Mr. Graham Kwan eports

HANWEI ENERGY SERVICES REPORTS YEAR END FISCAL 2013 FINANCIAL AND OPERATIONAL RESULTS

Hanwei Energy Services Corp. has released its financial results for the year ended March 31, 2013. All amounts are in Canadian dollars unless otherwise noted. The company's continuing focus on sales, production processes and cost controls resulted in significant improvements in revenue, gross profit margin and earnings before interest, taxes, depreciation and amortization on a year-over-year basis.

          SUMMARY OF FISCAL YEAR FINANCIAL RESULTS     
        (in thousands of Cdn $ except per-share data)
                                                                            
                                                 FY 2013 FY 2012

Revenue                                          $29,657 $27,652
Gross profit                                       9,879   8,985
EBITDA                                             4,264     533
Net income                                         2,452  (3,959)
Diluted EPS                                         0.03   (0.06)

For the year ended March 31, 2013:

• Revenue from continuing operations was $29.7-million for the fiscal year 2013 compared with $27.7-million for the fiscal year 2012. The increase of $2.0-million (or 7 per cent) was primarily due to international orders in the company's Kazakhstan market that increased from $8.3-million for the fiscal year 2012 to $17.7-million or by 113 per cent for the fiscal year 2013. This increase was a result of continuing direct sales and marketing efforts leveraging off the successful operating performance of previous pipe installations of the company. This increase in the Kazakhstan market also offset a reduction in sales from the company's China market that decreased from $18.9-million for the fiscal year 2012 to $10.7-million for the fiscal year 2013 or by 43 per cent. This decrease was primarily due to a reduction in demand from the major Chinese customers and increased competition from alternative product suppliers.
• Gross profit for the fiscal year 2013 totalled $9.9-million (or 33.3 per cent of revenue) as compared with $9.0-million (or 32.5 per cent of revenue) for the prior year. This represents a 10-per-cent increase in gross margin on a year-over-year basis in context to the aforementioned 7-per-cent increase in revenues.
• The company achieved positive earnings before interest, taxes, depreciation and amortization from continuing operations of $4.3-million (or 14 per cent of revenues) for the fiscal year 2013 as compared with $500,000 for the prior year representing a significant $3.7-million (or 700 per cent) improvement in EBITDA. This was due to additional savings and continuing control of general and administrative expenses, in addition to the aforementioned cost savings in production.
• The year-over-year increases in both gross profit margin and EBITDA, at a higher rate than the increases in year-over-year revenue, resulted in very positive flow-through of cost savings and a significant increase in net income. Net income for the fiscal year 2013 was $2.5-million, or three cents per share (including a one-time, income tax recovery of $1.6-million or two cents per share), as compared with a net loss for the prior year of $4-million (or six cents per share), and representing a positive improvement of $6.4-million.

Other highlights:

• As of March 31, 2013, the company's cash balance was approximately $5-million versus $1-million for the same date of the prior year.
• As of March 31, 2013, the company's net asset value per share for its continuing operations was 49 cents (compared with 47 cents as at March 31, 2012).
• The company is generating positive cash flows from operating activities significantly reducing its short-term loans. The total principal amount of all bank loans was $17.2-million as at March 31, 2013, representing a 69-per-cent debt to equity ratio (total debt, including amounts due to related parties, divided by total shareholders' equity) for the company. The company continues to manage its bank loans and debt facilities effectively. For comparison, the aggregate principal amount of bank loans as at March 31, 2012, was $20.8-million. The aggregate principal amount of bank loans as at March 31, 2010, was $50.8-million. Bank loans have been repaid, renewed or extended, when they have reached maturity.
• During the year ended March 31, 2012, the company executed a contract for sale of the majority of its wind power equipment inventory totalling 93.6 million renminbi ($15.3-million). To date, 75.3 million renminbi ($12.3-million) of this amount has been received by the company with the balance of approximately 18.3 million renminbi ($3.0-million) expected to be received before the end of calendar 2013.
• Subsequent to the year-end, the company had reached an agreement to sell all of the equity interest in its wholly owned subsidiary Kerui Green Energy Equipment (Tianjin) Co. Ltd. to a private Chinese company for an amount of 65 million renminbi ($10.6-million). The major asset of Hanwei Green is a manufacturing plant located in Tianjin, China, which was constructed for the production of wind blades. Hanwei has received a deposit of 1.0 million renminbi ($200,000) from the buyer in April, 2013. In addition, Hanwei shall also receive: 11 million renminbi ($1.8-million) when the transfer of the business licence of Hanwei Green is approved by regulatory authorities to reflect the new ownership; 19 million renminbi ($3.1-million) on or before Dec. 31, 2013; and 35 million renminbi ($5.7-million) within 12 months after the agreement was signed on May 27, 2013. The remaining payments are secured by certain corporate and personal guarantees.

For the three months ended March 31, 2013:

• Revenue for the fourth quarter of the fiscal year 2013 was $7.9-million as compared with $6.7-million for the same period of the prior year.
• Net income improved considerably to $1.8-million for the fourth quarter of the fiscal year 2013 as compared with a net loss of $600,000 for the same period of the prior year.
• Basic and diluted earnings per share were three cents for the fourth quarter of the fiscal year 2013 as compared with basic and diluted loss per share of one cent for the same period of the prior year.

Hanwei will host a conference call to discuss its operational and financial results for the year ended March 31, 2013. Graham Kwan, executive vice-president, and Rick Huang, chief financial officer of Hanwei, will host the call. Management invites analysts and investors to participate on the conference call.

Date:  June 19, 2013

Time:  1:30 p.m. Eastern Time

Dial-in number:  1-888-430-8709 or 1-719-325-2362

A replay of the conference call will be available on the company's website.

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