China LianDi Reports Financial Results for First Nine Months of FY2010; Provides Guidance

BEIJING, March 5 /PRNewswire-Asia-FirstCall/ -- China LianDi Clean Technology Engineering Ltd. (OTC Bulletin Board: RMSI), ("China LianDi" or "the Company"), a leading provider of clean technology, downstream flow equipment, engineering services and software to China's leading petroleum and petrochemical companies, today announced financial results for the first nine months of fiscal year 2010, which ended December 31, 2009.

Reported revenues were $45.6 million, an increase of 456% from the $8.2 million in reported revenue for same period of fiscal year 2009. The increase resulted from higher sales of equipment, software and engineering services to the Company's established petroleum and petrochemical customers.

Cost of goods sold for the nine months ended December 31, 2009 was approximately $32.0 million, compared to $5.9 million for the nine months ended December 31, 2008. Gross profit was $13.6 million and gross margins were 29.9%, compared to $2.4 million in gross profit and gross margins of 28.6% during the first nine months of fiscal 2008.

Operating expenses for the nine months ended September 30, 2009, were approximately $1.7 million, compared to $1.6 million in the same period in 2008. Selling expenses in the first nine months of fiscal 2009 were roughly flat at $0.8 million compared to the first nine months of 2008, and general and administration expenses totaled $0.9 million and $0.8 million in the respective periods.

Net income for the first nine months of fiscal 2010 totaled approximately $11.3 million compared to $0.8 million in the equivalent period in fiscal 2009. Net margins were 24.8% and 9.7% for the first three quarters of fiscal years 2010 and 2009, respectively.

"The rapid expansion in petroleum exploration and consumption as a result of China's economic recovery and growth, has driven sales across all product segments which contributed to our record performance during the first nine months of fiscal year 2010," stated Mr. Jianzhong Zuo, Chairman, Chief Executive Officer and President of the Company. "We will utilize our recent capital raise to launch our new clean technology product while capitalizing on all growth opportunities within our core business."

Balance Sheet and Cash Flow

Cash and cash equivalents and restricted cash totaled $19.8 million on December 31, 2009 compared to $6.1 million on March 31, 2009. The Company had total stockholders' equity of $31.7 million, with total assets of $52.5 million versus total liabilities of $20.8 million on March 31, 2009. For the first nine months of fiscal year 2010, the Company generated $7.8 million in cash from operations versus utilization of $4.0 million for the same period in fiscal year 2008. Balance sheet numbers reported in this release and 8-K do not include net proceeds from an approximately $27.6 million private placement completed by the Company on March 1, 2010.

Fiscal year 2010 and 2011 Guidance

For full fiscal years 2010 and 2011, respectively, China LianDi provided revenue guidance of $70.2 million and $116.7 million, representing year-over-year growth of 124% for fiscal 2010 and 60% for 2011. The Company provided net income guidance of approximately $15.1 million for fiscal year 2010 and $25.0 million for 2011, representing year-over-year growth of approximately 113% and 66% for the respective years.

"We look forward to meeting the needs of our many valued petroleum and petrochemical customers as China increases its crude oil exploration and consumption, and as refiners are required to implement clean solutions which improve production efficiencies while helping the environment," added Mr. Zuo. "By the fall of 2010, we expect to have our first installation of our totally enclosed unheading units, which are being developed through a partnership with DeltaGuard for the delayed coking process, and are the first of their kind in China. We are constructing a manufacturing facility to assemble and customize various products in our distribution portfolio, while creating the necessary capacity to produce the new unheading units. These new facilities will be a key component to support future growth."

About China LianDi Clean Technology Engineering Ltd.

China LianDi was established in July 2004 to serve the largest Chinese petroleum and petrochemical companies. Through its four operating subsidiaries, HuaShen Trading (International) Ltd., Petrochemical Engineering Ltd., Bright Flow Control Ltd. and Beijing JianXin Petrochemical Engineering Ltd., the Company distributes a wide range of customized valves and equipment and provides associated value-added technical and integration service. The Company also develops and markets proprietary optimization software for the polymerization process. In addition, LianDi is focused on the large, rapidly growing, clean technology market for oil refineries, projected to reach over $1 billion in the next 10 years. This market is expected to benefit from favorable Chinese government policies, including tax benefits and other incentives.

Cautionary Statement Regarding Forward-Looking Information

This press release may contain certain "forward-looking statements" relating to the business of China LianDi Clean Technology Engineering Ltd., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding: the impact of the proceeds from the private placement on the Company's short term business and operations,; the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov )

    For further information, please contact:

    Company:
     Joe Levinson, Vice President of Corporate Communications
     Email: [email protected]

    Investor Relations:
    HC International, Inc.
     Ted Haberfield, Executive VP
     Tel:   +1-760-755-2716
     Email: [email protected]



    CHINA LIANDI CLEAN TECHNOLOGY ENGINEERING LIMITED
    CONSOLIDATED BALANCE SHEETS
    (AMOUNTS EXPRESSED IN US DOLLARS)

                                           As of
                                       December 31,      As of March 31,
                                           2009         2009         2008
                                         (Unaudited)
    ASSETS
    Current Assets
    Cash and cash equivalents           $18,153,762   $5,018,813   $6,550,092
    Restricted cash                       1,640,333      989,475    2,245,561
    Notes receivable, net of $nil
     allowance                            5,519,312           --           --
    Accounts receivable, net of $nil
     allowance                            8,246,985   15,054,940    2,956,785
    Deferred costs of revenue             1,282,365   15,063,883    4,231,315
    Inventories                              66,626       72,199       30,871
    Prepaid expenses and other current
     assets                              12,077,151   21,973,197    4,235,341
    Pledged trading securities                8,820       29,380      313,508

    Total current assets                 46,995,354   58,201,887   20,563,473

    Other Assets
    Property and equipment, net             133,129      145,733           --
    Intangible assets, net                5,343,136    5,774,660           --

    Total assets                        $52,471,619  $64,122,280  $20,563,473

    LIABILITIES AND SHAREHOLDERS'
     EQUITY
    Current Liabilities
    Accounts payable                        $11,922          $--     $360,828
    Deferred revenue                      2,609,356   18,938,681    5,702,911
    Other payables and accrued expenses   3,135,160    1,275,711       72,291
    Provision for income tax                660,469      660,886      621,940
    Payable for intangible                5,975,220    5,968,490           --
    Due to shareholders                   8,392,314   26,242,336    9,896,966

    Total current liabilities            20,784,441   53,086,104   16,654,936

    Total liabilities                    20,784,441   53,086,104   16,654,936

    Commitments and Contingencies (Note
     18)

    Stockholders' Equity
    Common stock, $1 par value, 50,000
     shares authorized, issued and
     outstanding                             50,000       50,000       50,000
    Additional paid-in capital            9,329,878           --           --
    Retained earnings                    22,237,570   10,934,253    3,847,269
    Accumulated other comprehensive
     income                                  69,730       51,923       11,268

    Total stockholders' equity           31,687,178   11,036,176    3,908,537

    Total liabilities and shareholders'
     equity                             $52,471,619  $64,122,280  $20,563,473




    CHINA LIANDI CLEAN TECHNOLOGY ENGINEERING LIMITED
    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    (AMOUNTS EXPRESSED IN US DOLLARS

                                Nine months ended
                                  December 31,         Year ended March 31,
                                2009         2008        2009         2008
                             (Unaudited) (Unaudited)

    NET REVENUE              $45,604,199  $8,221,549  $31,265,285  $6,849,284
    Cost of revenue          (31,986,380) (5,868,198) (21,404,779) (3,216,227)

    Gross profit              13,617,819   2,353,351    9,860,506   3,633,057

    Operating expenses:
    Selling                     (816,281)   (865,090)  (1,228,481)   (313,251)
    General and
     administrative             (863,061)   (752,782)  (1,177,820)   (263,757)
    Research and development     (40,432)    (31,223)     (42,158)         --

    Total operating expenses  (1,719,774) (1,649,095)  (2,448,459)   (577,008)

    Income from operations    11,898,045     704,256    7,412,047   3,056,049

    Other income (expenses),
     net
    Interest income               48,121      31,278       48,390      21,820
    Interest and bank
     charges                    (402,674)   (236,051)    (366,232)    (46,313)
    Exchange gains (losses),
     net                        (479,188)    317,851       37,695      14,705
    Value added tax refund       220,758          --           --          --
    Other                         19,072     (18,162)      (3,196)    (11,433)
                                (593,911)     94,916     (283,343)    (21,221)

    Income before income tax  11,304,134     799,172    7,128,704   3,034,828

    Income tax expense              (817)     (3,985)     (41,720)   (620,842)

    NET INCOME                11,303,317     795,187    7,086,984   2,413,986

    OTHER COMPREHENSIVE
     INCOME (LOSS):
    Foreign currency
     translation adjustment       17,807     (15,203)      40,655      11,269

    TOTAL COMPREHENSIVE
     INCOME                  $11,321,124    $779,984   $7,127,639  $2,425,255

    Please refer to all accompanying notes in the associated financial
    statements of the accompanying 8-K filing for more details.

SOURCE China LianDi Clean Technology Engineering Ltd.