BEIJING, May 16, 2011 /PRNewswire-Asia/ -- Recon Technology, Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a leading Chinese non-state-owned oilfield services provider to oil and gas companies and their affiliates, today announced its financial results for the third fiscal quarter ended March 31, 2011. Summary financial data is provided below:
Third Quarter Fiscal 2011 Financial Highlights
-- Revenues for the third quarter of fiscal year 2011 decreased by 57.74%
year-over-year to $1.7 million, down from $4.0 million in the third
quarter of fiscal 2010
-- Gross margin for the third quarter was 17.9% based on gross profit of
$302 thousand, compared with a 44.7% margin based on gross profit of
$1.8 million in the same period last year
-- Operating expenses for the third quarter were $1.5 million, up 97.7%
year-over-year from $741 thousand in the same period last year
-- Operating loss for the third quarter was $1.2 million, down 211.18%
compared to operating income of $1.0 million in the third quarter of
fiscal 2010
-- Net loss attributable to Recon for the third quarter decreased 263.21%
year-over-year to $1.1 million compared with net income of $689 thousand
for the third quarter of fiscal 2010
-- Loss per diluted share was $0.28 for the quarter, down 263.21% from
diluted EPS of $0.17 achieved in the same period a year ago
Nine Months Fiscal 2011 Financial Highlights
-- Revenues for the first nine months of fiscal year 2011 decreased by
19.19% year-over-year to $12.2 million, down from $15.0 million in the
first nine months of fiscal 2010
-- Gross margin for the first nine months of fiscal 2011 was 36.98% based
on gross profit of $4.5 million, compared with a 43.33% margin based on
gross profit of $6.5 million in the same period last year
-- Operating expenses for the first nine months of fiscal 2011 were $4.0
million, up 52.38% year-over-year from $2.6million in the same period
last year
-- Operating income and operating margin for the nine months ended March
31, 2011 were $469 thousand and 3.86%, respectively, compared to $3.9
million and 25.7%, respectively, for the same period in 2010
-- Net income attributable to Recon for the first nine months of fiscal
2011 decreased 92.66% year-over-year to $196 thousand, compared with
$2.7 million for the first nine months of fiscal 2010
-- Earnings per diluted share were $0.05 for the first nine-month period,
down 92.66% from diluted EPS of $0.71 achieved in the same period a year
ago
Third Quarter Fiscal 2011 Results of Operations
Revenues
Revenues for the three months ended March 31, 2011 were $1.7 million as compared to $4.00 million for the three months ended March 31, 2010. The decrease of 57.74% was primarily due to some of Recon's clients, especially those of Sinopec, shifting their equipment procurement policies to increase cooperation with strategic suppliers rather than with third-party agents such as Recon. Additionally, a number of clients experienced temporary delays in their oilfield projects, which prevented Recon from providing systems and services to them and recognizing the corresponding revenues.
Gross Profit
Gross profit for the third quarter of fiscal 2011 was $302 thousand as compared to $1.8 million for the third quarter of fiscal 2010. The decrease of 83.11% was primarily due to the declining trading business. Costs of sales for the three-month period were $1.4 million as compared to $2.2 million for the same period a year ago. The Company's gross margin was 17.87% and 44.70% for the three months ended March 31, 2011 and 2010, respectively.
Income from Operations
Operating loss for the three months ended March 31, 2011 amounted to $1.2 million as compared to operating income of $1.0 million for the three months ended March 31, 2010. The decrease of 97.7% or $1.2 million was primarily attributable to the decline of the agency trading business, the uncertainty associated with the recovery of advance payments, and the increased expenses related to expanding sales channels. Operating expenses for the three-month period totaled $1.5 million as compared to $741 thousand for the same period a year ago.
Net Income
Net loss attributable to Recon for the fiscal 2011 third quarter was $1.1 million as compared to net income attributable to Recon of $689 thousand for the same period a year ago, due to the reasons set forth above. Loss per diluted share was $0.28 for the quarter, a decrease of 263.21% compared with diluted EPS of $0.17 for the same period a year ago.
Nine Months Fiscal 2011 Results of Operations
Revenues
Revenue for the first nine months ended March 31, 2011 was $12.2 million as compared to $15.0 million for the first nine months ended March 31, 2010. The decrease of 19.19% was primarily due to the same factors that affected revenues for the three months ended March 31, 2011.
Gross Profit
Gross profit for the nine months of fiscal 2011 was $4.5 million as compared to $6.5 million for the nine months ended March 31, 2010. The decrease of 31.04% was primarily due to the decrease in revenues. Costs of sales for the nine-month period were $7.7 million, down 10.13% from $8.5 million for the same period a year ago. The Company's gross margin was 36.98% and 43.33% for the nine months ended March 31, 2011 and 2010, respectively.
Income from Operations
Operating income for the nine months ended March 31, 2011 amounted to $469 thousand as compared to $3.9 million for the nine months ended March 31, 2010. The decrease of 887.9% or $3.4 million was primarily due to the decrease in revenues and an increase in administrative expenses. General and administrative expenses for the nine-month period ended March 31, 2011 increased 103.07% over the same nine-month period in fiscal 2010, driven by the increased allowance of advance payment related to the trading business and expenses related to the planned secondary offering, which was withdrawn due to unfavorable market conditions. The increase in general and administrative expenses was partially offset by a 13.39% decrease in selling and distribution expenses.
Net Income
Net income attributable to Recon for the nine months ended March 31, 2011 was $196thousand as compared to $2.7 million for the nine months ended March 31, 2010, due to the reasons set forth above. Earnings per diluted share were $0.05 for the nine-month period, compared with diluted EPS of $0.71 for the same period a year ago.
Liquidity and Capital Resources
As of March 31, 2011, the Company's current assets were $26.7 million and current liabilities were $8.3 million. Cash and cash equivalents totaled $2.5 million as of March 31, 2011. The Company has no long-term liabilities, and total shareholders' equity at March 31, 2011 was $18.6 million. The Company had cash provided by operating activities of $728,614 during the nine months ended March 31, 2011, compared to cash used in operating activities of $6.3 million for the nine months ended March 31, 2010. The Company used $22,422 in cash for investing activities during the nine months ended March 31, 2011, compared to $56,444 for the nine months ended March 31, 2010. The Company used $2,755 in cash from financing activities during the nine months ended March 31, 2011, compared to $9.36 million for the nine months ended March 31, 2010.
About Recon Technology, Ltd.
Recon Technology, Ltd. has been providing leading Chinese oil and gas companies with automation services that increase efficiency and profitability in exploring, extracting, producing, processing, refining and transporting petroleum products for over 10 years. The Company's proprietary computerized process control system manages oil production in real-time to increase extraction levels, reduce impurities in extracted petroleum and lower production costs. In addition, as one of only two acoustic system providers in the world, Recon's acoustic pipeline monitoring system is widely used to prevent gas leakage in the transport pipeline. Recon's technology is based on three software copyrights, eight product patents and four pending patents. Recon Technology is the first Chinese non-state-owned oil and gas service company to go public in the U.S.
More information may be found at http://www.recon.cn or via e-mail at info@recon.cn.
Forward-Looking Statements
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 field 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.
This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission, which includes the accompanying notes.
Contact:
At the Company:
Recon Technology, Ltd
Tel: +86-10-8494-5799
Email: info@recon.cn
RECON TECHNOLOGY, LTD
CONSOLIDATED BALANCE SHEETS
June 30, March 31, March 31,
-------- --------- ---------
2010 2011 2011
---- ---- ----
ASSETS RMB RMB U.S. Dollars
--- --- ------------
Current assets (Unaudited) (Unaudited)
Cash and cash
equivalents RMB 12,142,957 RMB 16,620,761 $2,529,758
Trade accounts
receivable, net 89,425,990 83,080,495 12,645,241
Other receivables,
net 12,850,547 17,794,691 2,708,435
Purchase advances 46,551,402 16,878,362 2,568,966
Prepaid expenses 766,638 1,228,887 187,042
Inventories 13,150,911 37,644,403 5,729,654
Deferred tax assets 275,960 2,061,711 313,802
------- --------- -------
Total current
assets 175,164,405 175,309,310 26,682,898
Property and
equipment, net 1,482,881 1,326,526 201,903
--------- --------- -------
Total Assets RMB 176,647,286 RMB 176,635,836 $26,884,801
=== =========== === =========== ===========
LIABILITIES AND
EQUITY
Current liabilities
Trade accounts
payable RMB 16,536,796 RMB 14,859,767 $2,261,727
Other payables 3,096,309 2,589,053 394,066
Deferred income 4,267,711 2,853,075 434,251
Advances from
customers 439,761 - -
Accrued payroll and
employees' welfare 360,540 117,562 17,893
Accrued expenses 290,803 313,747 47,754
Taxes payable 20,203,104 21,369,588 3,252,551
Short-term bank
loan - 5,000,000 761,023
Short-term
borrowings 5,024,881 3,913,820 595,702
Short-term
borrowings-
related parties 7,343,457 3,274,605 498,410
Total current
liabilities 57,563,362 54,291,217 8,263,377
---------- ---------- ---------
Total Liabilities 57,563,362 54,291,217 8,263,377
Commitments and
Contingencies
Equity
Ordinary shares ($
0.0185 U.S. dollar
par value,
25,000,000
shares authorized;
3,951,811 and
respectively
shares issued 529,979 529,979 80,665
and outstanding as
of June 30, 2010
and March 31,
2011,
respectively)
Additional paid-in
capital 69,257,098 70,394,755 10,714,412
Appropriated
retained earnings 3,755,503 4,396,641 669,189
Unappropriated
retained earnings 36,034,500 36,678,269 5,582,604
Accumulated other
comprehensive loss (76,997) (128,472) (19,554)
Total controlling
shareholders'
equity 109,500,083 111,871,172 17,027,316
Non-controlling
interest, net of
tax 9,583,841 10,473,447 1,594,108
--------- ---------- ---------
Total equity 119,083,924 122,344,619 18,621,424
----------- ----------- ----------
Total Liabilities
and Equity RMB 176,647,286 RMB 176,635,836 $26,884,801
=== =========== === =========== ===========
RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Nine Months ended
March 31,
---------
2010 2011
---- ----
RMB RMB
--- ---
(Unaudited) (Unaudited)
Revenues
Hardware RMB 90,932,348 RMB 77,754,951
Service 7,675,214 2,111,111
Software 226,496 -
------- ---
Total revenues 98,834,057 79,866,062
Cost of revenues 56,007,688 50,332,089
Gross margin 42,826,369 29,533,973
---------- ----------
Selling and distribution
expenses 7,557,188 6,545,509
General and
administrative expenses 9,803,491 19,908,120
Operating expenses 17,360,679 26,453,629
---------- ----------
Income (Loss) from
operations 25,465,690 3,080,344
---------- ---------
Other income (expenses)
Subsidy income 1,178,034 792,545
Interest income 5,693 5,974
Interest expense (32,074) (159,171)
Interest expense -
related parties (78,001) (267,168)
Other income 471,914 289,605
------- -------
Other income, net 1,545,566 661,785
--------- -------
Income (Loss) before
income taxes and non-
controlling interest 27,011,256 3,742,129
Provision for income
taxes 7,189,566 1,561,897
Net income (loss) before
allocation to non-
controlling interests 19,821,690 2,180,232
Less: Net income
attributable to non-
controlling interest (2,318,767) (895,325)
Net income (loss)
attributable to
ordinary shareholders RMB 17,502,923 RMB 1,284,907
=== ========== === =========
Comprehensive income
Net income (loss) before
allocation to non-
controlling interests 19,821,690 2,180,232
Foreign currency
translation adjustment 119,992 (57,194)
------- -------
Comprehensive income
(loss) 19,941,682 2,123,038
Comprehensive income
attributable to non-
controlling interests (2,330,766) (889,606)
---------- --------
Comprehensive income
attributable to
ordinary shareholders RMB 17,610,916 RMB 1,233,432
=== ========== === =========
Earnings (Loss) per
ordinary share -basic
Net income (loss)
attributable to
ordinary shareholders RMB 4.66 RMB 0.33
=== ==== === ====
Earnings (loss) per
ordinary share -
diluted
Net income (loss)
attributable to
ordinary shareholders RMB 4.65 RMB 0.33
=== ==== === ====
Weighted -average
ordinary shares -basic 3,753,350 3,951,811
========= =========
Weighted -average
ordinary shares
-diluted 3,763,408 3,951,811
========= =========
For the Three Months ended
March 31,
---------
2010 2011
---- ----
RMB RMB
--- ---
(Unaudited) (Unaudited)
Revenues
Hardware RMB 24,578,963 RMB 11,108,566
Service 1,709,402 -
Software - -
--- ---
Total revenues 26,288,365 11,108,566
Cost of revenues 14,538,530 9,123,575
Gross margin 11,749,835 1,984,991
---------- ---------
Selling and distribution
expenses 1,534,090 1,449,192
General and
administrative expenses 3,337,591 8,183,056
Operating expenses 4,871,681 9,632,248
--------- ---------
Income (Loss) from
operations 6,878,153 (7,647,257)
--------- ----------
Other income (expenses)
Subsidy income 20,000 341,025
Interest income - 1,035
Interest expense (21,335) (85,872)
Interest expense -
related parties (11,506) (13,671)
Other income 389,668 284,546
------- -------
Other income, net 376,827 527,063
------- -------
Income (Loss) before
income taxes and non-
controlling interest 7,254,979 (7,120,194)
Provision for income
taxes 2,082,801 174,898
Net income (loss) before
allocation to non-
controlling interests 5,172,178 (7,295,092)
Less: Net income
attributable to non-
controlling interest (647,827) (89,198)
Net income (loss)
attributable to
ordinary shareholders RMB 4,524,351 RMB (7,384,290)
=== ========= === ==========
Comprehensive income
Net income (loss) before
allocation to non-
controlling interests 5,172,178 (7,295,092)
Foreign currency
translation adjustment 119,992 (15,671)
------- -------
Comprehensive income
(loss) 5,292,170 (7,310,763)
Comprehensive income
attributable to non-
controlling interests (659,826) (87,631)
-------- -------
Comprehensive income
attributable to
ordinary shareholders RMB 4,632,344 RMB (7,398,394)
=== ========= === ==========
Earnings (Loss) per
ordinary share -basic
Net income (loss)
attributable to
ordinary shareholders RMB 1.14 RMB (1.87)
=== ==== === =====
Earnings (loss) per
ordinary share -
diluted
Net income (loss)
attributable to
ordinary shareholders RMB 1.13 RMB (1.87)
=== ==== === =====
Weighted -average
ordinary shares -basic 3,951,811 3,951,811
========= =========
Weighted -average
ordinary shares
-diluted 4,002,298 3,951,811
========= =========
For the Nine
Months ended
March 31,
---------
2011
----
U.S. Dollars
------------
(Unaudited)
Revenues
Hardware $11,834,668
Service 321,321
Software -
---
Total revenues 12,155,989
Cost of revenues 7,660,780
Gross margin 4,495,209
---------
Selling and distribution
expenses 996,257
General and
administrative expenses 3,030,109
Operating expenses 4,026,366
---------
Income (Loss) from
operations 468,843
-------
Other income (expenses)
Subsidy income 120,629
Interest income 909
Interest expense (24,227)
Interest expense -
related parties (40,664)
Other income 44,079
------
Other income, net 100,726
-------
Income (Loss) before
income taxes and non-
controlling interest 569,569
Provision for income
taxes 237,728
Net income (loss) before
allocation to non-
controlling interests 331,841
Less: Net income
attributable to non-
controlling interest (136,273)
Net income (loss)
attributable to
ordinary shareholders $195,568
========
Comprehensive income
Net income (loss) before
allocation to non-
controlling interests 331,841
Foreign currency
translation adjustment (8,705)
------
Comprehensive income
(loss) 323,136
Comprehensive income
attributable to non-
controlling interests (135,403)
--------
Comprehensive income
attributable to
ordinary shareholders $187,733
========
Earnings (Loss) per
ordinary share -basic
Net income (loss)
attributable to
ordinary shareholders $0.05
=====
Earnings (loss) per
ordinary share -
diluted
Net income (loss)
attributable to
ordinary shareholders $0.05
=====
Weighted -average
ordinary shares -basic 3,951,811
=========
Weighted -average
ordinary shares
-diluted 3,951,811
=========
RECON TECHNOLOGY, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months ended March 31,
-----------------------------------
2010 2011
---- ----
RMB RMB
--- ---
(Unaudited) (Unaudited)
Cash flows from
operating activities: - -
Net income before
allocation to non-
controlling interests RMB 19,821,690 RMB 2,180,232
Adjustments to
reconcile net income
before non-
controlling
interests to net cash
provided by (used in)
operating activities:
Depreciation 263,036 303,804
Stock based payment 1,178,701 1,138,264
Provision for doubtful
debts - 7,937,870
Movement of deferred
taxation 1,329,433 (1,785,751)
Changes in operating
assets and
liabilities:
Trade accounts
receivable, net (43,645,506) 6,345,495
Trade accounts
receivable-related
parties 7,458,302 -
Other receivable, net (4,517,417) (11,774,622)
Other receivables
related parties 507,541 -
Purchase advance (33,963,030) 30,275,498
Prepaid expense (778,507) (462,249)
Inventories (2,442,053) (24,493,492)
Deferred tax assets - (1,785,751)
Trade accounts payable 1,981,145 (1,677,029)
Trade accounts payable-
related parties (189,744) -
Other payables 840,619 (507,256)
Other payables-related
parties 73,579 -
Deferred income 1,822,916 (1,414,636)
Advances from customers (884,565) (439,761)
Accrued payroll and
employees' welfare (96,439) (242,978)
Accrued expenses 31,677 22,944
Taxes payable 9,701,746 1,166,484
Net cash provided by
(used in) operating
activities (41,506,877) 4,787,066
----------- ---------
Cash flows from
investing activities:
Purchases of property
and equipment (371,162) (147,449)
Proceeds from sale of
property and equipment 320 -
Net cash used in
investing activities (370,842) (147,449)
-------- --------
Cash flows from
financing activities:
Proceeds from stock
issuance 60,209,057 -
Proceeds from short-
term bank loan - 5,000,000
Proceeds from
(Repayment to) short-
term borrowings 459,089 (1,111,061)
Repayment to (Repayment
to) short-term
borrowings-related
party 803,280 (4,068,852)
Net cash provided by
(used in ) financing
activities 61,471,426 (179,913)
---------- --------
Effect of exchange rate
fluctuation on cash
and cash equivalents (28,514) 18,100
------- ------
Net increase in cash
and cash equivalents RMB 19,565,192 RMB 4,477,804
Cash and cash
equivalents at
beginning of period 2,727,735 12,142,957
--------- ----------
Cash and cash
equivalents at end of
period RMB 22,292,927 RMB 16,620,761
=== ========== === ==========
Supplemental cash flow
information
Cash paid during the
period for interest RMB - RMB 48,000
=== === === ======
Cash paid during the
period for taxes RMB 98,834 RMB 2,344,515
=== ====== === =========
For the Nine Months ended March 31,
-----------------------------------
2011
----
U.S. Dollars
------------
(Unaudited)
Cash flows from operating
activities: -
Net income before allocation to
non-controlling interests $331,841
Adjustments to reconcile net
income before non-controlling
interests to net cash provided by
(used in) operating activities:
Depreciation 46,240
Stock based payment 173,249
Provision for doubtful debts 1,208,181
Movement of deferred taxation (271,800)
Changes in operating assets and
liabilities:
Trade accounts receivable, net 965,814
Trade accounts receivable-
related parties -
Other receivable, net (1,792,153)
Other receivables related parties -
Purchase advance 4,608,075
Prepaid expense (70,356)
Inventories (3,728,024)
Deferred tax assets (271,800)
Trade accounts payable (255,252)
Trade accounts payable-related
parties -
Other payables (77,207)
Other payables-related parties -
Deferred income (215,314)
Advances from customers (66,934)
Accrued payroll and employees'
welfare (36,982)
Accrued expenses 3,492
Taxes payable 177,544
Net cash provided by (used in)
operating activities 728,614
-------
Cash flows from investing
activities:
Purchases of property and
equipment (22,442)
Proceeds from sale of property
and equipment -
Net cash used in investing
activities (22,442)
-------
Cash flows from financing
activities:
Proceeds from stock issuance -
Proceeds from short-term bank
loan 761,023
Proceeds from (Repayment to)
short-term borrowings (169,109)
Repayment to (Repayment to)
short-term borrowings-related
party (619,298)
Net cash provided by (used in )
financing activities (27,384)
-------
Effect of exchange rate
fluctuation on cash and cash
equivalents 2,755
-----
Net increase in cash and cash
equivalents $681,543
Cash and cash equivalents at
beginning of period 1,848,215
---------
Cash and cash equivalents at end
of period $2,529,758
==========
Supplemental cash flow
information
Cash paid during the period for
interest $7,306
======
Cash paid during the period for
taxes $356,846
========
SOURCE Recon Technology, Ltd.
SOURCE: Recon Technology, Ltd.
Recon Technology Announces Third Quarter Fiscal 2011 Financial Results
PR Newswire
BEIJING, May 16, 2011
BEIJING, May 16, 2011 /PRNewswire-Asia/ -- Recon Technology, Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a leading Chinese non-state-owned oilfield services provider to oil and gas companies and their affiliates, today announced its financial results for the third fiscal quarter ended March 31, 2011. Summary financial data is provided below:
Third Quarter Fiscal 2011 Financial Highlights
- Revenues for the third quarter of fiscal year 2011 decreased by 57.74% year-over-year to $1.7 million, down from $4.0 million in the third quarter of fiscal 2010
- Gross margin for the third quarter was 17.9% based on gross profit of $302 thousand, compared with a 44.7% margin based on gross profit of $1.8 million in the same period last year
- Operating expenses for the third quarter were $1.5 million, up 97.7% year-over-year from $741 thousand in the same period last year
- Operating loss for the third quarter was $1.2 million, down 211.18% compared to operating income of $1.0 million in the third quarter of fiscal 2010
- Net loss attributable to Recon for the third quarter decreased 263.21% year-over-year to $1.1 million compared with net income of $689 thousand for the third quarter of fiscal 2010
- Loss per diluted share was $0.28 for the quarter, down 263.21% from diluted EPS of $0.17 achieved in the same period a year ago
Nine Months Fiscal 2011 Financial Highlights
- Revenues for the first nine months of fiscal year 2011 decreased by 19.19% year-over-year to $12.2 million, down from $15.0 million in the first nine months of fiscal 2010
- Gross margin for the first nine months of fiscal 2011 was 36.98% based on gross profit of $4.5 million, compared with a 43.33% margin based on gross profit of $6.5 million in the same period last year
- Operating expenses for the first nine months of fiscal 2011 were $4.0 million, up 52.38% year-over-year from $2.6million in the same period last year
- Operating income and operating margin for the nine months ended March 31, 2011 were $469 thousand and 3.86%, respectively, compared to $3.9 million and 25.7%, respectively, for the same period in 2010
- Net income attributable to Recon for the first nine months of fiscal 2011 decreased 92.66% year-over-year to $196 thousand, compared with $2.7 million for the first nine months of fiscal 2010
- Earnings per diluted share were $0.05 for the first nine-month period, down 92.66% from diluted EPS of $0.71 achieved in the same period a year ago
Third Quarter Fiscal 2011 Results of Operations
Revenues
Revenues for the three months ended March 31, 2011 were $1.7 million as compared to $4.00 million for the three months ended March 31, 2010. The decrease of 57.74% was primarily due to some of Recon's clients, especially those of Sinopec, shifting their equipment procurement policies to increase cooperation with strategic suppliers rather than with third-party agents such as Recon. Additionally, a number of clients experienced temporary delays in their oilfield projects, which prevented Recon from providing systems and services to them and recognizing the corresponding revenues.
Gross Profit
Gross profit for the third quarter of fiscal 2011 was $302 thousand as compared to $1.8 million for the third quarter of fiscal 2010. The decrease of 83.11% was primarily due to the declining trading business. Costs of sales for the three-month period were $1.4 million as compared to $2.2 million for the same period a year ago. The Company's gross margin was 17.87% and 44.70% for the three months ended March 31, 2011 and 2010, respectively.
Income from Operations
Operating loss for the three months ended March 31, 2011 amounted to $1.2 million as compared to operating income of $1.0 million for the three months ended March 31, 2010. The decrease of 97.7% or $1.2 million was primarily attributable to the decline of the agency trading business, the uncertainty associated with the recovery of advance payments, and the increased expenses related to expanding sales channels. Operating expenses for the three-month period totaled $1.5 million as compared to $741 thousand for the same period a year ago.
Net Income
Net loss attributable to Recon for the fiscal 2011 third quarter was $1.1 million as compared to net income attributable to Recon of $689 thousand for the same period a year ago, due to the reasons set forth above. Loss per diluted share was $0.28 for the quarter, a decrease of 263.21% compared with diluted EPS of $0.17 for the same period a year ago.
Nine Months Fiscal 2011 Results of Operations
Revenues
Revenue for the first nine months ended March 31, 2011 was $12.2 million as compared to $15.0 million for the first nine months ended March 31, 2010. The decrease of 19.19% was primarily due to the same factors that affected revenues for the three months ended March 31, 2011.
Gross Profit
Gross profit for the nine months of fiscal 2011 was $4.5 million as compared to $6.5 million for the nine months ended March 31, 2010. The decrease of 31.04% was primarily due to the decrease in revenues. Costs of sales for the nine-month period were $7.7 million, down 10.13% from $8.5 million for the same period a year ago. The Company's gross margin was 36.98% and 43.33% for the nine months ended March 31, 2011 and 2010, respectively.
Income from Operations
Operating income for the nine months ended March 31, 2011 amounted to $469 thousand as compared to $3.9 million for the nine months ended March 31, 2010. The decrease of 887.9% or $3.4 million was primarily due to the decrease in revenues and an increase in administrative expenses. General and administrative expenses for the nine-month period ended March 31, 2011 increased 103.07% over the same nine-month period in fiscal 2010, driven by the increased allowance of advance payment related to the trading business and expenses related to the planned secondary offering, which was withdrawn due to unfavorable market conditions. The increase in general and administrative expenses was partially offset by a 13.39% decrease in selling and distribution expenses.
Net Income
Net income attributable to Recon for the nine months ended March 31, 2011 was $196thousand as compared to $2.7 million for the nine months ended March 31, 2010, due to the reasons set forth above. Earnings per diluted share were $0.05 for the nine-month period, compared with diluted EPS of $0.71 for the same period a year ago.
Liquidity and Capital Resources
As of March 31, 2011, the Company's current assets were $26.7 million and current liabilities were $8.3 million. Cash and cash equivalents totaled $2.5 million as of March 31, 2011. The Company has no long-term liabilities, and total shareholders' equity at March 31, 2011 was $18.6 million. The Company had cash provided by operating activities of $728,614 during the nine months ended March 31, 2011, compared to cash used in operating activities of $6.3 million for the nine months ended March 31, 2010. The Company used $22,422 in cash for investing activities during the nine months ended March 31, 2011, compared to $56,444 for the nine months ended March 31, 2010. The Company used $2,755 in cash from financing activities during the nine months ended March 31, 2011, compared to $9.36 million for the nine months ended March 31, 2010.
About Recon Technology, Ltd.
Recon Technology, Ltd. has been providing leading Chinese oil and gas companies with automation services that increase efficiency and profitability in exploring, extracting, producing, processing, refining and transporting petroleum products for over 10 years. The Company's proprietary computerized process control system manages oil production in real-time to increase extraction levels, reduce impurities in extracted petroleum and lower production costs. In addition, as one of only two acoustic system providers in the world, Recon's acoustic pipeline monitoring system is widely used to prevent gas leakage in the transport pipeline. Recon's technology is based on three software copyrights, eight product patents and four pending patents. Recon Technology is the first Chinese non-state-owned oil and gas service company to go public in the U.S.
More information may be found at http://www.recon.cn or via e-mail at info@recon.cn.
Forward-Looking Statements
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 field 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.
This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission, which includes the accompanying notes.
Contact: | |
At the Company: | |
Recon Technology, Ltd | |
RECON TECHNOLOGY, LTD | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
June 30, | March 31, | March 31, | |||||||
2010 | 2011 | 2011 | |||||||
ASSETS | RMB | RMB | U.S. Dollars | ||||||
Current assets | (Unaudited) | (Unaudited) | |||||||
Cash and cash equivalents | RMB | 12,142,957 | RMB | 16,620,761 | $ | 2,529,758 | |||
Trade accounts receivable, net | 89,425,990 | 83,080,495 | 12,645,241 | ||||||
Other receivables, net | 12,850,547 | 17,794,691 | 2,708,435 | ||||||
Purchase advances | 46,551,402 | 16,878,362 | 2,568,966 | ||||||
Prepaid expenses | 766,638 | 1,228,887 | 187,042 | ||||||
Inventories | 13,150,911 | 37,644,403 | 5,729,654 | ||||||
Deferred tax assets | 275,960 | 2,061,711 | 313,802 | ||||||
Total current assets | 175,164,405 | 175,309,310 | 26,682,898 | ||||||
Property and equipment, net | 1,482,881 | 1,326,526 | 201,903 | ||||||
Total Assets | RMB | 176,647,286 | RMB | 176,635,836 | $ | 26,884,801 | |||
LIABILITIES AND EQUITY | |||||||||
Current liabilities | |||||||||
Trade accounts payable | RMB | 16,536,796 | RMB | 14,859,767 | $ | 2,261,727 | |||
Other payables | 3,096,309 | 2,589,053 | 394,066 | ||||||
Deferred income | 4,267,711 | 2,853,075 | 434,251 | ||||||
Advances from customers | 439,761 | - | - | ||||||
Accrued payroll and employees' welfare | 360,540 | 117,562 | 17,893 | ||||||
Accrued expenses | 290,803 | 313,747 | 47,754 | ||||||
Taxes payable | 20,203,104 | 21,369,588 | 3,252,551 | ||||||
Short-term bank loan | - | 5,000,000 | 761,023 | ||||||
Short-term borrowings | 5,024,881 | 3,913,820 | 595,702 | ||||||
Short-term borrowings- related parties | 7,343,457 | 3,274,605 | 498,410 | ||||||
Total current liabilities | 57,563,362 | 54,291,217 | 8,263,377 | ||||||
Total Liabilities | 57,563,362 | 54,291,217 | 8,263,377 | ||||||
Commitments and Contingencies | |||||||||
Equity | |||||||||
Ordinary shares ($ 0.0185 U.S. dollar par value, 25,000,000 | |||||||||
shares authorized; 3,951,811 and respectively shares issued | 529,979 | 529,979 | 80,665 | ||||||
and outstanding as of June 30, 2010 and March 31, 2011, | |||||||||
respectively) | |||||||||
Additional paid-in capital | 69,257,098 | 70,394,755 | 10,714,412 | ||||||
Appropriated retained earnings | 3,755,503 | 4,396,641 | 669,189 | ||||||
Unappropriated retained earnings | 36,034,500 | 36,678,269 | 5,582,604 | ||||||
Accumulated other comprehensive loss | (76,997) | (128,472) | (19,554) | ||||||
Total controlling shareholders’ equity | 109,500,083 | 111,871,172 | 17,027,316 | ||||||
Non-controlling interest, net of tax | 9,583,841 | 10,473,447 | 1,594,108 | ||||||
Total equity | 119,083,924 | 122,344,619 | 18,621,424 | ||||||
Total Liabilities and Equity | RMB | 176,647,286 | RMB | 176,635,836 | $ | 26,884,801 | |||
RECON TECHNOLOGY, LTD | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||||||||||
For the Nine Months ended | For the Three Months ended | For the Nine | |||||||||||||
2010 | 2011 | 2010 | 2011 | 2011 | |||||||||||
RMB | RMB | RMB | RMB | U.S. Dollars | |||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
Revenues | |||||||||||||||
Hardware | RMB | 90,932,348 | RMB | 77,754,951 | RMB | 24,578,963 | RMB | 11,108,566 | $ | 11,834,668 | |||||
Service | 7,675,214 | 2,111,111 | 1,709,402 | - | 321,321 | ||||||||||
Software | 226,496 | - | - | - | - | ||||||||||
Total revenues | 98,834,057 | 79,866,062 | 26,288,365 | 11,108,566 | 12,155,989 | ||||||||||
Cost of revenues | 56,007,688 | 50,332,089 | 14,538,530 | 9,123,575 | 7,660,780 | ||||||||||
Gross margin | 42,826,369 | 29,533,973 | 11,749,835 | 1,984,991 | 4,495,209 | ||||||||||
Selling and distribution expenses | 7,557,188 | 6,545,509 | 1,534,090 | 1,449,192 | 996,257 | ||||||||||
General and administrative expenses | 9,803,491 | 19,908,120 | 3,337,591 | 8,183,056 | 3,030,109 | ||||||||||
Operating expenses | 17,360,679 | 26,453,629 | 4,871,681 | 9,632,248 | 4,026,366 | ||||||||||
Income (Loss) from operations | 25,465,690 | 3,080,344 | 6,878,153 | (7,647,257) | 468,843 | ||||||||||
Other income (expenses) | |||||||||||||||
Subsidy income | 1,178,034 | 792,545 | 20,000 | 341,025 | 120,629 | ||||||||||
Interest income | 5,693 | 5,974 | - | 1,035 | 909 | ||||||||||
Interest expense | (32,074) | (159,171) | (21,335) | (85,872) | (24,227) | ||||||||||
Interest expense - related parties | (78,001) | (267,168) | (11,506) | (13,671) | (40,664) | ||||||||||
Other income | 471,914 | 289,605 | 389,668 | 284,546 | 44,079 | ||||||||||
Other income, net | 1,545,566 | 661,785 | 376,827 | 527,063 | 100,726 | ||||||||||
Income (Loss) before income taxes and non-controlling interest | 27,011,256 | 3,742,129 | 7,254,979 | (7,120,194) | 569,569 | ||||||||||
Provision for income taxes | 7,189,566 | 1,561,897 | 2,082,801 | 174,898 | 237,728 | ||||||||||
Net income (loss) before allocation to non-controlling interests | 19,821,690 | 2,180,232 | 5,172,178 | (7,295,092) | 331,841 | ||||||||||
Less: Net income attributable to non-controlling interest | (2,318,767) | (895,325) | (647,827) | (89,198) | (136,273) | ||||||||||
Net income (loss) attributable to ordinary shareholders | RMB | 17,502,923 | RMB | 1,284,907 | RMB | 4,524,351 | RMB | (7,384,290) | $ | 195,568 | |||||
Comprehensive income | |||||||||||||||
Net income (loss) before allocation to non-controlling interests | 19,821,690 | 2,180,232 | 5,172,178 | (7,295,092) | 331,841 | ||||||||||
Foreign currency translation adjustment | 119,992 | (57,194) | 119,992 | (15,671) | (8,705) | ||||||||||
Comprehensive income (loss) | 19,941,682 | 2,123,038 | 5,292,170 | (7,310,763) | 323,136 | ||||||||||
Comprehensive income attributable to non-controlling interests | (2,330,766) | (889,606) | (659,826) | (87,631) | (135,403) | ||||||||||
Comprehensive income attributable to ordinary shareholders | RMB | 17,610,916 | RMB | 1,233,432 | RMB | 4,632,344 | RMB | (7,398,394) | $ | 187,733 | |||||
Earnings (Loss) per ordinary share - basic | |||||||||||||||
Net income (loss) attributable to ordinary shareholders | RMB | 4.66 | RMB | 0.33 | RMB | 1.14 | RMB | (1.87) | $ | 0.05 | |||||
Earnings (loss) per ordinary share - diluted | |||||||||||||||
Net income (loss) attributable to ordinary shareholders | RMB | 4.65 | RMB | 0.33 | RMB | 1.13 | RMB | (1.87) | $ | 0.05 | |||||
Weighted - average ordinary shares -basic | 3,753,350 | 3,951,811 | 3,951,811 | 3,951,811 | 3,951,811 | ||||||||||
Weighted - average ordinary shares -diluted | 3,763,408 | 3,951,811 | 4,002,298 | 3,951,811 | 3,951,811 | ||||||||||
RECON TECHNOLOGY, LTD. | |||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
For the Nine Months ended March 31, | |||||||||
2010 | 2011 | 2011 | |||||||
RMB | RMB | U.S. Dollars | |||||||
(Unaudited) | (Unaudited) | (Unaudited) | |||||||
Cash flows from operating activities: | - | - | - | ||||||
Net income before allocation to non-controlling interests | RMB | 19,821,690 | RMB | 2,180,232 | $ | 331,841 | |||
Adjustments to reconcile net income before non-controlling | |||||||||
Depreciation | 263,036 | 303,804 | 46,240 | ||||||
Stock based payment | 1,178,701 | 1,138,264 | 173,249 | ||||||
Provision for doubtful debts | - | 7,937,870 | 1,208,181 | ||||||
Movement of deferred taxation | 1,329,433 | (1,785,751) | (271,800) | ||||||
Changes in operating assets and liabilities: | |||||||||
Trade accounts receivable, net | (43,645,506) | 6,345,495 | 965,814 | ||||||
Trade accounts receivable-related parties | 7,458,302 | - | - | ||||||
Other receivable, net | (4,517,417) | (11,774,622) | (1,792,153) | ||||||
Other receivables related parties | 507,541 | - | - | ||||||
Purchase advance | (33,963,030) | 30,275,498 | 4,608,075 | ||||||
Prepaid expense | (778,507) | (462,249) | (70,356) | ||||||
Inventories | (2,442,053) | (24,493,492) | (3,728,024) | ||||||
Deferred tax assets | - | (1,785,751) | (271,800) | ||||||
Trade accounts payable | 1,981,145 | (1,677,029) | (255,252) | ||||||
Trade accounts payable-related parties | (189,744) | - | - | ||||||
Other payables | 840,619 | (507,256) | (77,207) | ||||||
Other payables-related parties | 73,579 | - | - | ||||||
Deferred income | 1,822,916 | (1,414,636) | (215,314) | ||||||
Advances from customers | (884,565) | (439,761) | (66,934) | ||||||
Accrued payroll and employees' welfare | (96,439) | (242,978) | (36,982) | ||||||
Accrued expenses | 31,677 | 22,944 | 3,492 | ||||||
Taxes payable | 9,701,746 | 1,166,484 | 177,544 | ||||||
Net cash provided by (used in) operating activities | (41,506,877) | 4,787,066 | 728,614 | ||||||
Cash flows from investing activities: | |||||||||
Purchases of property and equipment | (371,162) | (147,449) | (22,442) | ||||||
Proceeds from sale of property and equipment | 320 | - | - | ||||||
Net cash used in investing activities | (370,842) | (147,449) | (22,442) | ||||||
Cash flows from financing activities: | |||||||||
Proceeds from stock issuance | 60,209,057 | - | - | ||||||
Proceeds from short-term bank loan | - | 5,000,000 | 761,023 | ||||||
Proceeds from (Repayment to) short-term borrowings | 459,089 | (1,111,061) | (169,109) | ||||||
Repayment to (Repayment to) short-term borrowings-related party | 803,280 | (4,068,852) | (619,298) | ||||||
Net cash provided by (used in ) financing activities | 61,471,426 | (179,913) | (27,384) | ||||||
Effect of exchange rate fluctuation on cash and cash equivalents | (28,514) | 18,100 | 2,755 | ||||||
Net increase in cash and cash equivalents | RMB | 19,565,192 | RMB | 4,477,804 | $ | 681,543 | |||
Cash and cash equivalents at beginning of period | 2,727,735 | 12,142,957 | 1,848,215 | ||||||
Cash and cash equivalents at end of period | RMB | 22,292,927 | RMB | 16,620,761 | $ | 2,529,758 | |||
Supplemental cash flow information | |||||||||
Cash paid during the period for interest | RMB | - | RMB | 48,000 | $ | 7,306 | |||
Cash paid during the period for taxes | RMB | 98,834 | RMB | 2,344,515 | $ | 356,846 | |||
SOURCE Recon Technology, Ltd.
Web Site: http://www.recon.cn