Recon Technology Reports Second Quarter 2013 Financial Results

        Recon Technology Reports Second Quarter 2013 Financial Results

Revenue Increases 49%, Net Profit Up 278%

PR Newswire

BEIJING, Feb. 13, 2013

BEIJING, Feb.13, 2013 /PRNewswire-FirstCall/ --Recon Technology, Ltd.
(Nasdaq: RCON) ("Recon" or the "Company"), a Chinese non-state-owned oilfield
services provider to oil and gas companies and their affiliates, today
reported results for its second quarter of fiscal 2013 ended December 31,
2012.

Q2 FY2013 Highlights

                                      For the Three Months Ended
                                      December 31,
                                      2011            2012            % Change
Revenues                              RMB30,844,229  RMB45,980,600  49.07%
Net income attributable to ordinary   1,395,926       5,288,361       278.84%
shareholders
Earnings per share                    0.35            1.34            278.84%

  oTotal revenues for the second quarter of FY2013 were approximately RMB46.0
    million ($7.3 million), an increase of 49.1% from the same period of
    FY2012.
  oNet income attributable to ordinary shareholders for the second quarter of
    FY2013 was RMB5.3 million ($0.8 million), or RMB1.34 ($0.21) per diluted
    share. Net income attributable to ordinary shareholders for the same
    period of FY2012 was RMB1.4 million, or RMB0.35 ($0.06) per diluted share.

"Recon recorded both strong top-line and bottom-line growth in the second
quarter of fiscal 2013. We are very pleased with our progress over the past
several quarters and expect the trend to continue in 2013." said Mr. Yin
Shenping, Chairman and CEO of Recon. "For the six-month period, our business
benefited mainly from our recently developed fracturing service business. It
also benefited from our integrated product-service strategies. To further
strengthen our competitive advantage, protect our leading market position, and
maintain our strong growth momentum, we will continue to expand our portfolio
of products and services and focus our growth strategies on high growth,
high-margin areas."

Q2 FY2013 Financial Results

Total revenues for the second quarter of FY2013 increased by 49.1% to RMB46.0
million ($7.3 million) from RMB30.8 million for the same period in FY2012.
Service revenues were particularly strong, increasing 476.5% year over year.
The overall increase of service revenue consisted mainly of fracturing
services and minor maintenance services. During FY2012, Recon BHD signed
several fracturing service contracts with an aggregate contract value of RMB30
million with Sinopec Zhongyuan oilfield. As of December 31, 2012, we have
completed most of the contracts and recognized corresponding revenues from the
contracts. Our management intends to leverage our reputation and experience in
the field to pursue new fracturing business contracts in the coming years.

Gross profit increased to RMB14.0 million ($2.2 million) for the second
quarter of FY2013, up 53.8% from the same period of FY2012. Gross margin
increased to 30.49% for the second quarter of FY2013 from 29.55% for the same
period in FY2012. The improvement in overall gross margin was mainly due to
service and software sales contributing to a higher portion of total revenues.
Service and software sales historically carry higher gross margins than
hardware sales.

Selling and distribution expenses increased by 14.1% from RMB1.4 million for
the second quarter of FY2012 to RMB1.6 million ($0.3 million) for the second
quarter of FY2013. This increase was primarily due to increased shipping
charge and maintenance expenses. General and administrative expenses decreased
by 32.3% from RMB3.2 million for the second quarter of FY2012 to RMB2.5
million ($0.4 million) for the same period of FY2013. Research and development
expenses were RMB4.2 million ($0.7 million) for the second quarter of FY2013,
up 72.5% from a year ago. Overall, operating expenses increased by 18.6% year
over year to RMB8.3 million ($1.3 million) for the second quarter of FY2013.

Income from operations was RMB5.7 million ($0.9 million) for the second
quarter of FY2013, compared to RMB2.1 million for the same period of FY2012.
This increase in income from operations is mainly driven by top line growth as
well as decrease in SG&A expenses as a percentage of total revenues.

Net income attributable to ordinary shareholders increased by 278.8% to RMB5.3
million ($0.8 million) for the second quarter of FY2013 from RMB1.4 million
for the same period of FY2012. Diluted earnings per share was RMB1.34 ($0.21)
for the second quarter of FY2013, compared to RMB0.35 ($0.06) for the same
period of FY2012.

Adjusted EBITDA was RMB7.6 million ($1.2 million) for the second quarter of
FY2013, up 249.9% compared to RMB2.2 million for the same period of FY2012.

                                    For the Three Months Ended
                                    December 31,
Reconciliation of Adjusted EBITDA   2011           2012           2012
to Net Income (Loss)               RMB            RMB            USD
Net income (loss)                   RMB1,581,383  RMB5,887,567  RMB932,153
Provision for income taxes          104,566        423,308        67,020
Interest expense                    133,384        546,658        86,550
Stock compensation expense          261,483        452,348        71,618
Depreciation, amortization and      77,434         242,778        38,438
accretion
Adjusted EBITDA                     RMB2,158,250  RMB7,552,659  RMB1,195,779

As of December 31, 2012, cash and cash equivalents were RMB2.1 million ($0.3
million). Cash and cash equivalents consist of cash on hand, demand deposits
and highly liquid short-term debt investments with stated maturities of no
more than six months.

Year-to-Date FY2013 Financial Results

Total revenues for the six months ended December 31, 2012 increased by 53.8%
to RMB55.0 million ($8.7 million) from RMB35.8 million for the same period of
fiscal 2012, primarily driven by strong sales from fracturing service
business.

Gross profit increased to RMB16.5 million ($2.6 million) for the six months
ended December 31, 2012, up 42.0% from the same period of fiscal 2012. Gross
margin decreased to 29.92% for the six months ended December 31, 2012 from
32.39% for the same period ended December 31, 2011. The decrease in gross
margin was mainly related to furnace sales, which carry a lower margin than
our other solutions.

Selling and distribution expenses increased by 28.2% from RMB2.3 million for
the six months ended December 31, 2011 to RMB2.9 million ($0.5 million) for
the same period in fiscal 2013. This increase was primarily due to increased
shipping charge and maintenance expenses. General and administrative expenses
decreased by 22.9% from RMB5.8 million for the six months ended December 31,
2011 to RMB4.5 million ($0.7 million) for the same period of fiscal 2013.
Research and development expenses were RMB5.7 million ($0.9 million) for the
six months ended December 31, 2012, up 23.1% from the same period of fiscal
2012. Overall, operating expenses were RMB13.1 million ($2.1 million) for the
six months ended December 31, 2012, steady compared to same period of last
year.

Income from operations was RMB3.3 million ($0.5 million) for the six months
ended December 31, 2012, compared to a loss of RMB1.1 million for the same
period ended December 31, 2011. This increase in income from operations can be
attributed primarily to an increase in total revenues and decrease in
operating expenses as a percentage of total revenues.

Net income attributable to ordinary shareholders increased by 246.5% to RMB2.9
million ($0.5 million) for the six months ended December 31, 2012, an
improvement of RMB4.9 million compared to a loss of RMB2.0 million for the
same period of fiscal 2012. Diluted earnings per share was RMB0.75 ($0.12) for
the six months ended December 31, 2012, compared to diluted loss per share of
RMB0.51 for the same period ended December 31, 2011.

Adjusted EBITDA was RMB6.1 million ($1.0 million) for the six months ended
December 31, 2012, compared to a loss of RMB0.6 million for the same period of
fiscal 2012, an improvement of 1,048.5%.

                                       For the Six Months Ended
                                       December 31,
Reconciliation of Adjusted EBITDA      2011            2012           2012
to Net Income (Loss)                  RMB             RMB            USD
Net income (loss)                      RMB-1,823,813  RMB3,549,283  $561,942
Provision for income taxes             213,081         454,932        72,027
Interest expense                       276,295         876,414        138,759
Stock compensation expense             524,847         907,153        143,626
Depreciation, amortization and         166,157         315,157        49,897
accretion
Adjusted EBITDA                        RMB-643,433    RMB6,102,939  $966,251

For the six months ended December 31, 2012, net cash provided by operating
activities was RMB5.2 million ($0.8 million). This was an increase of RMB7.2
million ($1.1 million) compared to net cash used in operating activities of
RMB2.0 million for the six months ended December 31, 2011.

Net cash used in financing activities amounted to RMB6.6 million ($1.0
million) for the six months ended December 31, 2012, compared to RMB0.2
million for the same period of fiscal 2012. During the fiscal 2013 six-month
period, we paid back a prior RMB12 million ($1.9 million) commercial bank loan
and received a RMB5 million ($0.8 million) loan from another bank, which was
guaranteed by one of our shareholders.

Net cash used in investing activities was RMB0.4 million (approximately $0.1
million) for the six months ended December 31, 2012, an increase of RMB0.3
million from RMB0.1 million for the same period of fiscal 2012. The increase
was related to the purchase a motor vehicle.

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.cnor e-mail:
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.

Contact: 

At the Company:
Recon Technology, Ltd.
Tel: +86-10-8494-5799
Email: info@recon.cn
Web: http://www.recon.cn

Investor Relations:
Tina Xiao
Weitian Group LLC
Email: tina.xiao@weitian-ir.com
Web: http://www.weitian-ir.com

SOURCE Recon Technology, Ltd.

Website: http://www.recon.cn