Recon Reports Fiscal Year 2013 Financial Results

Sep 30, 2013, 06:30 ET from Recon Technology, Ltd.

BEIJING, Sept. 30, 2013 /PRNewswire-FirstCall/ -- Recon Technology, Ltd (Nasdaq: RCON), an oilfield services provider that operates primarily in the People's Republic of China (the "Company"), today announced increasing revenues and a generally improving operations in the fiscal year ended June 30, 2013.

Fiscal Year 2013 Highlights

  • Total revenues increased by RMB 1.04 million or 1.4% in FY2013 to RMB 76.59 million ($12.38 million), due to continued development of our horizontal fracturing business.
  • Gross profits increased 3.2% in FY2013 to RMB 25.05 million ($4.05 million).
  • Gross margin improved to 32.71% as compared to 32.13% in FY 2012.
  • Income before income taxes showed strong improvement from a loss of RMB 3.73 million to income of RMB 906 thousand ($146 thousand).
  • Comprehensive net income attributable to Recon in FY 2013 was approximately RMB 37 thousand ($6 thousand), an improvement of 99.03% compared to net loss attributable to Recon of RMB 3.82 million ($617 thousand) for FY 2012.
  • Diluted Earning per Share attributable to Recon for FY 2013 was RMB 0.01 ($0.002), compared to diluted losses per share of RMB 0.97 in FY 2012.
  • Adjust EBITDA in FY 2013 was RMB 4.70 million ($760 thousand), showing a substantial improvement of 518.3% over FY 2012.

Mr. Yin Shenping, CEO of Recon, noted, "Our goal this year has been to grow into an integrator of oil field and oil well services. We have built on our particular strength in fracturing services in 2013 and plan to leverage our relationships with customers who use our fractured products to build into a full-service provider for our industry. Moving forward, we plan to develop our service offerings in the different stages of the process, from exploration to production of wells."

Mr. Yin continued, "We will also expand our business into the shale gas and mine gas industries based on our final strategy, which is to be leading integrator of oilfield service and products with advanced technology. We recognize the potential market share available in China's domestic gas industry. We believe that our products are applicable not just to this industry, but also to complementary industries in China and abroad. We expect that our investment of time and effort in research and development of automation products will benefit us not only in our current industry but also in these complementary industries moving forward."

"In addition, we recently acquired a 32.33% interest of a US based oil and gas company in June 2013. We believe this investment will serve as a solid basis from which we will continue to strengthen a general mutual trust and understanding of these various global markets which will result in providing our company with an opportunity to explore exporting our services and products to the US and other markets."

Fiscal Year 2013 Results

Total revenues for the year ended June 30, 2013 were approximately RMB 76.6 million ($12.4 million), an increase of approximately RMB1.0 million or 1.4% from RMB75.5 million for the year ended June 30, 2012. This increased was mainly driven by development of our fracturing service business.

Gross profit increased to approximately RMB25.1 million ($4 million) for the year ended June 30, 2013 from approximately RMB24.3 million for the year ended June 30, 2012. Our gross profit as a percentage of revenue increased to 32.7% for the year ended June 30, 2013 from 32.1% for the same period in FY2012.

Selling and distribution expenses increased by 21.2%, from approximately RMB5.1 million for the year ended June 30, 2012 to approximately RMB6.1 million ($1 million) for the same period of FY2013. This increase was primarily due to the increased expenses related to shipping, traveling and maintenance expenses. 

General and administrative expenses decreased by 33.4%, or approximately RMB5.6 million ($0.9 million), from approximately RMB16.5 million in the year ended June 30, 2012 to approximately RMB11.0 million ($1.8 million) as related to the same period in FY2013. General and administrative expenses were 21.8% of total revenues in 2012 and 14.3% of total revenues in FY2013.

Research and development expenses increased by 35.8%, from approximately RMB6.3 million for the year ended June 30, 2012 to approximately RMB8.5 million ($1.4 million) for the same period of 2013. This increase was primarily due to the increases in R&D expenditures on our furnaces and fracturing services.

Loss from operations was approximately RMB0.6 million ($0.1 million) for the year ended June 30, 2013, compared to a loss of approximately RMB3.5 million for the same period in FY2012. This decrease in loss from operations is attributed primarily to the increases in general revenue and decrease in our general and administrative expenses.

Net income attributable to ordinary shareholders was RMB39,698 ($6,415) for the year ended June 30, 2013, an improvement of approximately RMB4 million ($0.6 million) from net loss attributable to ordinary shareholders of approximately RMB3.8 million for same period in FY2012.

Adjusted EBITDA improved by approximately RMB5.8 million ($1 million) to approximately RMB4.7 million ($0.8 million) for the year ended June 30, 2013 compared to loss of approximately RMB1.1 million for the same period in 2012 as a result of increased revenues and lower operating expenses. Compared to net income attributable to ordinary shareholders, we believe this EBITDA value more accurately reflects our operations.

As of June 30, 2013, cash and cash equivalents was RMB12.4 million ($2 million). Except for RMB6.07 million ($0.98 million) of short-term borrowings and RMB10 million ($1.6 million) short-term bank loan, there were no other financing activities and contingent liabilities.

Net cash provided by operating activities was approximately RMB24.8 million ($4 million) for the year ended June 30, 2013. This was an increase of approximately RMB46.5 million ($7.5 million) compared to net cash used in operating activities of approximately RMB21.7 million for year ended June 30, 2012. This increase was mainly due to the fact that we earned net profit in fiscal 2013 while we experienced net losses in fiscal 2012.

Net cash used in investing activities was approximately RMB2.1 million ($0.3 million) for the year ended June 30, 2013, an increase of RMB1.3 million ($0.2 million) from RMB0.8 million for the same period of 2012. The increase in net cash used in investing activities was mainly due to an approximately RMB1.5 million increase in long-term investment for a 32.2% equity investment in a U.S. oil and natural gas company offset by RMB0.2 million increase in proceeds from disposal of fixed assets and a decrease of approximately RMB86,000 in purchase of property and equipment.

Net cash used in financing activities amounted to approximately RMB14.2 million ($2.3 million) for the year ended June 30, 2013, compared to cash flows provided by financing activities of approximately RMB22.7 million for the year ended June 30, 2012. During the year ended June 30, 2013, we repaid RMB23 million ($3.7 million) in commercial bank loans and received RMB10 million ($1.6 million) in loans from two banks, which were guaranteed by one of our shareholders.

About Recon Technology, Ltd.

Recon Technology, Ltd. is a non-state-owned oil field service company in China. The company has been providing software, equipment and services designed to increase the efficiency and automation in oil and gas exploration, extraction, production and refinery for Chinese oil and gas fields for more than 10 years. More information may be found at http://www.recon.cn or via e-mail at info@recon.cn.

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission.

All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Investor Contact:

Recon Technology, Ltd. Tel: +86-10-8494-5799

RECON TECHNOLOGY, LTD

CONSOLIDATED BALANCE SHEETS

As of June 30,

As of June 30,

As of June 30,

2012

2013

2013

ASSETS

RMB

RMB

U.S. Dollars

Current assets

Cash and cash equivalents

 

RMB

3,533,283

 

RMB

12,350,392

$

1,995,797

Notes receivable

-

2,578,855

416,738

Trade accounts receivable, net

61,993,942

38,648,780

6,245,561

Trade accounts receivable- related parties, net

20,394,749

18,744,364

3,029,049

Inventories, net

24,281,300

13,271,070

2,144,577

Other receivables, net

8,074,096

19,131,503

3,091,610

Other receivables- related parties

17,729

742,528

119,991

Purchase advances, net

16,250,616

18,412,507

2,975,422

Purchase advances- related parties

1,093,534

394,034

63,675

Tax recoverable

2,790,722

575,650

93,024

Prepaid expenses

535,336

2,853,956

461,192

Deferred tax asset

1,106,801

1,006,721

162,684

Total current assets

140,072,108

128,710,360

20,799,320

Property and equipment, net

1,774,820

1,709,846

276,307

Long-term investment

-

1,549,450

250,388

Long-term other receivable

10,302,349

3,502,680

566,026

Total Assets

 

RMB

152,149,277

 

RMB

135,472,336

$

21,892,041

LIABILITIES AND EQUITY

Current liabilities

Short-term bank loans

 

RMB

23,000,000

 

RMB

10,000,000

$

1,615,979

Trade accounts payable

11,905,560

7,384,165

1,193,265

Trade accounts payable- related parties

5,339,231

3,994,718

645,538

Other payables

2,341,826

1,964,691

317,490

Other payable- related parties

1,099,259

4,239,675

685,122

Deferred revenue

3,291,073

3,381,382

546,424

Advances from customers

936,124

470,700

76,064

Accrued payroll and employees' welfare

949,579

1,992,783

322,030

Accrued expenses

476,416

488,730

78,978

Taxes payable

9,681,620

6,754,428

1,091,501

Short-term borrowings- related parties

4,123,306

5,503,279

889,318

Short-term borrowings- other

2,767,066

570,375

92,171

Total current liabilities

65,911,060

46,744,926

7,553,880

Commitments and Contingency

Equity

Common stock, ($ 0.0185 U.S. dollar par value, 25,000,000 shares authorized; 3,951,811 shares issued and outstanding as of June 30, 2012 and June 30, 2013)

529,979

529,979

85,641

Additional paid-in capital

67,643,791

69,516,447

11,233,710

Appropriated retained earnings

2,378,961

3,023,231

488,548

Unappropriated retained earnings

9,354,535

8,749,963

1,413,975

Accumulated other comprehensive loss

(290,496)

(293,201)

(47,378)

Total controlling shareholders' equity

79,616,770

81,526,419

13,174,496

Non-controlling interest

6,621,447

7,200,991

1,163,665

Total equity

86,238,217

88,727,410

14,338,161

Total Liabilities and Equity

 

RMB

152,149,277

 

RMB

135,472,336

$

21,892,041

 

RECON TECHNOLOGY, LTD

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the years ended

June 30,

2012

2013

2013

RMB

RMB

USD

Revenues

Hardware and software

RMB

53,646,920

 

RMB

41,408,517

 

 

$

6,691,529

Service

13,985,465

25,464,003

4,114,929

Hardware and software - related parties

7,909,994

9,713,209

1,569,634

Total revenues

75,542,379

76,585,729

12,376,092

Cost of revenues

Hardware and software

 

RMB

37,740,629

 

RMB

26,617,786

$

4,301,378

Service

8,945,100

18,567,123

3,000,408

Hardware and software - related parties

4,584,221

6,346,850

1,025,637

Total cost of revenues

51,269,950

51,531,759

8,327,423

Gross profit

24,272,429

25,053,970

4,048,669

Selling and distribution expenses

5,054,219

6,126,095

989,964

General and administrative expenses

16,484,972

10,978,942

1,774,174

Research and development expenses

6,270,919

8,513,680

1,375,793

Operating expenses

27,810,110

25,618,717

4,139,931

Loss from operations

(3,537,681)

(564,747)

(91,262)

Other income (expenses)

Subsidy income

554,856

2,257,344

364,782

Interest income

335,517

570,442

92,182

Interest expense

(962,824)

(1,557,204)

(251,641)

Gain from foreign currency exchange

(46,303)

233,478

37,730

Other income (expense)

(78,097)

(32,901)

(5,317)

Income (loss) before income tax

(3,734,532)

906,412

146,474

Provision (benefit) for income tax

(220,050)

286,871

46,358

Net Income (loss)

(3,514,482)

619,541

100,116

Less: Net income attributable to non-controlling interest

305,653

579,843

93,701

Net Income (loss) attributable to Recon Technology, Ltd

 

RMB

(3,820,135)

 

RMB

39,698

$

6,415

Comprehensive income (loss)

Net income (loss)

(3,514,482)

619,541

100,116

Foreign currency translation adjustment

(1,599)

(3,004)

(487)

Comprehensive income (loss)

(3,516,081)

616,537

99,629

Less: Comprehensive income attributable to non-controlling interest

305,830

579,543

93,653

Comprehensive income (loss) attributable to Recon Technology, Ltd

 

RMB

(3,821,911)

RMB

36,994

$

5,976

Earnings (loss) per common share - basic

 

RMB

(0.97)

 

RMB

0.01

$

0.00

Earnings per common share - diluted

 

RMB

(0.97)

 

RMB

0.01

$

0.00

Weighted - average shares -basic

3,951,811

3,951,811

3,951,811

Weighted - average shares -diluted

3,951,811

3,951,811

3,951,811

 

RECON TECHNOLOGY, LTD

 CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended June 30,

2012

2013

2013

RMB

RMB

U.S. Dollars

Cash flows from operating activities:

Net income (loss)

 

RMB

(3,514,482)

 

RMB

619,541

$

100,116

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation

361,790

618,552

99,957

Loss from disposal of equipment

8,056

38,006

6,142

Provision/(recovery of) for doubtful accounts

3,919,052

(749,121)

(121,056)

Stock based compensation

1,239,788

1,852,656

299,385

Deferred tax (benifit)/provision

(648,668)

100,080

16,173

Changes in operating assets and liabilities:

Trade accounts receivable

(42,916,527)

25,107,519

4,057,322

Trade accounts receivable-related parties

5,588,423

672,175

108,622

Notes receivable

1,276,574

(2,578,855)

(416,738)

Other receivable, net

447,706

(4,263,858)

(689,031)

Other receivables related parties, net

4,365,271

(724,799)

(117,126)

Purchase advance, net

(4,488,357)

(2,190,796)

(354,028)

Purchase advance-related party, net

(103,706)

699,500

113,038

Tax recoverable

(2,790,722)

2,215,072

357,951

Prepaid expense

480,963

(2,318,620)

(374,684)

Inventories

(1,705,206)

11,010,230

1,779,230

Trade accounts payable

5,585,072

(4,521,395)

(730,648)

Trade accounts payable-related parties

5,339,231

(1,344,513)

(217,270)

Other payables

380,902

(377,135)

(60,944)

Other payables-related parties

1,037,782

3,140,416

507,485

Deferred income

870,576

90,309

14,594

Advances from customers

153,179

(465,424)

(75,212)

Accrued payroll and employees' welfare

791,755

1,043,204

168,580

Accrued expenses

131,401

12,314

1,990

Taxes payable

2,489,497

(2,927,192)

(473,028)

Net cash provided by (used in) operating activities

(21,700,650)

24,757,866

4,000,820

Cash flows from investing activities:

Purchase of property and equipment

(1,031,028)

(753,583)

(121,777)

Long-term investment

-

(1,549,450)

(250,388)

Proceeds from disposal of equipment

18,787

162,000

26,179

Net cash used in investing activities

(1,012,241)

(2,141,033)

(345,986)

Cash flows from financing activities:

Proceeds from short-term bank loans

23,000,000

10,000,000

1,615,979

Repayments of short-term bank loans

(5,000,000)

(23,000,000)

(3,716,751)

Proceeds from short-term borrowings

2,153,780

579,073

93,577

Proceeds from borrowings-related parties

4,991,907

1,962,450

317,128

Repayment of short-term borrowings

(1,130,000)

(2,775,764)

(448,558)

Repayment of short-term borrowings-related parties

(1,780,000)

(582,477)

(94,127)

Capital contribution in VIE

500,000

20,000

3,232

Net cash provided by (used in) financing activities

22,735,687

(13,796,718)

(2,229,520)

Effect of exchange rate fluctuation on cash and cash equivalents

24,543

(3,006)

(488)

Net increase in cash and cash equivalents

47,339

8,817,109

1,424,826

Cash and cash equivalents at beginning of year

3,485,944

3,533,283

570,971

Cash and cash equivalents at end of year

 

RMB

3,533,283

 

RMB

12,350,392

$

1,995,797

Supplemental cash flow information

Cash paid during the period for interest

 

RMB

442,719

 

RMB

1,356,581

$

219,221

Cash paid during the period for taxes

 

RMB

494,087

 

RMB

832,028

$

134,454

SOURCE Recon Technology, Ltd.



RELATED LINKS

http://www.recon.cn