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Recon Reports Fiscal Year 2013 Financial Results
PR Newswire
BEIJING

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 [email protected].

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                          3,533,283                  12,350,392                $1,995,797

                      RMB                               RMB

    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                        152,149,277                 135,472,336               $21,892,041

                      RMB                               RMB
                      ===                               ===


    LIABILITIES AND
     EQUITY

    Current
     liabilities

    Short-term bank
     loans                               23,000,000                  10,000,000                $1,615,979

                      RMB                               RMB

    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.       and June 30,
     dollar par        2013)
     value,
     25,000,000
     shares
     authorized;
     3,951,811 shares
     issued and
     outstanding as
     of June 30, 2012                       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                         152,149,277                 135,472,336               $21,892,041

                      RMB                               RMB
                      ===                               ===

                                                                                                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               41,408,517        6,691,529
                                                                                                                                                              
     
    $
                                                                                                                                        RMB

    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                                                                                                37,740,629               26,617,786       $4,301,378

                                                                                           RMB                                          RMB

    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                                                              (3,820,135)                  39,698           $6,415

                                                                                           RMB                                          RMB
                                                                                           ===                                          ===


    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                                                    (3,821,911)                  36,994           $5,976

                                                                                           RMB                                          RMB
                                                                                           ===                                          ===


    Earnings (loss) per common share - basic                                                                                  (0.97)                    0.01            $0.00

                                                                                           RMB                                          RMB
                                                                                           ===                                          ===

    Earnings per common share - diluted                                                                                       (0.97)                    0.01            $0.00

                                                                                           RMB                                          RMB
                                                                                           ===                                          ===

    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)                                                                                                                (3,514,482)                619,541                $100,116

                                                                                                    RMB                                          RMB

    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                                                                                          3,533,283              12,350,392              $1,995,797

                                                                                                    RMB                                          RMB
                                                                                                    ===                                          ===



    Supplemental cash flow information

    Cash paid during the period for interest                                                                                            442,719               1,356,581                $219,221

                                                                                                    RMB                                          RMB
                                                                                                    ===                                          ===

    Cash paid during the period for taxes                                                                                               494,087                 832,028                $134,454

                                                                                                    RMB                                          RMB
                                                                                                    ===                                          ===

SOURCE Recon Technology, Ltd.

SOURCE: Recon Technology, Ltd.

Recon Reports Fiscal Year 2013 Financial Results

PR Newswire

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 [email protected].

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.


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