BEIJING, October 1, 2012 /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 its financial results for fiscal year 2012 ended June 30, 2012.
Fiscal Year 2012 Highlights
"I'm pleased that we closed the year with improved operating results," said Mr. Yin Shenping, CEO of Recon, "The high-end segment of China's oilfield service industry has opened more to private companies, and we believe there are opportunities for Chinese oilfield services companies, especially experienced companies that can provide all-in-one solutions for customers. As a small company, Recon now is more focused on oilfield automation and production stimulation-related services. But we also seek to extend our business on the industrial chain by providing more integrated services and incremental measures and growing our business from a predominantly up-ground business to include some down-hole services as well. We believe our experience and reputation will help us remain competitive in this arena."
Fiscal Year 2012 Results
Total revenues for the year ended June 30, 2012 were RMB75.54 million ($11.95 million), an increase of RMB11.85 million or 18.61%. The deconsolidation of ENI was responsible for a decrease of RMB18.68 million in hardware and hardware-related revenues. Excluding the effect of deconsolidating ENI, our operating revenue increased by RMB30.54 million, or 67.85%
Gross profit increased by RMB4.05 million ($641 thousand), or 20.05%, to RMB24.27 million ($3.84 million) for fiscal year 2012. Gross profit as a percentage of revenues increased slightly from 31.75% to 32.13%.
Selling and distribution expenses decreased by RMB2.68 million, or 34.67%, from RMB7.74 million for the year ended June 30, 2011 to RMB 5.05 million ($780 thousand) for the same period of 2012 as a result of focusing our selling efforts on a more limited number of clients.
General and administrative expenses decreased by RMB9.30 million ($1.47 million), or 29.01%, from RMB32.06 million in FY2011 to RMB22.76 million ($3.60 million) in the same period of 2012, which was mainly attributable to deconsolidation of ENI during the fiscal year 2011, offset by increase in expenses in research and development activities, staff wages, in order to retain talented staff and SOX compliance services.
Loss from operations was RMB3.54 million ($560 thousand) for FY2012, an improvement of RMB16.03 million, or 81.93%, from a loss of RM19.57 million for 2011. This improvement in operations is attributed primarily to the deconsolidation of ENI, increase in revenues and reduction in expenses during this year.
Net loss attributable to ordinary shareholders was RMB3.82 million ($605 thousand) for the year ended June 30, 2012, an improvement of RMB25.22 million or 86.84%, from a loss of RMB29.04 million for same period of 2011.
As of June 30, 2012, cash and cash equivalents was RMB3.53 million ($553 thousand). Except for RMB6.89 million ($1.09 million) of short-term borrowings and RMB23 million ($3.64 million) short-term bank loan, there were no other financing activities and contingent liabilities.
Net cash used in operating activities was RMB21.87 million ($3.46 million) for the year ended June 30, 2012, an increase of RMB15.54 million ($2.46 million) from RMB6.33 million for the same period of 2011. The increase in the use of cash in the current period was due to an increase in trade accounts receivable and purchase advances, which resulted from increased business activities, offset by the increased in inventory turnover and accounts payable.
Net cash provided in financing activities was RMB22.74 million ($3.60 million) for the year ended June 30, 2012, compared to net cash provided by financing activities amounting to RMB2.62 million for the same period of 2011. The increase in net cash provided by financing activities was mainly due to the increase of bank loans and short-term borrowings from related parties to supplement our working capital.
Net cash used in investing activities was RMB840 thousand ($133 thousand) for the year ended June 30, 2012, a decrease of RMB1.59 million from RMB2.43 million for the same period of 2011. The decrease was mainly caused by a loss on cash due to the deconsolidation of ENI amounting to RMB2.56 million in the fiscal 2011, while there was no such loss for the same period of 2012.
About Recon Technology, Ltd.
Recon Technology, Ltd. is a non-state-owned oil field service company in China. The company has been providing software, equipment and services designed to increase the efficiency and automation in oil and gas exploration, extraction, production and refinery for Chinese oil and gas fields for more than 10 years. More information may be found at http://www.recon.cn or via e-mail at info@recon.cn.
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission.
All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Investor Contact:
Recon Technology, Ltd.
Tel: +86-10-8494-5799
RECON TECHNOLOGY, LTD. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
As of June 30, |
As of June 30, |
As of June 30, | ||||||
2011 | 2012 | 2012 | ||||||
ASSETS | RMB | RMB | U.S. Dollars | |||||
Current assets | ||||||||
Cash and cash equivalents | RMB | 3,485,944 | RMB | 3,533,283 | $ | 559,090 | ||
Notes receivable | 1,276,574 | - | - | |||||
Trade accounts receivable, net | 22,329,705 | 61,993,942 | 9,809,634 | |||||
Trade accounts receivable- related parties, net | 25,983,172 | 20,394,749 | 3,227,170 | |||||
Inventories, net | 22,576,094 | 24,281,300 | 3,842,160 | |||||
Other receivables, net | 6,128,794 | 8,074,096 | 1,277,608 | |||||
Other receivables- related parties | 4,383,000 | 17,729 | 2,805 | |||||
Purchase advances, net | 12,152,896 | 16,250,616 | 2,571,422 | |||||
Purchase advances- related parties | 989,828 | 1,093,534 | 173,036 | |||||
Tax recoverable | - | 2,790,722 | 441,591 | |||||
Prepaid expenses | 1,016,299 | 535,336 | 84,709 | |||||
Deferred tax asset | 458,133 | 1,106,801 | 175,135 | |||||
Total current assets | 100,780,439 | 140,072,108 | 22,164,360 | |||||
Property and equipment, net | 1,132,425 | 1,774,820 | 280,839 | |||||
Long-term other receivable | 12,971,481 | 10,302,349 | 1,630,196 | |||||
Total Assets | RMB | 114,884,345 | RMB | 152,149,277 | $ | 24,075,395 | ||
LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Short-term bank loan | RMB | 5,000,000 | RMB | 23,000,000 | $ | 3,639,413 | ||
Trade accounts payable | 6,320,488 | 11,905,560 | 1,883,881 | |||||
Trade accounts payable- related parties | - | 5,339,231 | 844,855 | |||||
Other payables | 1,960,924 | 2,341,826 | 370,560 | |||||
Other payable- related parties | 61,477 | 1,099,259 | 173,942 | |||||
Deferred revenue | 2,420,497 | 3,291,073 | 520,764 | |||||
Advances from customers | 782,945 | 936,124 | 148,128 | |||||
Accrued payroll and employees' welfare | 157,824 | 949,579 | 150,257 | |||||
Accrued expenses | 345,015 | 476,416 | 75,384 | |||||
Taxes payable | 7,192,123 | 9,681,620 | 1,531,975 | |||||
Short-term borrowings | 1,743,286 | 2,767,066 | 437,848 | |||||
Short-term borrowings- related parties | 911,399 | 4,123,306 | 652,453 | |||||
Total current liabilities | 26,895,978 | 65,911,060 | 10,429,460 | |||||
Total Liabilities | 26,895,978 | 65,911,060 | 10,429,460 | |||||
Commitments and Contingency | ||||||||
Equity | ||||||||
Common shares, ($ 0.0185 U.S. dollar par value, 25,000,000 shares authorized; 3,951,811 shares issued and outstanding as of June 30, 2011 and 2012) | 529,979 | 529,979 | 83,861 | |||||
Additional paid-in capital | 65,877,686 | 67,643,791 | 10,703,640 | |||||
Appropriated retained earnings | 2,058,429 | 2,378,961 | 376,436 | |||||
Unappropriated retained earnings | 13,495,199 | 9,354,535 | 1,480,218 | |||||
Accumulated other comprehensive loss | (288,897) | (290,496) | (45,967) | |||||
Total controlling shareholders' equity | 81,672,396 | 79,616,770 | 12,598,188 | |||||
Non-controlling interest | 6,315,971 | 6,621,447 | 1,047,747 | |||||
Total equity | 87,988,367 | 86,238,217 | 13,645,935 | |||||
Total Liabilities and Equity | RMB | 114,884,345 | RMB | 152,149,277 | $ | 24,075,395 | ||
RECON TECHNOLOGY, LTD. | |||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||||||||
For the year ended June 30, | |||||||||
2011 | 2012 | 2012 | |||||||
RMB | RMB | U.S. Dollars | |||||||
Revenues | |||||||||
Hardware | RMB | 41,677,918 | RMB | 49,693,929 | $ | 7,863,337 | |||
Service | - | 13,985,465 | 2,212,995 | ||||||
Software | 2,111,111 | 3,952,991 | 625,503 | ||||||
Hardware - related parties | 19,899,438 | 7,909,994 | 1,251,641 | ||||||
Total revenues | 63,688,467 | 75,542,379 | 11,953,476 | ||||||
Cost of revenues | 43,469,506 | 51,269,950 | 8,112,719 | ||||||
Gross margin | 20,218,961 | 24,272,429 | 3,840,757 | ||||||
Selling and distribution expenses | 7,736,091 | 5,054,219 | 799,756 | ||||||
General and administrative expenses | 32,055,652 | 22,755,891 | 3,600,787 | ||||||
Operating expenses | 39,791,743 | 27,810,110 | 4,400,543 | ||||||
Loss from operations | (19,572,782) | (3,537,681) | (559,786) | ||||||
Other income (expenses) | |||||||||
Subsidy income | 822,545 | 554,856 | 87,798 | ||||||
Interest income | 1,463 | 335,517 | 53,091 | ||||||
Interest expense | (600,500) | (962,824) | (152,353) | ||||||
Gain or loss from currency exchange | 35,846 | (46,303) | (7,327) | ||||||
Other income (expense) | 279,664 | (78,097) | (12,358) | ||||||
Loss on deconsolidation | (8,989,614) | - | - | ||||||
Loss before income taxes | (28,023,378) | (3,734,532) | (590,935) | ||||||
Benefit (provision) for income taxes | (665,146) | 220,050 | 34,820 | ||||||
Net loss | (28,688,524) | (3,514,482) | (556,115) | ||||||
Less: Net income attributable to non-controlling interest | 347,851 | 305,653 | 48,365 | ||||||
Net loss attributable to Recon Technology, Ltd | RMB | (29,036,375) | RMB | (3,820,135) | $ | (604,480) | |||
Comprehensive Loss | |||||||||
Net loss | (28,688,524) | (3,514,482) | (556,115) | ||||||
Foreign currency translation adjustment | (211,900) | (1,599) | (253) | ||||||
Comprehensive loss | (28,900,424) | (3,516,081) | (556,368) | ||||||
Comprehensive income attributable to non-controlling interest | 324,307 | 305,830 | 48,393 | ||||||
Comprehensive loss attributable to Recon Technology, Ltd | RMB | (29,224,731) | RMB | (3,821,911) | $ | (604,761) | |||
Loss per common share - basic and diluted | RMB | (7.35) | RMB | (0.97) | $ | (0.15) | |||
Weighted - average shares -basic and diluted | 3,951,811 | 3,951,811 | 3,951,811 | ||||||
RECON TECHNOLOGY, LTD. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
For the year ended June 30, | ||||||||
2011 | 2012 | 2012 | ||||||
RMB | RMB | U.S. Dollars | ||||||
Cash flows from operating activities: | ||||||||
Net loss | RMB | (28,688,524) | RMB | (3,514,482) | $ | (556,115) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Loss on deconsolidation | 8,989,614 | - | - | |||||
Depreciation | 361,837 | 197,873 | 31,310 | |||||
Provision for doubtful accounts | 3,919,052 | 620,133 | ||||||
Stock based payments | 1,420,588 | 1,239,788 | 196,178 | |||||
Deferred tax benefit | (182,173) | (648,668) | (102,642) | |||||
Changes in operating assets and liabilities: | ||||||||
Trade accounts receivable | 7,406,206 | (42,916,527) | (6,790,912) | |||||
Trade accounts receivable-related parties | 9,947,112 | 5,588,423 | 884,286 | |||||
Notes receivbale | (1,276,574) | 1,276,574 | 201,999 | |||||
Other receivable, net | 3,987,998 | 447,706 | 70,843 | |||||
Other receivables related parties, net | (1,226,488) | 4,365,271 | 690,740 | |||||
Purchase advance, net | 18,150,896 | (4,488,357) | (710,217) | |||||
Purchase advance-related party, net | 8,947,200 | (103,706) | (16,410) | |||||
Tax recorvable | - | (2,790,722) | (441,591) | |||||
Prepaid expense | (269,661) | 480,963 | 76,105 | |||||
Inventories | (23,287,337) | (1,705,206) | (269,824) | |||||
Trade accounts payable | (4,747,743) | 5,585,072 | 883,756 | |||||
Trade accounts payable-related parties | - | 5,339,231 | 844,855 | |||||
Other payables | (1,183,142) | 380,902 | 60,272 | |||||
Other payables-related parties | 133,206 | 1,037,782 | 164,214 | |||||
Deferred income | (1,795,986) | 870,576 | 137,756 | |||||
Advances from customers | 334,678 | 153,179 | 24,238 | |||||
Accrued payroll and employees' welfare | (176,235) | 791,755 | 125,284 | |||||
Accrued expenses | 54,212 | 131,401 | 20,792 | |||||
Taxes payable | (3,231,315) | 2,489,497 | 393,926 | |||||
Net cash used in operating activities | (6,331,632) | (21,872,623) | (3,461,024) | |||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (173,089) | (840,268) | (132,960) | |||||
Cash effect of deconsolidating VIE | (2,256,305) | - | - | |||||
Net cash used in investing activities | (2,429,394) | (840,268) | (132,960) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from short-term bank loan | 5,000,000 | 23,000,000 | 3,639,413 | |||||
Repayments of short-term bank loan | - | (5,000,000) | (791,177) | |||||
Proceeds from other receivables-loans | 3,216,000 | |||||||
Proceeds from short-term borrowings | 168,317 | 2,153,780 | 340,804 | |||||
Proceeds from short-term borrowings-related party | 4,991,907 | 789,896 | ||||||
Repayments of short-term borrowings | (5,343,082) | (1,130,000) | (178,806) | |||||
Repayments of short-term borrowings-related party | (2,700,000) | (1,780,000) | (281,659) | |||||
Capital contribution in VIE | - | 500,000 | 79,118 | |||||
Net cash provided by financing activities | 341,235 | 22,735,687 | 3,597,589 | |||||
Effect of exchange rate fluctuation on cash and cash equivalents | (237,222) | 24,543 | 3,884 | |||||
Net increase (decrease) in cash and cash equivalent | (8,657,013) | 47,340 | 7,490 | |||||
Cash and cash equivalents at beginning of year | 12,142,957 | 3,485,944 | 551,600 | |||||
Cash and cash equivalents at end of year | RMB | 3,485,944 | RMB | 3,533,284 | $ | 559,090 | ||
Supplemental cash flow information | ||||||||
Cash paid during the year for interest | RMB | 401,529 | RMB | 442,719 | $ | 70,054 | ||
Cash paid during the year for taxes | RMB | 3,700,671 | RMB | 494,087 | $ | 78,182 | ||
