Keyuan Petrochemicals (PINK:KEYP)

First Quarter 2012 Results

• Sales for the first quarter ended March 31, 2012 were $183.3 million, an increase of $36.5 million, or 24.9% from the first quarter of 2011.
• Net income attributable to common shareholders was $1.6 million for the first quarter of 2012, with diluted net loss per share of $0.03 compared to net income of $4.9 million and diluted earnings per share of $0.08 in the first quarter of 2011.

"Our first three months 2012 revenues benefitted from solid customer demand and expanded production capacity," declared Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "Although our margins were negatively impacted by higher raw materials costs, with a series of initiatives on major projects and our SBS facility ramping into commercial production, I believe Keyuan's core earnings potential continues to improve."

Full Year 2012 Guidance

Management is forecasting $880 million of revenues, $30 million of net income and 760,000 MT of production for 2012. This assumes approximately $100 million to $110 million of revenue and $10 million to $11 million of net income contribution from its SBS production facility.

Updates on Internal Control

Since early 2012, the Company has implemented an overall comprehensive budget management system ("The General Rule of Budget Performance Assessment"), which is executed and controlled by the planning finance department to review and instruct all other departments. The budget control system includes evaluating a "Budget Enforcement Monthly Assessment Form" and a "Budget Enforcement Monthly Record Form" on monthly basis to greatly improve the Company's operating efficiency.

The Company began to implement a management and evaluation system for personnel position responsibility standards, training, assessment and promotion which defines the talent introduction plan and payroll multiplication plan; forms the effective incentive system and commitment system; and is designed to retain personnel and prevent talent losses.

NINGBO, China, May 16, 2012 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals Inc. (OTCQB: KEYP), ("Keyuan" or "the Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced that it filed Form 12b-25 with the Securities and Exchange Commission on May 15, 2012 to extend the filing of the Company's Form 10-Q for the three months ended March 31, 2012 within the 5-day grace period.

The Company is unable to file its Form 10-Q for the three months ended March 31, 2012 in a timely manner because the compilation, dissemination and review of the information required to be presented in the Form 10-Q has imposed time constraints on the Company that have rendered timely filing of the Form 10-Q impracticable without undue hardship and expense to the Company.

The Company expects to report revenues of approximately $183.3 million based on sales of 157,854 MT of products during the three months ended March 31, 2012.

Fourth Quarter 2011 Results

• Sales for the fourth quarter ended December 31, 2011 were $164.4 million, an increase of $6.4 million, or 4% from the fourth quarter of 2010.
• Net loss attributable to common shareholders was $0.1 million for the fourth quarter of 2011, with diluted net loss per share of $0.00 compared to net income of $6.2 million and earnings per share of $0.11 in the fourth quarter of 2010.

Our 2011 revenues benefitted from solid customer demand and expanded production capacity," declared Mr. Chungfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "Although our margins were negatively impacted by higher raw materials costs, legal and administrative expenses related to the investigation, and 44 days of production interruptions; we generated positive cash flows, which allow us to continue funding our growth initiatives. With a series of initiatives on major projects and SBS facility entering into operation, I believe Keyuan's core earnings potential continues to improve."

Full Year 2012 Guidance

Management is forecasting $880 million of revenues, $30 million of net income and 760,000 MT of production for 2012. This assumes approximately $100 to $110 million of revenue and $10 to $11 million of net income contribution from its SBS production facility.

NINGBO, China, March 5, 2012 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals Inc. (OTCQB: KEYP), ("Keyuan" or "the Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced preliminary production results for the fourth quarter and full year 2011, which exceeded previously announced revenue and production guidance of $625.0 million and 570,000 MT, respectively. The Company also announced it has commenced operation of a 35-ton boiler at its petrochemical manufacturing facility as a means to reduce electricity costs for Keyuan while having a positive impact on the local environmental.

Preliminary 2011 Results:

The Company provided preliminary, unaudited production results for the fourth quarter and full year 2011:

The Company will report fourth quarter and full year 2011 results in mid-late March 2012. Additional information will be provided once the details have been finalized.

Keyuan brought online a 35-ton boiler that converts waste gas from its petrochemicals production to produce steam, which is then used to generate electricity. The new facility reduces energy consumption and unnecessary gas emissions. Additionally, the Company can reduce its dependence on outside sources for electricity and lower its costs by approximately $4.8 million per year.

"We constantly strive to be more efficient and environmentally friendly," stated Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "As we gain more experience operating our production lines, we are finding diverse ways to increase our output and reduce our costs. This initiative coupled with the addition of higher margin products such as SBS, will help deliver greater overall margins for 2012."

NINGBO, China, July 12, 2011 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals, Inc. (Nasdaq: KEYP) ("Keyuan or the "Company"), a leading merchant manufacturer of various petrochemical products in China, announced today that the audit committee has received initial findings of its independent investigation of the Company's 2010 sales and revenue. Deloitte Financial Advisory Services ("Deloitte"), King & Wood, Pillsbury Winthrop Shaw Pittman LLP ("Pillsbury") and a petrochemicals industry expert, separately verified the accuracy of information related to the Company's 2010 sales.

On March 31, 2011, the Company's audit committee hired Pillsbury, Deloitte, and King and Wood to conduct an independent investigation of issues identified by the Company's former independent public accountant, KPMG. A team of lawyers and forensic accountants reviewed scores of documents at Keyuan's offices, visited select customer locations throughout China, and interviewed representatives of the customers, and senior officers and personnel of the Company. The independent investigators also consulted an industry expert, who has years of experience in the petrochemicals industry, to analyze Keyuan's production plants and operations.

Based on results from the independent investigation, the independent investigators made the following conclusions:

1. "…nothing has come to our attention to indicate that the Company has inappropriately accounted for the specific customer transactions we were able to test, other than the documentation issues notes above";(1)

2. "the Company-arranged interviews with selected customers supported that the customers transacted business with the Company in 2010";

3. "in the documents that we have reviewed, we have found no documents reflecting any intent by the Company to misstate revenues;"

4. "plant visit and document review by an expert in the petrochemical industry supports the finding that the plant is operating and producing petrochemicals at a quantity consistent with the revenues stated by the Company"; and

5. "interviews with management and selected Company personnel were consistent with the above findings."

"We are pleased with the results of the independent investigation," stated Mr. Chungfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals. "The findings support our assertion throughout this process that we are an excellent company on solid financial footing with a clear and focused growth strategy. Having cooperated fully with examiners and regulators during this extensive review process, we will continue to focus on completing our 2010 and 1H 2011 audits."

(1) Please refer to Form 8-K we filed on July 11, 2011 for further information

NINGBO, China, May 4, 2011 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals, Inc. announced that is has successfully completed its capacity expansion.

The Company commenced the capacity expansion project on March 19th, 2011 and completed all equipment installation and testing by the end of April. Keyuan now has approximately 720,000 metric tons (MT) of annual production design capacity, up from 550,000 MT previously.

NINGBO, China, Feb. 1, 2011 /PRNewswire-Asia/ -- Keyuan Petrochemicals, Inc. today announced that it has signed an agreement with Ningbo Institute of Technology, an affiliate of Zhejiang University, to jointly develop commercial applications for K-resin. This is one component of Keyuan's long-term strategy to invest in technology advancement.

Keyuan will work with researchers from the Ningbo Institute of Technology to research and develop synthesis technology for K-resin over the next 2 years. K-resin is a block co-polymer with excellent transparency and anti-impact properties, including flexibility and durability. It is currently used in packaging and plastic products such as medical instruments and toys. This partnership will focus on developing commercial applications for K-resin in synthetic rubber products. Keyuan and Ningbo Institute of Technology will share the rights to products and technologies developed from this cooperation.

NINGBO, China, Dec. 14, 2010 /PRNewswire/ -- Keyuan Petrochemicals, Inc. announced a plan to expand its design production capacity by approximately 30% from 550,000 to 720,000 metric tons (MT) per year.

"Our team designed our manufacturing facilities in order to balance time to market and operational efficiency," explained Chungfeng Tao, Chairman and Chief Executive Officer of Keyuan. "Initially, using our proprietary catalytic pyrolysis technology, the Company built a facility capable of producing 550,000 metric tons of petrochemicals per annum, serviced by heavy oil feedstock. Our flexible production process and design allow us to change the mix of feedstock to maximize production volumes, sales and profits. This attribute has enabled us to produce and sell approximately 482,000 MT of petrochemical products in the first three quarters of 2010, or 17% above the original 550,000 MT design capacity on an annualized basis."

Keyuan expects to spend approximately $3.8 million to upgrade the catalytic pyrolysis processing equipment used in its existing production facilities. The Company has started the design work and installation is scheduled to begin in March 2011. Once the installation and annual maintenance is completed by the end of the second quarter of 2011, Keyuan's design capacity will increase to 720,000 MT per year.

Financial Outlook for 2010

Management is expecting its full year 2010 guidance of approximately $550.0 million of revenues. This guidance assumes sales volume of 660,000 metric tons. The company's net income target is $36.3 million for the full year 2010, excluding public company expenses.

Management expects to generate approximately $650.5 million of revenue for the full year 2011. This assumes sales volume of 740,000 metric tons.

Second Quarter 2010 Financial Results:

• Revenue totaled $132.0 million. The Company had no revenue in the quarter ended June 30, 2009, having commenced production in October 2009.
  
• Net income was $4.9 million vs. a loss of (841,408).
  
• EPS was $0.11.

"Our performance during the second quarter of 2010 reflects continued strong demand for our products," stated Mr. Chunfeng Tao, founder, chairman and chief executive officer of the Company. "With a healthy backlog and a clear growth strategy, we are doubling our storage capacity from 100,000 tons to 200,000 tons, building a raw material pre-treatment facility and an asphalt production facility in order to meet growing customer demand. Once completed, our new facilities will allow us to reduce raw material costs, improve production yield and maximize profits from all stages of production. We also believe this expansion will position Keyuan to achieve significant growth in cash flows and profits and establish ourselves as a leading producer of refined petrochemical products in China."

Dilution may be in the cards:

The Company also plans to double its storage capacity to 200,000 MT by the end of 2011 and to add a new raw material pre-treatment facility and an asphalt production facility in 2012. The total cost of the expansion is projected to be approximately

• $78 million including $8 million for purchasing land.
• $20 million for facility construction.
• $40 million for new equipment.
• $10 million for working capital.

We expect to fund expansion with cash on hand, bank loans, cash flows generated by our business and potential equity financing.

"We are pleased with our performance during the first quarter of 2010, as we continued to capitalize on China's growing demand and supply imbalance for refined petrochemical products," stated Mr. Chunfeng Tao, founder, chairman and chief executive officer of the Company. "This growing demand, which has surpassed supply in recent years, has led to record contract signings and backlog for Keyuan's various products. To meet this order backlog and customer demand, we are expanding our production and storage capacity in order to deliver additional tonnage of industry leading products to our customers in China. Like our current production facilities, this expansion will include manufacturing technologies that enable us to achieve above-industry-average margins by reducing raw material costs and increasing utilization rates and yields. As a result, we believe we are well-positioned to drive

Financial Outlook for 2010 For fiscal year 2010,

• Revenue of approximately $461.3 million
• Net income of approximately $36.3 million, excluding public company expenses.
• Gross margins are expected to improve to 12%
• Net margins expected to improve to 8.0%.

This guidance assumes average annual sales volume of 550,000 MT of refined petrochemical product sales in 2010.

Financial Outlook for 2011 For fiscal year 2011

• Revenue of approximately $518.2 million
• Net income of approximately $48.2 million, excluding public company expenses.
• Gross margins are expected to improve to 13.0%, with net margins expected to improve to 9.0%. This guidance assumes average annual volume of 600,000 MT of refined petrochemical product sales in 2011