
Accounts receivable  8,618,646  20,119,753
Other receivable  50,080  51,112
Prepaid expenses and deposit  14,808,502  10,178,924
   49,647,793  74,175,813
Equipment, net  13,489,808  64,286,601
Intangible assets, net  32,077,027  26,770,105
     
   $ 95,214,628  $ 165,232,519
     
LIABILITIES    
     
CURRENT    
Accounts payable  $ 1,293,701  $ --
Other payables and accrued liabilities  1,758,320  2,417,620
Loan interest payable  --  763,248
Income taxes payable   1,427,734  3,541,873
Deferred gain on disposal of equipment - current portion   121,740  17,133
Obligation under capital lease - current portion   3,986  4,395
Due to related parties  5,170,947  8,206,579
   9,776,428  14,950,848
Bank loan  --  12,082,499
Deferred gain on disposal of equipment  16,787  -- 
Obligation under capital lease  10,179  5,994
Warrant liabilities  --   69,020,000
Deferred tax liability   6,485,378  5,030,055
     
SHAREHOLDERS' EQUITY    
     
Common stock   100  100
Additional paid in capital  70,403,724  67,120,298
Accumulated other comprehensive income  3,301,824  5,487,243
Retained earnings (Accumulated losses)  5,220,208  (8,464,518)
Total equity  78,925,856  64,143,123
     
Total liabilities and equity  $ 95,214,628  $ 165,232,519
 
 
SUPERPORT LIMITED AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
 
  Successor Predecessor Successor
        Period from Period from Period from
  For the three months ended October 1, 2008 to May 6, 2009 to October 1, 2009 to
  September 30, 2009 June 30, 2010 September 30, 2010 May 5, 2009 September 30, 2009 September 30, 2010
             
Sales  $ 9,287,847  $ 9,778,036  $ 19,820,023  $ 22,942,841  $ 15,269,947  $ 45,309,674
-LHD  3,004,046  5,159,939  10,263,743  9,073,401  5,270,010  21,200,906
-MDF  6,283,801  4,618,097  4,858,360  13,869,440  9,999,937  19,410,849
-Others  --  --  4,697,920  --  --  4,697,920
             
Cost of sales  3,324,019  2,411,129  3,959,746  8,286,681  5,543,385  10,389,268
-LHD  894,573  1,821,741  3,138,058  2,795,776  1,617,882  7,098,062
-MDF  2,429,446  589,388  584,443  5,490,905  3,925,503  3,053,961
-Others  --  --  237,245  --  --  237,245
Gross profit  5,963,828  7,366,907  15,860,277  14,656,160  9,726,562  34,920,406
             
Expenses            
Accounting and auditing fees  --  146,509  325,026  184,618  --  599,382
Depreciation of equipment  5,716  7,643  9,080  17,924  9,172  34,078
Amortization of intangible assets  1,487,095  1,497,526  1,859,615  1,716,785  2,398,641  6,332,845
Consulting and professional fees  19,884  620,861  44,847  144,240  66,098  2,074,603
Office and miscellaneous  7,044  38,404  151,263  133,970  7,044  317,947
Rent and utilities  48,280  48,326  94,538  142,577  77,874  239,473
Repair and maintenance  6,744  5,101  5,704  14,910  8,512  16,740
Salaries and benefits  147,895  161,911  182,098  318,068  236,909  645,183
Travel and business promotion  117,657  161,952  166,358  142,104  230,602  587,493
   1,840,315  2,688,233  2,838,529  2,815,196  3,034,852  10,847,744
             
Operating income  4,123,513  4,678,674  13,021,748  11,840,964  6,691,710  24,072,662
             
Other income and expenses            
Gain on disposal of equipment  30,428  30,457  30,714  72,572  49,079  122,056
Interest income  57,035  64,521  61,778  33,403  88,544  238,623
Foreign exchange gain  --  270,517  259,185  --  --  445,718
Changes in fair value of warrant liabilities  --  (8,530,000)  (13,760,000)  --  --  (25,000,000)
Effective interest on bank loans  --          
(amortization of discount)  --  (2,194,970)  (2,219,091)  --  --  (6,102,499)
Bank loan interest  --  (710,839)  (725,766)  --  --  (1,983,405)
   87,463  (11,070,314)  (16,353,180)  105,975  137,623  (32,279,507)
           
Net income (loss) from operations before          
provision for income taxes   4,210,976  (6,391,640)  (3,331,432)  11,946,939  6,829,333  (8,206,845)
             
Current income tax expenses  1,310,224  1,511,975  3,374,826  3,122,780  2,144,083  7,038,894
Deferred income tax expenses (benefits)  (330,647)  (509,833)  (249,515)  (481,827)  (534,958)  (1,561,013)
             
Net income (loss) for the period   3,231,399  (7,393,782)  (6,456,743)  9,305,986  5,220,208  (13,684,726)
RECONCILIATION FROM NET INCOME TO ADJUSTED EBITDA(*)
(Expressed in U.S. dollars, Unaudited)
        Period from  Period from   Period from 
  Three months ended Three months ended Three months ended October 1, 2008 to May 6, 2009 to October 1, 2009 to
  September 30, 2009 June 30,

2010
September 30, 2010 May 5,

2009
September 30, 2009 September 30, 2010
Net income (loss) 3,231,399 (7,393,782) (6,456,743) 9,305,986 5,220,208 (13,684,726)
Income taxes expense 979,577 1,002,142 3,125,311 2,640,953 1,609,125 5,477,881
Interest (income) expense, net (57,035) 646,318 663,988 (33,403) (88,544) 1,744,782
Depreciation and amortization 1,710,486 1,778,973 2,773,519 2,219,649 2,758,917 7,840,176
Changes in fair value of warrant liabilities -- 8,530,000 13,760,000 -- -- 25,000,000
Effective interest on bank loans (amortization of discount) -- 2,194,970 2,219,091 -- -- 6,102,499
Other adjustments (30,428) (300,974) (289,899) (72,572) (49,079) (567,774)
             
Adjusted EBITDA 5,833,999 6,457,647 15,795,267 14,060,613 9,450,627 31,912,838
             
(*) Definition of adjusted EBITDA: Adjusted EBITDA refers to earnings before current income tax expenses, deferred income tax expenses (benefits), interest income, bank loan interest, depreciation and amortization, changes in fair value of warrant liabilities, effective interest on bank loans (amortization of discount) and other adjustments. Other adjustments comprise of gain on disposal of equipment and foreign exchange gain.
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES (*)
(Expressed in U.S. dollars, Unaudited)
           
Three months ended September 30, 2009
  GAAP Results Amortization of intangible assets  Changes in fair value of warrant liabilities  Effective interest on bank loans (amortization of discount) Non-GAAP Results
Operating income 4,123,513 1,487,095 -- -- 5,610,608
Operating income margin 44.4%       16.3%
           
Net income  3,231,399 1,487,095 -- -- 4,718,494
Net income margin 34.8%       50.8%
           
           
Three months ended June 30, 2010
  GAAP Results Amortization of intangible assets  Changes in fair value of warrant liabilities  Effective interest on bank loans (amortization of discount) Non-GAAP Results
Operating income 4,678,674 1,497,526 -- -- 6,176,200
Operating income margin 47.8%       63.2%
           
Net (loss) income  (7,393,782) 1,497,526 8,530,000 2,194,970 4,828,714
Net (loss) income margin  -75.6%       49.4%
           
           
Three months ended September 30, 2010
  GAAP Results Amortization of intangible assets  Changes in fair value of warrant liabilities  Effective interest on bank loans (amortization of discount) Non-GAAP Results
Operating income 13,021,748 1,859,615     14,881,363
Operating income margin 65.7%       75.1%
           
Net (loss) income (6,456,743) 1,859,615 13,760,000 2,219,091 11,381,963
Net (loss) income margin  -32.6%       57.4%
           
           
Period from October 1, 2008 to May 5, 2009
  GAAP Results Amortization of intangible assets  Changes in fair value of warrant liabilities  Effective interest on bank loans (amortization of discount) Non-GAAP Results
Operating income 11,840,964 1,716,785 -- -- 13,557,749
Operating income margin 51.6%       59.1%
           
Net income  9,305,986 1,716,785 -- -- 11,022,771
Net income margin 40.6%       48.0%
           
           
Period from May 6, 2009 to September 30, 2009
  GAAP Results Amortization of intangible assets  Changes in fair value of warrant liabilities  Effective interest on bank loans (amortization of discount) Non-GAAP Results
Operating income 6,691,710 2,398,641 -- -- 9,090,351
Operating income margin 43.8%       59.5%
           
Net income  5,220,208 2,398,641 -- -- 7,618,849
Net income margin 34.2%       49.9%
           
           
Period from October 1, 2009 to September 30, 2010
  GAAP Results Amortization of intangible assets  Changes in fair value of warrant liabilities  Effective interest on bank loans (amortization of discount) Non-GAAP Results
Operating income 24,072,662 6,332,845 -- -- 30,405,507
Operating income margin 53.1%       67.1%
           
Net (loss) income (13,684,726) 6,332,845 25,000,000 6,102,499 23,750,618
Net (loss) income margin  -30.2%       52.4%
           
(*) The adjustment is for amortizaion of intangible assets, changes in fair value of warrant liabilities and effective interest on bank loans (amortization of discount).
CONTACT:  SinoTech Energy Limited, Beijing 
          Ms. Rebecca Guo
          +86-10-8712-5567
          rebecca.guo@sinotechenergy.com

          Brunswick Group LLP
          Ms. Yue Yu
          +86-10-6566-2256
          sinotech@brunswickgroup.com

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

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