Orient Paper, Inc. Reports Fourth Quarter and Full Year 2012 Results

     Orient Paper, Inc. Reports Fourth Quarter and Full Year 2012 Results

PR Newswire

BAODING, China, March 18, 2013

BAODING, China, March 18, 2013 /PRNewswire/ --Orient Paper, Inc. (NYSE MKT:
ONP) ("Orient Paper" or the "Company"), a leading manufacturer and distributor
of diversified paper products in North China, today announced audited
financial results for the fourth quarter and full year 2012 ended December 31,

Financial Highlights:

US$ million                  4Q 2012 YOY Change FY 2012 YOY Change
Revenue                      43.5    11.9%      151.1   0.3%
Corrugating medium paper     30.9    125.4%     95.8    117.7%
Offset printing paper        11.7    -49.7%     49.1    -50.1%
Digital photo paper          0.9     -52.9%     6.2     -25.0%
Gross profit                 6.7     -20.0%     27.1    -17.9%
Gross margin                 15.4%   -6.1pp     17.9%   -4.0pp
Corrugating medium paper     15.4%   -11.3pp    18.5%   -10.0pp
Offset printing paper        15.7%   -2.1pp     16.2%   -1.8pp
Digital photo paper          10.6%   -18.6pp    23.3%   -10.2pp
Loss on impairment of assets 2.8     N/A        2.8     N/A
Operating income             3.0     -60.6%     21.0    -30.3%
Net income                   2.0     -63.6%     14.7    -32.2%
EBITDA                       5.2     40.9%      29.3    -15.3%
Note: Pp represents percentage points.

Key Highlights for Fourth Quarter 2012:

  oRecord quarterly revenue of $43.5 million, driven by accelerating ramp-up
    of new 360,000 tonnes-per-year Corrugating Medium Paper ("CMP") production
    line (PM6)^1 with sales volume up by 154% YoY.
  oProfitability affected by continuing weak product prices and a $2.8
    million, one-time impairment loss due to the planned renewal of legacy
    line (PM1)^1.
  oExcluding the non-cash charge related to the impairment loss, non-GAAP
    operating income was $5.7 million, and non-GAAP net income was $4.7
  oProgress in tissue paper business expansion to capture higher value and
    high growth market

Key Highlights for Full Year 2012:

  oTotal revenue of $151.1 million driven by CMP sales volume increasing 135%
    YoY to 254,500 tonnes, of which 69% were from the new production line
    launched in December 2011.
  oExcluding the non-cash charge related to the impairment loss, non-GAAP
    operating income was $23.6 million, and non-GAAP net income was $17.3
  oCash position significantly improved to $13 million supported by strong
    cash flow from operations.
  oBoard implemented regular dividend payout after its first quarterly cash
    dividend of $0.0125 per share in the second quarter of 2012.

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of Orient Paper,
commented, "2012 has been a difficult year for the paper industry in China and
product prices have been weak for the most part. As we disclosed to the market
in previous quarters, there were also operational disruptions back in the
second and early third quarters that have all been resolved. Nevertheless, we
were able to record the highest quarterly revenue ever in the fourth quarter
for $43.5 million and also successfully began the ramp-up of our new CMP
production line PM6, which boosted our sales volume by 154% in the fourth
quarter. We will continue to accelerate this ramp up for 2013.

"As China continues to develop, we see a sustainable long term growth demand
for paper, and prospects remain bright for Orient Paper, particularly in North
China, where we have strengthened our cost-leadership position.With CMP as
our core business, we have just begun the renovation of our legacy 150,000
tonnes-per-year production line PM1 in anticipation of increased regulatory
concerns on energy efficiencies and to further upgrade the quality of our CMP
products. The renewal program will provide us with an increased annual
capacity of 250,000 tonnes for PM1 upon completion next year. As a result, the
Company has made a provision of a one-off impairment loss of US$2.8 million
for 2012 in anticipation of this renovation," continued Mr. Liu.

Mr. Liu added, "Furthermore, we are pleased that our cash position has
improved significantly, supported by strong recurring cash flows from
operations that will give us the necessary fuel to fund our business expansion
plans. In the last quarter, Orient Paper also made head-start progress in our
tissue business expansion where we are aiming to capture the growing demand in
the underpenetrated market especially here in North China."

Financial Review:

Quarter ended December 2012 Financial Results compared with quarter ended
December 2011

Changes in revenues, sales volumes, and Average Selling Prices ("ASPs") for 4Q
2012 are presented as follows:

                 Sales        YOY      Revenue         YOY      ASP   YOY
                 Volumes      Change   (US$millions) Change         Change
                 (Tonnes)                                       (US$)
Corrugating      83,769       153.6%   30.9            125.4%   369   -11.1%
Medium Paper
Offset Printing  16,823       -42.2%   11.7            -49.7%   697   -13.0%
Digital Photo    237          -49.5%   0.9             -52.9%   3,720 -6.7%


Total Revenue in the fourth quarter of 2012 was $43.5 million, increased 11.9%
from $38.9 million.

Corrugating Medium Paper ("CMP")

  oRevenue from CMP in the quarter increased 125.4% to $30.9 million,
    representing 71.0% of total revenue. The increase was a direct outcome of
    the ramp up of the new production line PM6.
  oVolumes sold during the fourth quarter were up 153.6% to 83,769 tonnes, of
    which 63,689 tonnes, or 76.0%, of total CMP sold in the fourth quarter of
    2012 were produced by PM6.
  oASP decreased 11.1% year-over-year to $369/tonne in the fourth quarter of
    2012, due to the prevailing economic slowdown in China, and the Chinese
    government's efforts to cool off domestic construction activities.

Offset Printing Paper

  oRevenue from offset printing paper in the quarter decreased 49.7% to $11.7
    million, representing 27.0% of total revenue.
  oVolumes sold during the quarter were down 42.2% to 16,823 tonnes. In the
    fourth quarter of 2011, 5,884 tonnes was sold from the trading activities,
    while none were sold in the fourth quarter of 2012, due to the suspension
    of all trading activities of offset printing paper since the first quarter
    of 2012, since the lower ASP affected trading margins severely.
  oASP decreased 13.0% year-over-year to $697/tonne in the fourth quarter of
  oThe decrease in revenue was mainly due to softening demand for printing
    paper in the North China region and lower ASP.

Digital Photo Paper

  oRevenue from digital photo paper in the quarter decreased 52.9% to $0.9
    million, representing 2.0% of total revenue.
  oVolumes sold during the quarter dropped 49.5% to 237 tonnes, resulting
    from the suspension of night-time operations due to intensifying
    restrictions from government urban planning officials and pressure from
    the residential community, owing to the increasing presence of residential
    buildings in the neighborhood.
  oASP decreased 6.7% year-over-year to $3,720/tonne in the fourth quarter of

Cost of Sales

Cost of Sales in the fourth quarter of 2012 was $36.8 million, up 20.6%,
primarily due to the increase in sales and revenue of CMP in the quarter,
while costs per tonne for CMP moved slightly up by 2.6% to $312, as prices for
the CMP raw material went up sharply by 25.3% by the end of the fourth quarter
as compared to the end of the third quarter.

Gross Profit

Gross profit in the fourth quarter of 2012 was $6.7 million, down 20.0% from
$8.4 million for the fourth quarter of 2011. The decline was mainly due to the
falling average selling prices of the offset printing paper and CMP.

Overall gross margin in the fourth quarter of 2012 was 15.4%, down from 21.5%
for the fourth quarter of 2011. Gross profit margins for CMP, offset printing
paper and digital photo paper for the fourth quarter of 2012 were 15.4%, 15.7%
and 10.6%, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") were $0.9 million for
the fourth quarter of 2012, increasedfrom $0.5 million for the fourth quarter
of 2011. The increase was mainly due to the currency exchange gain/loss
between intercompany transactions and increase in depreciation of properties
and land use rights amortization, and the increase in wages and salary in the
fourth quarter 2012.

Income from Operations & Operating Margin

Income from operations was $3.0 million for the fourth quarter of 2012, down
60.7% from $7.6 million for the fourth quarter of 2011, primarily due to
weakened demand, and a provision of a one-off impairment loss of US$2.8
million for the renovation of the CMP production line PM1. Operating margin
was subsequently lower at 6.9%, compared to 19.7% a year ago. Excluding the
one off impairment loss, operating margin was 15.7%.


Excluding the impact of interest expenses, income tax expenses, depreciation
and amortization, EBITDA, a non-GAAP measurement, was $5.2 million, down 40.9%
from $8.7 million. Excluding the one-off impairment loss, EBITDA was $8
million, (refer to Note 2 for a discussion of non-GAAP financial measures,
including the reconciliation EBITDA to net income), mainly because of the $2.8
million one-off impairment loss charge for the PM1 renovation project.

Net Income

Net income was $2.0 million, down 63.6% from $5.5 million. Basic and diluted
earnings per share for the fourth quarter of 2012 were $0.11 compared to $0.30
for the corresponding period of 2011.

Cash, Liquidity and Financial Position

The Company is now better capitalized and liquid with increased free cash flow
and solid cash flows from its operating activities compared to the financial
position at the end of 2011, with its cash position has recovered to normal
levels after the construction of the new 360,000 tonnes-per-year CMP
production line PM6.

As of December 31, 2012, cash and cash equivalents were $13.1 million,
compared to $4.2 million at the end of 2011. Working capital was $21.9 million
at the end of December 31, 2012. Short-term debt was $4.0 million, and long
term debt was $3.9 million. As of December 31, 2012, shareholders' equity
totaled $142.7 million, compared to $127.5 million at the end of 2011.

In the full year of 2012,  Orient Paper generated net cash flow from operating
activities of $22.1 million, representing an increase of 18.7%, from $18.6
million for the corresponding period of 2011. The Company incurred $14.8
million in cash expenditures for the construction of ancillary facilities of
the new PM6 production line, as well as facilities to house the new 75-tonne
boiler, and additional power substation equipment.

Recent Developments

Operation Updates

Relocation plan and proposed sale of Headquarters estate

The Company has been notified of a recent Xushui County urban redevelopment
plan mandate affecting the current site of our headquarters compound and
Digital Photo Paper facility and the neighboring area, which will be re-zoned
for residential use only. This mandate would require manufacturers, including
Orient Paper, to eventually cease all operations currently conducted within
this area.

To comply with this government mandate, the Company has initiated the process
of relocating our offices and facilities to a new site. For this purpose, we
have received a proposal from Hebei Fangsheng Real Estate Development Co. Ltd.
("Fangsheng"), a real estate development company recently formed by Mr.
Zhenyong Liu, our Chairman and Chief Executive Officer, and have entered into
negotiations concerning the potential sale of this property.

While we intend to continue negotiations with Fangsheng on an arm's length
basis, we are having the asset appraised by the independent appraisal firm
designated by the government, and it is the intention of the Audit Committee
to engage a secondindependent appraisal firm as well.

Environmental Inspection Update and First Quarter 2013 Earnings Alert

As announced earlier, the county-wide environmental inspection mandated by the
government covering a wide range of manufacturers including the Company's
production facilities, was conducted recently in early March. The inspection
proceeded smoothly for Orient Paper and the government made recommendations
for further enhancement to our environmental protection measures, which
include some improvement works to the sewage conduit. The improvement works
were started immediately and completed on March 17, and all of our production
activities have resumed as normal.

While the cost of the sewage works is estimated to be within $100,000, the
three-week suspension due to the inspections has negatively impacted our
earnings. We do not currently have an accurate estimate of the financial
impact for the first quarter of 2013, but are expecting a significant decrease
in the first quarter earnings.

Production Line Ramp Up

Orient Paper continued to ramp up its new 360,000 tonnes-per-year CMP line PM6
for the fourth quarter 2012, and the new production line has increased the
average utilization rate to 69.0%, from 52.0% in the previous quarter. Ramping
up further, the Company estimates annual production output for the new line to
reach from 245,000 to 271,000 tonnes for the year of 2013.

Renew Production Lines - Phase out old line and Rebuild new line

As announced earlier, Orient Paper will renovate its 150,000 tonnes-per-year
CMP line PM1 in anticipation of increased regulatory concerns on energy
efficiencies and to further upgrade the quality of its CMP products.
Preparation for the renovation has started in March 2013 and is expected to be
completed before the end of 2014, and during that time, production for this
line will be suspended. The Company expects that once the renovated line comes
online, it will have an increased capacity of 250,000 tonnes per year, or an
estimated annual gross revenue of approximately $71.2 million (based on our
current ASP) when utilization reaches 75%.

During this renovation, Orient Paper expects revenue impact to be limited as
the Company plans to continue to ramp up utilization of its new CMP production
line PM6.

As a result of the PM1 renovation, the Company made a provision of a one-off
impairment loss of US$2.8 million for the fiscal year ended December 31, 2012
in anticipation of this renovation.

Business Updates

Tissue paper expansion

As announced in January 2013, Orient Paper has secured the land lease for a
49.4 acres of land (approximately 200,000 square meters) in the Wei County
Economic Development Zone in Hebei for the lease payment of RMB3.6 million
(US$580,000) per annum, for its new household/tissue paper production

In addition, the Company has signed the construction and installation contract
for the first paper machine of its two household/tissue paper production
lines, each having a designed capacity of 15,000 tonnes-per-year in these
facilities. The consideration for the first tissue paper machine, designated
as PM8, under the contract is RMB31 million (US$5.0 million), funded by the
Company's cash on hand, with installation targeted for completion by the end
of the second quarter of 2014. The total estimated cost of the two tissue
paper production lines and related facilities will be approximately US$43.5
million. We estimate future annual revenue from PM8 to be $18.7 million
starting from fiscal 2015.

Fourth Quarter Dividend

In line with its earlier announced decision on a regular dividend payout, the
Company announced on December 6, 2012, another quarterly dividend of $0.0125
per share, with the record date on December 17, 2012. The dividends were paid
on December 31, 2012.

Business Outlook

While the overall economic situation has yet to see significant improvements,
the industry is expecting further consolidation and tightening of supply with
strict reinforcement of environment protection requirements by the Chinese
government. It is also widely expected that the ongoing mandatory closure of
outdated capacities by the government will be continued in 2013. Furthermore,
as there is a strong growing public demand for a clean and healthy
environment, it is expected that all levels of the Chinese governments will
elevate their reinforcement of environmental protection guidelines to protect
the quality of air and water. Although our production has been affected by
environmental inspections in the last few fiscal quarters, we place the
environmental issues at top priority and are confident that our environmental
protection measures and practices can withstand any public scrutiny.

Our gross profit margins have been squeezed by resistance over efforts to
raise paper product ASPs, as well as rising raw material costs since the
fourth quarter of 2012. However, due to the increasingly stringent
environmental policy reinforcement efforts on paper mills, particularly the
smaller operators, it is widely expected that paper supply will be noticeably
suppressed in 2013 and may help push the ASP higher. We are cautiously
optimistic about the mid-to-long term prospect of the Chinese paper market but
will closely monitor our pricing policy and continue to improve the production
efficiency in year 2013.

Looking ahead, Orient Paper will continue to focus relentlessly on business
execution: increasing the ramp up of the new production line PM6 to increase
sales volume and extract greater synergies and cost efficiencies in all
aspects of its operations, while undertaking the renewal program of its legacy
line. The Company will also speed ahead as planned with the building of its
new tissue paper machines, which will start operating its first production
line in mid-2014, while maintaining strong cash flows to support our

2013 Guidance

In view of the production disruption for the government's environment
inspection in March, the Company expects revenues to be lower for the first
quarter of 2013, compared to the corresponding period in 2012. Coupled with
the suspension of the renovated legacy line PM1 and the prevailing low ASP
rates, we believe 2013 will continue to be a challenging year in terms of
earnings growth.

Revenues for the full year are expected to be in the range of between $144
million and $159 million, gross profit to be between $17 million and $19
million, net income to be between $9 million and $10 million, and basic and
diluted earnings per share to be between $0.51 and $0.56.

Conference Call

The Company will host a conference call at 8:30 am US Eastern Time (5:30 am US
Pacific Time/8:30 pm Beijing Time) on Tuesday, March 19, 2013, to discuss its
quarterly and full year results and recent business activities.

To participate in the conference call, please dial the following number five
to ten minutes prior to the scheduled conference call time:

China:         400-120-0654
Hong Kong:     800-903-737
United States: 1-855-500-8701
International: +65-6723-9385
Passcode:      1215 2384

A replay of this conference call will be available by dialing:

China:         400-120-0932 / 800-870-0205
Hong Kong:     800-963-117
United States: 1-855-452-5696
International: +61-2-8199-0299
Passcode:      1215 2384

The replay will be archived for 14 days following the earnings announcement
until April 1, 2013. A PowerPoint presentation can be downloaded on our
website www.orientpaperinc.com.

This conference call will be broadcast live over the Internet and can be
accessed by all interested parties by clicking on
http://www.orientpaperinc.com/. Please access the link at least fifteen
minutes prior to the start of the call to register, download, and install any
necessary audio software. A replay will be archived for one year shortly after
the call by accessing the same link.

About Orient Paper, Inc.

Orient Paper, Inc. ("Orient Paper") is a leading paper manufacturer in North
China. Using recycled paper as its primary raw material, Orient Paper produces
and distributes three types of paper products namely, packaging paper
(corrugating medium paper), offset printing paper, and other paper products,
including digital photo paper, and household/tissue paper that the company is
currently expanding into.

With production operations based in Baoding in North China's Hebei Province,
Orient Paper is located strategically close to the Beijing and Tianjin region,
home to a growing base of industrial and manufacturing activities and one of
the largest markets for paper products consumption in the country.

Orient Paper's production facilities are controlled and operated by its wholly
owned subsidiary Shengde Holdings, Inc., which in turn controls and operates
Baoding Shengde Paper Co., Ltd., and Hebei Baoding Orient Paper Milling Co.,
Ltd for manufacturing digital photo, printing and packaging paper.

Founded in 1996, ONP has been listed on the NYSE MKT Board since December
2009. (Please visit http://www.orientpaperinc.com.)

Note 1: Production Facilities of Orient Paper

PM#   Paper Product          Designed Capacity Location
PM1   Corrugating medium     150,000
      paper                                    Xushui County, Baoding city,
PM2   Offset printing paper  50,000            Hebei province
PM3   Offset printing paper  40,000
PM4   Digital photo paper    2,500             ONP's Headquarters Compound
PM5   Digital photo paper    2,500**
PM6   Corrugating medium     360,000           Xushui County, Baoding city,
      paper                                    Hebei province
PM7*  Specialty paper        10,000
PM8*  Tissue paper           15,000            Economic Development Zone in
PM9*  Tissue paper           15,000            Wei County, Hebei Province
*: Paper machines under renovation, under construction, or in the planning
**: PM4 and PM5 have a total coating capacity of 2,500 tonnes per year.

Safe Harbor Statement

This announcement 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
announcement are forward-looking statements, including but not limited to,
anticipated revenues from the digital photo paper business segment; the
actions and initiatives of current and potential competitors; the Company's
ability to introduce new products; the Company's ability to implement the
planned capacity expansion of corrugate medium paper; market acceptance of new
products; general economic and business conditions; the ability to attract or
retain qualified senior management personnel and research and development
staff; and other risks detailed in the Company's filings with the Securities
and Exchange Commission. These forward-looking statements involve known and
unknown risks and uncertainties and are based on current expectations,
assumptions, estimates and projections about the companies and the industry.
The Company undertakes no obligation to update forward-looking statements to
reflect subsequent occurring events or circumstances, or to changes in its
expectations, except as may be required by law. Although the Company believes
that the expectations expressed in these forward looking statements are
reasonable, it cannot assure you that its expectations will turn out to be
correct, and investors are cautioned that actual results may differ materially
from the anticipated results.

Note 2:

Reconciliation of Net Income to EBITDA
(Amounts expressed in US$)
(in millions)
                                   For the Three Months Ended For Year Ended

                                   December 31,               December 31,
                                   2012          2011         2012    2011
Net income                         $     2.0          5.5       14.7    21.6
Add: Income tax                          0.8          1.9       5.5     7.8
Add: Net interest expense                0.2          0.2       0.9     0.7
Add: Depreciation and amortization       2.2          1.1       8.4     4.4
EBITDA                             $     5.2          8.7       29.5    34.6

DECEMBER 31, 2012 AND 2011
                                                     ThreeMonthsEnded              Year Ended
                                                     December31,                    December31,
                                                     2012            2011            2012             2011
Revenues                                             $ 43,534,781    $ 38,912,952    $ 151,116,806    $ 150,747,316
Cost of Sales                                          (36,837,424)    (30,537,977)    (124,060,559)    (117,797,241)
Gross Profit                                           6,697,357       8,374,975       27,056,247       32,950,075
Selling,generalandadministrative                    (925,840)       (476,248)       (3,360,520)      (2,517,530)
Loss on impairment of assets                           (2,762,349)     -               (2,762,349)      -
Gain/(Loss) from disposal of
                                                       46              (251,572)       45,288           (321,200)
 property, plant and equipment
Income from Operations                                 3,009,215       7,647,155       20,978,666       30,111,345
Other Income (Expense):
Interest income                                        12,951          5,132           30,674           36,437
Interest expense                                       (226,937)       (210,095)       (871,834)        (699,892)
Income before Income Taxes                             2,795,228       7,442,192       20,137,506       29,447,890
Provision for Income Taxes                             (794,117)       (1,939,159)     (5,464,843)      (7,799,226)
Net Income                                             2,001,112       5,503,033       14,672,663       21,648,664
Foreign currency translation                           386,809         687,251         884,872          4,304,334
Total Comprehensive Income                           $ 2,387,921     $ 6,190,284     $ 15,557,535     $ 25,952,998
Earnings Per Share:
BasicandFullyDilutedEarnings                     $ 0.11          $ 0.30          $ 0.79           $ 1.18
 per Share
Outstanding -BasicandFullyDiluted                  18,459,775      18,350,186      18,456,781       18,349,332

                                                  December31,   December31,
                                                  2012           2011
Current Assets
Cash and cash equivalents                         $ 13,140,288   $ 4,165,446
Restricted cash                                     1,585,138      -
Accounts receivable (net of allowance for
 doubtful accounts of $57,643 and $76,752        2,836,335      3,820,696
 as of December 31, 2012 and 2011,
Inventories                                         15,104,101     10,007,928
Prepayments and other current assets                5,401,705      5,071,215
Total current assets                                38,067,567     23,065,285
Prepayment on property, plant and equipment         1,445,645      7,241,472
Property, Plant, and Equipment, net                 122,391,456    114,651,107
Deferred tax asset                                  941,646        -
Total Assets                                      $ 162,846,324  $ 144,957,864
Current Liabilities
Short-term bank loans                             $ 3,962,844    $ 2,833,619
Current portion of long-term debt from credit       4,168,912      -
Loan from related parties                           -              2,499,312
Accounts payable                                    1,012,906      2,766,554
Security deposit from related party                 1,075,606      -
Notes payable                                       3,170,276      -
Accrued payroll and employee benefits               292,638        308,290
Other payables and accrued liabilities              1,262,284      1,589,541
Income taxes payable                                1,255,457      1,744,253
Total current liabilities                           16,200,923     11,741,569
Loan from credit union                              1,561,361      5,690,852
Loan from related parties                           2,315,239      -
Total liabilities                                   20,077,523     17,432,421
Commitments and Contingencies
Stockholders' Equity
Common stock, 500,000,000 shares
 authorized, $0.001 par value per share,
 18,459,775 and 18,350,191 shares issued         18,460         18,350
 and outstanding as of December 31, 2012
 and 2011, respectively
Additional paid-in capital                          46,135,975     45,758,020
Statutory earnings reserve                          5,963,960      5,863,442
Accumulated other comprehensive income              12,327,439     11,442,567
Retained earnings                                   78,322,967     64,443,064
Total stockholders' equity                          142,768,801    127,525,443
Total Liabilities and Stockholders' Equity        $ 162,846,324  $ 144,957,864

                                               2012            2011
Cash Flows from Operating Activities:
Net income                                     $ 14,672,663    $ 21,648,664
Adjustments to reconcile net income to net
cash provided by
 operating activities
Depreciation and amortization                    8,382,859       4,424,531
Loss from impairment and disposition of
property, plant and                              2,717,060       321,200
(Recovery from)/allowance for bad debts         (19,631)        37,087
Stock-based expense for service received         378,065         30,369
Deferred tax                                     (941,208)       -
Changes in operating assets and liabilities:
Accounts and notes receivable                    1,029,978       (1,597,193)
Prepayments and other current assets             (295,763)       (4,803,656)
Inventories                                      (5,024,459)     (2,246,090)
Accounts payable                                 (1,771,968)     2,299,240
Notes payable                                    3,168,769       -
Accrued payroll and employee benefits            (17,306)        (39,473)
Other payables and accrued liabilities           453,548         (1,402,290)
Income taxes payable                             (500,641)       (42,340)
Net Cash Provided by Operating Activities        22,231,966      18,630,049
Cash Flows from Investing Activities:
Prepayment/deposit for purchase of property,
plant and                                        (2,759,997)     (2,298,633)
Refund of prepayment for purchase of
property, plant and                              3,112,571       -
Security deposit from related party              1,075,095
Purchases of property, plant and equipment       (13,518,955)    (25,424,280)
Proceeds from disposal of property, plant and    175,593         271,508
Net Cash Used in Investing Activities            (11,915,693)    (27,451,405)
Cash Flows from Financing Activities:
Proceeds from related party loans                1,030,097       200,000
Repayment of related party loans                 (1,230,097)     (2,091,596)
Proceeds from bank loans                         5,941,441       8,389,626
Repayments of bank loans                         (4,832,372)     (5,001,239)
Proceeds from issuing of common stock            -               -
Restricted cash                                  (1,584,384)     -
Dividend paid                                    (692,242)       -
Net Cash (Used in)/Provided by Financing         (1,367,557)     1,496,791
Effect of Exchange Rate Changes on Cash and      26,126          141,903
Cash Equivalents
Net  Increase /(Decrease) in Cash and Cash       8,974,842       (7,182,662)
Cash and Cash Equivalents - Beginning of         4,165,446       11,348,108
Cash and Cash Equivalents - End of Period      $ 13,140,288    $ 4,165,446
Supplemental Disclosure of Cash Flow
Cash paid for interest                         $ 486,278       $ 689,869
Cash paid for income taxes                     $ 6,909,690     $ 7,841,566

SOURCE Orient Paper, Inc.

Website: http://www.orientpaperinc.com
Contact: Orient Paper, Inc., +1-562-818-3817, ir@orientpaperinc.com or
Fleishman-Hillard, +852-2530-0228, ir@orientpaperinc.com
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