• Sales rose 61%, from $31.0 million in FY 2010 to $49.8 million in FY 2011
• EBITDA grew 92%, from $5.0 million in FY 2010 to $9.7 million in FY 2011
• Net income increased 115%, from $1.4 million in FY 2010 to $3.0 million in FY 2011
• Adjusted net income improved 87%, from $2.3 million in FY 2010 to $4.3 million in FY 2011
• Adjusted EPS rose 61%, from $0.12 in FY 2010 to $0.19 in FY 2011
• Gross profit grew 67%, from $7.0 million in FY 2010 to $11.6 million in FY 2011

Fourth Quarter (Q4) 2011 Highlights:

• Net income increased $1.5 million, from a net loss of $0.4 million in Q4 2010 to a net gain of $1.1 million in Q4 2011

Summarized FY 2011 Results:

Summarized Q4 2011 Results:

“Our full year results in 2011 reflect the outstanding sales growth in our high purity and fine grain graphite products,” said Donghai Yu, Chief Executive Officer of China Carbon. “For the year, our sales of these products rose 211 percent and 68 percent, respectively, and both products provided us with higher margins than our other business segment, graphite electrodes. We further improved our gross margin by making advance deposits to suppliers, offsetting the rises in graphite prices, and the manufacturing of solar and mold products increased the demand for our products as high performance raw materials.”

“In 2012, we are very confident that we will boost our supply of high purity and fine grain graphite products,” continued Mr. Yu. “We recently added a new facility that doubled our production capacity from 30,000 to 60,000 tons and is specializing in the manufacture of both these products. We delivered strong results this past year, achieving tremendous growth in our overall sales, gross profit and net income on the strength of our high purity and fine grain graphite sales, and we believe that we are poised to build on our success with the installation of this facility.”

Fiscal Year 2011 & Fourth Quarter 2011 Financial Results

Revenue

In FY 2011, China Carbon had sales of $49.8 million compared to sales of $31.0 million in FY 2010, an increase of $18.8 million or 61 percent. This growth reflects the significant increase in demand China Carbon experienced for its products, which was attributable to market improvement, new customer developments and the Company adjusting its products mix to include more high purity graphite products.

China Carbon’s FY 2011 sales included $6.4 million in graphite electrodes, $21.8 million in fine grain graphite, and $20.7 million in high purity graphite. When comparing FY 2011 with FY 2010, China Carbon’s sales of its fine grain graphite improved 68 percent and its sales of its high purity graphite rose 211 percent. When further comparing FY 2011 with FY 2010, the Company’s average unit selling price increased 24 percent, with the average unit selling prices of its high purity graphite products rising 58 percent, which is a reflection of the large demand for and the rise in prices of the raw materials of such products. The manufacturing of solar and mold products also increased the demand for China Carbon’s products as raw materials. Additionally, the Company’s improved production capacity enabled it to better meet the rising demand it saw for its products in 2011.

In Q4 2011, China Carbon had sales of $12.6 million compared to sales of $13.0 million in Q4 2010, a decrease of $0.4 million.

Cost of Sales & Gross Margin

China Carbon’s cost of goods sold consists of the cost of raw materials, utilities, labor, and depreciation expenses in its manufacturing facilities. In FY 2011, China Carbon’s cost of sales was $38.3 million compared to a cost of sales of $24.1 million in FY 2010, an increase of $14.2 million or approximately 59 percent. This increase is a result of the rise in the cost of raw materials, as well as China Carbon’s growth in sales and rises in the unit selling prices of its products, in FY 2011.

China Carbon’s growth margin improved from 22.4 percent in FY 2010 to 23.2 percent in FY 2011. This increase is attributable to the Company maintaining its strategy of adjusting its products mix to meet market demand. In FY 2011, China Carbon experienced heightened demand for its high purity graphite products, which provided a higher margin than graphite electrodes. As the Company adapted its product mix to include more high purity graphite products and improved its sales of these products, this helped offset the decreased margin and unit price for fine grain products China Carbon experienced in FY 2011. The decrease in the margin for fine grain products is attributable to the shift in demand for high purity graphite electrodes. As a result of these circumstances, China Carbon’s gross profit was $11.6 million compared to a gross profit of $6.9 million in FY 2010, an improvement of $4.7 million or 67 percent.

In Q4 2011, China Carbon’s cost of sales was $9.4 million as compared to $9.7 million during Q4 2010, a decrease of $0.3 million.

EBITDA

China Carbon’s EBITDA in FY 2011 was $9.7 million compared to $5.0 million in FY 2010, an increase of $4.7 million or 92 percent. The Company’s EBITDA in Q4 2011 was $3.2 million compared to $1.3 million in Q4 2010, representing a increase of $2.9 million.

Net Income

As a result of the factors described above, in FY 2011, China Carbon’s net income was $3.0 million as compared to $1.4 million in FY 2010, an increase of $1.6 million or approximately 115 percent. In Q4 2011, China Carbon’s net income was $1.1 million as compared to a net loss of $0.4 million in Q4 2010, a $1.5 million improvement.

Business Outlook

“We believe that the future of graphite, especially when looking at it from the perspective of high-tech, high-demand applications, is very encouraging,” said Mr. Yu. “Pebble-bed nuclear reactors, lithium ion batteries and solar panels are just some of the next generation technologies that make use of graphite’s unique properties. In China, we are seeing the demand for graphite increase from the nation’s developing iron, steel, automobile, aerospace and defense industries. To better take advantage of this evolving market, we are working hard to further enhance our product line.”

“Specifically, our new plant has technologically advanced equipment capable of producing rounded fine grain electrodes with a diameter as large as 600 millimeters and ultra-high electrodes with a diameter as large as 800 millimeters,” continued Mr. Yu. “Steel plants in China have recently been upgrading their furnace facilities, resulting in substantial increases in demand for large size ultra-high power graphite electrodes. Moreover, the margin for these products is high due to the shortage of supply compared to demand. Accordingly, we are striving to produce 800 millimeter diameter ultra-high graphite electrodes, as we believe selling this product could help us further strengthen our leading position in China’s fine grain graphite market.”

Mr. Yu further commented, “In 2012, we plan to continue adjusting our product mix towards our high purity and fine grain graphite products as a way to further improve our gross profit, and we are also looking to develop isostatic graphite products, including nuclear, solar and semiconductor products, to improve our margins as well. In regards to nuclear graphite, only graphite rods with a diameter of more than 840 millimeters and a purity of more than 99.99 percent may be used in nuclear power reactors and to date, we have produced samples that meet these standards. While we look to develop nuclear graphite and other isostatic graphite products, we are also seeking to acquire and vertically integrate a local graphite mine to supplement our operations. In the meantime, we will work towards maximizing our recently expanded production capacity to better position ourselves to meet potential rises in demand for our products. While 2011 was an excellent year for us in terms of financial growth and our development as a company, we are confident that we will make further progress in 2012, and solidify our position as one of China’s premier graphite companies.”

About China Carbon Graphite Group, Inc.

China Carbon Graphite Group, through its affiliate, Xingyong Carbon Co., Ltd., manufactures graphite and carbon based products in China. The company is the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation’s top overall producers of carbon and graphite products. Fine grain graphite is widely used in smelting for colored metals and rare earth metal smelting as well as the manufacture of molds. High purity graphite is used in metallurgy, mechanical industry, aviation, electronic, atomic energy, chemical industry, food industry and a variety of other fields. In September 2007, the Company was approved and designated by the Ministry of Science & Technology as a “National Hi-tech Enterprise,” a distinction that the Company still holds. Of the more than 400 carbon graphite producers in China, China Carbon is the only non-state-owned company to receive this honor. For more information, please visit www.chinacarboninc.com.

Safe Harbor Statement

This release contains certain “forward-looking statements” relating to the business of the Company and its subsidiary companies. These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 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 the risk factors set forth in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q.

Financial Statements