omniture

Recon Technology, Ltd Reports Financial Results for Fiscal Year 2020

2020-10-10 05:00 27004

BEIJING, Oct. 10, 2020 /PRNewswire/ -- Recon Technology, Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a China-based independent solutions integrator in the oilfield service and environmental protection, electric power and coal chemical industries, today announced its financial results for fiscal year 2020.

Fiscal 2020 Financial Highlights:

  • Total cost of revenues for fiscal year 2020 decreased by 36.4% to $6.5 million (RMB46.2 million).
  • Gross profit for fiscal year 2020 was $2.8 million (RMB19.6 million). Gross profit margin for fiscal year 2020 was 29.8%, an increase of 0.6 percentage points compared to fiscal year 2019.
  • Net loss attributable to Recon for fiscal year 2020 was $2.7 million (RMB19.2 million), or $0. 59 (RMB4.16) per basic and diluted share, compared to $3.5 million (RMB24.0 million), or $0.92 (RMB6.49) per basic and diluted share for the fiscal year 2019.

Management Commentary

Mr. Shenping Yin, co-founder and CEO of Recon, stated, "The COVID-19 pandemic had a significant impact on our operation of the second-half of fiscal 2020, resulted in a delay in project performance timeline and thus delayed recognition of revenue. Nevertheless, we are pleased with our ability to handle such challenge and we believe our delayed projects will be completed methodically as social and overall conditions in China resume. We're also very proud that our clients remained stable and we believe our strategy to establish long term cooperation with clients valuing our essential automation solution and value-added services will help us reposition our business by bringing more resources through companies that want to adopt effective online and industrial automotive solutions and Internet-of-Things in China."

"We believe Recon has been prepared for larger projects in automation and environmental protection segments. We never stop improving our business structure and focusing on opportunities that can leverage our knowledge and experience in energy industry. We believe all our current efforts will drive our long-term net profit growth targets," concluded Mr. Yin.

Fiscal 2020 Financial Results:

Revenue

Total revenues were approximately RMB65.8 million ($9.3 million), representing a decrease of 35.8% compared to fiscal year 2019.

Automation products and software. Revenues from automation products and software decreased to approximately RMB51.4 million ($7.3 million), representing a decrease of 19.1% from fiscal year 2019. The decrease was primarily due to the postponed acceptance of several projects and less expenditures budgeted by Shenhua Group and decreased orders from Xinjiang East Hope New Energy Co., Ltd.

Equipment and accessories. Revenue from equipment and accessories decreased to approximately RMB14.2 million ($2.0 million), representing a decrease of 40.6% from fiscal year 2019, mainly due to less demand of the Company's products by oilfield companies as a result of low oil price.

Oilfield environmental protection. Revenue from oilfield environmental protection decreased by 99.2% to almost nil for this period, mainly affected by late acceptance inspection of the Company's Gansu production project, thus orders were not fulfilled and revenue was not recognized during the fiscal year 2020.

Cost and Margin

Total cost of revenues decreased by 36.4% to approximately RMB46.2 million ($6.5 million), mainly due to the decreased cost in line with revenue.

Gross profit decreased to approximately RMB19.6 million ($2.8 million), representing a decrease of 34.4% from fiscal year 2019. Gross margin was maintained at a same level of 29.8%, compared to a 29.2% of last year. Specifically, gross margin for automation and equipment segments were all improved during fiscal year 2020. The Company expects that the gross margin for oilfield environmental protection segment will be back to a 40% level when the treatment process is completed and revenue is recognized.

Operating Expenses

Total operating expenses decreased to approximately RMB39.8 million ($5.6 million), representing a decrease of 26.5%.

Selling and distribution expenses. Selling and distribution expenses were approximately RMB4.4 million ($0.6 million), representing a 51.3% decrease from fiscal year 2019. This decrease was mainly caused by less traveling expenses and entertainment expenses as the Company tried to control its operating expenditure, as well as the restriction on travelling and outdoor activities imposed by PRC government due to the COVID-19 during the fiscal year 2020.

General and Administrative Expenses. General and administrative expenses was approximately RMB26.1 million ($3.7 million), representing a 36.7% decrease from fiscal year 2019. The decrease was mainly due to the decrease in stock-based compensation expense.

Research and development expenses. Research and development expenses were approximately RMB7.0 million ($1.0 million), representing an increase of 7.6% from fiscal year 2019. This increase was primarily due to more expenses spent on design of new automation platform systems.

Net Loss

Loss from operations was RMB20.2 million ($2.9 million), representing a decrease of 22.0% from fiscal year 2019, which was a loss of RMB25.8 million.

Basic and diluted EPS. Basic and diluted net loss per share were RMB4.16 ($0.59), compared to RMB6.49 ($0.92) in fiscal year 2019.

Financial Condition

As of June 30,2020, the Company had cash of RMB30.3 million ($4.3 million), compared to RMB4.5 million as of June 30, 2019. As of June 30, 2020, the Company had working capital of RMB64.1 million ($9.1 million), while as of June 30, 2019, the Company had working capital of RMB55.7 million. The increase was mainly contributed to securities offerings during May and June of 2020.

Net cash used in operating activities was RMB5.2 million ($0.7 million) for fiscal year 2020, compared to net cash used in operating activities of approximately RMB32.2 million for fiscal year 2019. Net cash used in investing activities was RMB2.1 million ($0.3 million) for fiscal year 2020, compared to RMB13.5 million for fiscal year 2019. Net cash provided by financing activities was RMB33.2 million ($4.7 million) for fiscal year 2020, compared to net cash provided by financing activities of RMB3.5 million for fiscal year 2019.

Exchange Rate

The translation of RMB amounts into U.S. dollars are included solely for the convenience of readers and have been made at the rate of RMB7.06973 to $1.00, the approximate exchange rate prevailing on December 31, 2019.

About Recon Technology, Ltd.

Recon Technology, Ltd. (RCON) is China's first non-state-owned oil and gas field service company listed on NASDAQ. Recon supplies China's largest oil exploration companies with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measures for increasing petroleum extraction levels, reducing impurities and lowering production costs. Since 2017, the Company has expanded its business operations into other segments of the broader energy industry including electric power, coal chemicals, renewable energy and environmental protection in the energy and chemical industries. Through the years, Recon has taken leading positions on several market segments of the oil and gas field service industry. Recon also has developed stable long-term cooperation relationships with its major clients, and its products and service are well accepted by clients. For additional information please visit: www.recon.cn.

Safe Harbor Statement

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, the effect of novel coronavirus and other health matters on target markets, 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.

IR contact:

In China:

Ms. Liu Jia
Recon Technology, Ltd.
Phone: +86 (10) 8494-5799
Email: info@recon.cn

 

 

 

 

RECON TECHNOLOGY, LTD

CONSOLIDATED BALANCE SHEETS




As of June 30


As of June 30


As of June 30




2019


2020


2020


ASSETS


RMB


RMB


U.S. Dollars


Current assets











Cash


¥

4,521,325


¥

30,336,504


$

4,291,042


Notes receivable



3,073,680



4,180,885



591,378


Trade accounts receivable, net



68,535,282



48,244,015



6,824,026


Trade accounts receivable- related party, net



3,409,912



3,068,920



434,093


Inventories, net



1,270,523



1,985,723



280,877


Other receivables, net



5,665,593



6,350,802



898,309


Loans to third parties



4,960,000



3,200,377



452,687


Purchase advances, net



1,343,576



178,767



25,286


Contract assets, net



4,633,940



31,537,586



4,460,933


Prepaid expenses



192,837



198,294



28,048


Prepaid expenses - related parties



217,600



-



-


Total current assets



97,824,268



129,281,873



18,286,679













Property and equipment, net



3,661,321



29,756,879



4,209,055


Construction in progress



21,524,994



-



-


Land use right, net



1,307,887



1,280,648



181,145


Investment in unconsolidated entity



31,078,971



31,541,850



4,461,536


Long-term other receivables, net



440,015



3,640



515


Prepayments for construction in progress



1,144,098



-



-


Operating lease right-of-use assets (including ¥Nil and ¥803,503
($113,654) from a related party as of June 30, 2019 and 2020, respectively)



-



2,549,914



360,681


Total Assets


¥

156,981,554


¥

194,414,804


$

27,499,611













LIABILITIES AND STOCKHOLDERS' EQUITY






















Current liabilities











Short-term bank loans


¥

2,500,000


¥

9,520,000


$

1,346,586


Trade accounts payable



14,089,293



23,034,347



3,258,163


Other payables



2,246,410



2,609,486



369,107


Other payable- related parties



2,290,873



4,498,318



636,279


Contract Liabilities



120,000



3,486,033



493,093


Accrued payroll and employees' welfare



1,384,529



1,917,635



271,246


Investment payable



6,400,000



6,400,000



905,268


Taxes payable



2,180,847



1,108,288



156,765


Short-term borrowings



1,081,096



200,000



28,290


Short-term borrowings - related parties



9,010,525



10,230,746



1,447,120


Long-term borrowings - related party - current portion



780,797



847,346



119,856


Operating lease liabilities - current (including ¥Nil and ¥450,728
($63,755) from a related party as of June 30, 2019 and 2020, respectively)



-



1,328,976



187,981


Total Current Liabilities



42,084,370



65,181,175



9,219,754













Operating lease liabilities - non-current (including ¥Nil and ¥352,775
($49,899) from a related party as of June 30, 2019 and 2020, respectively)



-



1,210,088



171,165


Long-term borrowings - related party



8,196,204



7,379,253



1,043,782


Total Liabilities



50,280,574



73,770,516



10,434,701













Commitments and Contingencies






















Equity











Common stock, ($ 0.0925 U.S. dollar par value, 20,000,000 shares
authorized; 4,361,634 shares and 7,202,832 shares issued and outstanding
as of June 30, 2019 and June 30, 2020, respectively) *



2,712,773



4,577,233



647,441


Additional paid-in capital



250,624,798



282,505,455



39,959,870


Statutory reserve



4,148,929



4,148,929



586,858


Accumulated deficit



(164,780,885)



(184,027,586)



(26,030,358)


Accumulated other comprehensive gain



2,909,936



2,825,731



399,694


Total stockholders' equity



95,615,551



110,029,762



15,563,505


Non-controlling interests



11,085,429



10,614,526



1,501,405


Total equity



106,700,980



120,644,288



17,064,910


Total Liabilities and Equity


¥

156,981,554


¥

194,414,804


$

27,499,611


 

 

 

RECON TECHNOLOGY, LTD

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS




For the years ended June 30,



2018


2019


2020


2020




RMB


RMB


RMB


USD


Revenues














Revenues - third party


¥

84,135,037


¥

98,657,433


¥

65,760,651


$

9,301,722


Revenues - related party



577,009



3,726,894



-



-


Revenues



84,712,046



102,384,327



65,760,651



9,301,722
















Cost of revenues














Cost of revenues - third party



80,097,834



70,316,198



46,154,255



6,528,433


Cost of revenues - related party



464,027



2,202,765



-



-


Cost of revenues



80,561,861



72,518,963



46,154,255



6,528,433
















Gross profit



4,150,185



29,865,364



19,606,396



2,773,289
















Selling and distribution expenses



8,013,353



9,076,266



4,417,413



624,835


General and administrative expenses



34,687,317



41,288,351



26,120,099



3,694,644


Provision for (net recovery of) doubtful accounts



(841,242)



610,776



2,203,531



311,685


Research and development expenses



3,215,653



3,133,545



7,042,385



996,132


Operating expenses



45,075,081



54,108,938



39,783,428



5,627,296
















Loss from operations



(40,924,896)



(24,243,574)



(20,177,032)



(2,854,007)
















Other income (expenses)














Subsidy income



371,650



1,149,016



1,210,318



171,197


Interest income



68,028



40,391



54,746



7,744


Interest expense



(897,521)



(1,589,045)



(1,451,890)



(205,367)


Income (loss) from investment in unconsolidated entity



-



(959,905)



462,879



65,473


Impairment loss of investment in unconsolidated entity



(4,037,736)



-



-



-


Foreign exchange transaction gain (loss)



(4,068)



56,603



(17,720)



(2,506)


Other income



65,539



162,585



78,417



11,092


Other income (expense), net



(4,434,108)



(1,140,355)



336,750



47,633


Loss before income tax



(45,359,004)



(25,383,929)



(19,840,282)



(2,806,374)


Income tax expenses



16,230



398,477



282,322



39,934


Net loss



(45,375,234)



(25,782,406)



(20,122,604)



(2,846,308)
















Less: Net loss attributable to non-controlling interests



(1,302,913)



(426,501)



(875,903)



(123,895)


Net loss attributable to Recon Technology, Ltd


¥

(44,072,321)


¥

(25,355,905)


¥

(19,246,701)


$

(2,722,413)
















Comprehensive loss














Net loss



(45,375,234)



(25,782,406)



(20,122,604)



(2,846,308)


Foreign currency translation adjustment



1,765,249



1,393,843



(84,205)



(11,911)


Comprehensive loss



(43,609,985)



(24,388,563)



(20,206,809)



(2,858,219)


Less: Comprehensive loss attributable to non-controlling
interests



(1,302,913)



(426,501)



(875,903)



(123,895)


Comprehensive loss attributable to Recon Technology,
Ltd


¥

(42,307,072)


¥

(23,962,062)


¥

(19,330,906)


$

(2,734,324)
















Loss per common share - basic and diluted


¥

(19.19)


¥

(6.49)


¥

(4.16)


$

(0.59)


Weighted - average shares -basic and diluted



2,296,693



3,908,833



4,624,615



4,624,615


 

 

 

RECON TECHNOLOGY, LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS    




For the years ended



2018


2019


2020


2020




RMB


RMB


RMB


U.S. Dollars


Cash flows from operating activities:














Net loss


¥

(45,375,234)


¥

(25,782,406)


¥

(20,122,604)


$

(2,846,308)


Adjustments to reconcile net loss to net cash used in
operating activities:














Depreciation and amortization



1,119,049



1,124,011



1,609,700



227,689


Gain from disposal of equipment



(78,285)



-



(89,156)



(12,611)


Provision for (net recovery of) doubtful accounts



(841,242)



610,776



2,203,531



311,685


Provision for slow moving inventories



65,245



65,380



56,817



8,037


Amortization of right of use assets



-



-



1,408,551



199,237


Reversal of interests expense



-



-



(81,096)



(11,471)


Restricted shares issued for management and employees



15,462,124



21,288,204



7,944,835



1,123,782


Loss (income) from investment in unconsolidated entity



-



959,905



(462,879)



(65,473)


Impairment loss of investment in unconsolidated entity



4,037,736



-



-



-


Restricted shares issued for services



3,050,896



845,781



33,927



4,799


Changes in operating assets and liabilities:














Notes receivable



2,116,998



922,282



(1,107,205)



(156,612)


Trade accounts receivable



11,972,175



(40,461,376)



18,428,088



2,606,619


Trade accounts receivable-related party



-



(3,409,912)



-



-


Inventories



(5,012,984)



(1,197,529)



(1,124,935)



(159,120)


Other receivable



(1,717,096)



(928,882)



(206,146)



(29,159)


Purchase advance



(296,903)



5,784,669



1,210,309



171,196


Contract assets



(127,325)



7,554,745



(26,938,013)



(3,810,332)


Prepaid expense



318,759



316,845



(5,457)



(772)


Prepaid expense - related parties



-



(217,600)



217,600



30,779


Operating lease liabilities



-



-



(1,419,402)



(200,772)


Trade accounts payable



(2,706,304)



(400,034)



8,205,660



1,160,675


Other payables



(179,507)



(861,620)



(23,600)



(3,338)


Other payables-related parties



(102,563)



(920,584)



2,207,445



312,239


Deferred revenue



(1,174,585)



-



-



-


Advance from customers



27,756



(37,856)



3,366,033



476,119


Accrued payroll and employees' welfare



140,828



784,095



533,109



75,407


Accrued expenses



-



-



9,425



1,333


Taxes payable



(269,358)



1,748,934



(1,085,213)



(153,501)


Net cash used in operating activities



(19,569,820)



(32,212,172)



(5,230,676)



(739,873)
















Cash flows from investing activities:














Investment in unconsolidated entity



(4,037,736)



(4,205,080)



-



-


Purchases of property and equipment



(1,503,410)



(1,735,956)



(85,974)



(12,161)


Proceeds from disposal of equipment



32,000



-



900



127


Payments for land use right



(1,361,969)



-



-



-


Repayments from loans to third parties



435,250



1,000,000



11,239,623



1,589,824


Payments made for loans to third parties



(1,960,000)



(4,000,000)



(9,480,000)



(1,340,928)


Payments and prepayments for construction in progress



(9,157,103)



(4,606,823)



(3,782,912)



(535,086)


Net cash used in investing activities



(17,552,968)



(13,547,859)



(2,108,363)



(298,224)
















Cash flows from financing activities:














Proceeds from short-term bank loans



45,000



2,500,000



9,520,000



1,346,586


Repayments of short-term bank loans



(45,000)



-



(2,500,000)



(353,620)


Proceeds from short-term borrowings



4,600,000



1,081,096



200,000



28,290


Repayments of short-term borrowings



(4,900,000)



-



(1,000,000)



(141,448)


Proceeds from short-term borrowings-related parties



20,188,318



5,000,000



17,415,000



2,463,319


Repayments of short-term borrowings-related parties



(21,332,036)



(5,000,000)



(16,195,000)



(2,290,753)


Proceeds from long-term borrowings-related party



10,000,000



-



-



-


Repayments of long-term borrowings-related party



(371,975)



(684,191)



(747,630)



(105,751)


Proceeds from sale of common stock, net of issuance costs



65,004,531



-



26,141,051



3,697,603


Refund of capital contribution by a non-controlling
shareholder



-



(200,000)



-



-


Capital contribution by non-controlling shareholders



3,700,000



850,000



405,000



57,286


Net cash provided by financing activities



76,888,838



3,546,905



33,238,421



4,701,512
















Effect of exchange rate fluctuation on cash



1,765,249



1,393,873



(84,203)



(11,906)
















Net (decrease) increase in cash



41,531,299



(40,819,253)



25,815,179



3,651,509


Cash at beginning of year



3,809,279



45,340,578



4,521,325



639,533


Cash at end of year


¥

45,340,578


¥

4,521,325


¥

30,336,504


$

4,291,042
















Supplemental cash flow information














Cash paid during the year for interest


¥

868,042


¥

1,542,381


¥

1,400,462


$

198,093


Cash paid (received) during the year for taxes


¥

(22,671)


¥

2,002


¥

282,322


$

39,934
















Non-cash investing and financing activities














Shares issued to settle salary payable


¥

1,554,908


¥

-


¥

-


$

-


Issuance of common stock in exchange of shares of FGS,
net of issuance costs


¥



¥

21,433,796


¥

-


$

-


Investment payable in exchange of interest of FGS


¥

-


¥

6,400,000


¥

-


$

-


Right-of-use assets obtained in exchange for operating
lease obligations


¥

-


¥

-


¥

1,228,963


$

173,834


Inventories used for fixed assets


¥

-


¥

-


¥

409,735


$

57,956


Payable for construction in progress


¥

3,096,781


¥

5,694,980


¥

732,513


$

103,613


Receivable for disposal of property and equipment


¥

81,900


¥

-


¥

110,000


$

15,559


Payable for issuance cost of common stock


¥

-


¥

-


¥

374,696


$

53,000
















The accompanying notes are an integral part of these consolidated financial statements.

* Retrospectively restated for effect of stock split on December 27, 2019.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/recon-technology-ltd-reports-financial-results-for-fiscal-year-2020-301149639.html

Source: Recon Technology, Ltd.
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