Recon Technology Reports Third Quarter Fiscal 2013 Financial Results

     Recon Technology Reports Third Quarter Fiscal 2013 Financial Results

PR Newswire

BEIJING, May 13, 2013

BEIJING, May 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 third quarter of fiscal 2013 ended March 31, 2013.

Nine Month Financial  Highlights

  oTotal revenue for the nine months ended March 31, 2013 increased 28% to
    RMB 62.5 million ($10.0 million).
  oGross profit for the nine months ended March 31, 2013 increased 16% to RMB
    20.6 million ($3.3 million).
  oOperating profit was RMB1.2 million ($0.2 million), up 214.6% compared to
    an operating loss of RMB1.0 million for the nine months ended March 31,
    2012.
  oNet profit attributable to ordinary shareholders for the nine months ended
    March 31, 2013 was RMB 1.7 million ($0.3 million), or RMB 0.43 ($0.07) per
    diluted share, as compared to net loss attributable to ordinary
    shareholders for the same period of FY2012 of RMB 2.0 million, or a loss
    of RMB 0.48 per diluted share.

Q3 FY2013 Financial Highlights

  oTotal revenue for the third quarter of FY2013 was RMB7.5 million ($1.2
    million), a decrease of 42.4% from the same period of FY2012.
  oGross margin increased to 55.4% for the third quarter of FY2013 from 47.9%
    for the same period of FY2012.
  oNet loss attributable to ordinary shareholders for the third quarter of
    FY2013 was RMB1.2 million ($0.2 million), or RMB0.32 ($0.05) per diluted
    share. Net income attributable to ordinary shareholders for the same
    period of FY2012 was RMB0.1 million or RMB0.03 per diluted share.

"Year to date in FY2013, our operating efficiency has continued to improve,
which is reflected in our overall financial performance," said Mr. Yin
Shenping, CEO of Recon. "The temporary revenue decline in the third quarter
was mainly due to timing issues related to current project completion status,
rather than any changes in business fundamentals. As we complete outstanding
projects, and assuming we obtain new contracts for our fracturing services and
furnace business, we anticipate the coming quarters will reflect what we
believe are positive results for our company."

Mr. Yin continued, "Since our IPO in 2009, we have successfully expanded our
market penetration, including in the Sichuan Oilfield, Zhongyuan Oilfield and
Jilin Oilfield. Our fracturing services were recently qualified at Sinopec,
which gives us the opportunity to continue to expand this new service line
beyond Sinopec's affiliate, Zhongyuan Oilfield. As we continue to capitalize
on our position in China's fragmented oil services industry and broaden our
integrated products and service offerings through R&D and collaboration with
Chinese and international companies involved in the oilfield services
industry, we believe Recon is well-positioned to continue to grow."

Q3 FY2013 Financial Results

Total revenue for the third quarter of FY2013 decreased by 42.4% to RMB7.5
million ($1.2 million) from RMB13.0 million for the same period of FY2012. The
decline in revenue was mainly attributable to lower sales of automation
equipment and service business as a result of unfinished projects.

Gross profit decreased to RMB4.2 million ($0.7 million) for the third quarter
of FY2013, down 33.3% from the same period of FY2012. Gross margin increased
to 55.4% for the third quarter of FY2013 from 47.9% for the same period of
FY2012. This was mainly because software sales, which have higher gross
margin, accounted for a higher percentage of total revenue during the third
quarter of FY2013 compared to the same period in FY2012.

Selling and distribution expenses increased by 40.6% to RMB1.8 million ($0.3
million) for the third quarter of FY2013 from RMB1.3 million for the same
period of FY2012. This increase was primarily due to increased business
travelling expenses, bidding maintenance expenses. General and administrative
expenses decreased by 5.4% to RMB4.0 million ($0.6 million) for the third
quarter of FY2013 from RMB4.2 million for the same period of FY2012. Research
and development expenses decreased by 16.6% to RMB0.6 million ($0.1 million)
for the third quarter of FY2013 from RMB0.7 million for the same period of
FY2012.

Loss from operations was RMB2.2 million ($0.3 million) for the third quarter
of FY2013, compared to an income of RMB0.1 million for the same period of
FY2012. This decrease in income from operations is attributed to the decrease
in revenue and increase in SG&A expenses as a percentage of revenue. 

Net loss attributable to ordinary shareholders was RMB1.2 million ($0.2
million) for the third quarter of FY2013 versus net income of RMB0.1 million
for the same period of FY2012. Diluted loss per share was RMB0.32 ($0.05) for
the third quarter of FY2013, compared to diluted earnings per share of RMB0.03
($0.005) for the same period of FY2012.

Adjusted EBITDA was (RMB0.1) million for the third quarter of FY2013, compared
to RMB1.0 million for the same period of FY2012.

                                        For the Three Months Ended
                                        March 31,
Reconciliation of Adjusted EBITDA       2012          2013           2013
to Net Income (Loss)                   RMB           RMB            USD
Net income (loss)                   RMB 259,106  RMB (1,248,860)  $ (198,812)
Provision for income taxes              132,883       (152,382)      (24,258)
Interest expense                        225,718       618,473        98,458
Stock compensation expense              259,164       451,572        71,888
Depreciation, amortization and          86,685        395,535        62,967
accretion
Adjusted EBITDA                     RMB 954,305  RMB 64,338       $ 10,243

As of March 31, 2013, cash and cash equivalents were RMB6.5 million ($1
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 revenue for the nine months ended March 31, 2013 increased by 28.1% to
RMB62.5 million ($10.0 million) from RMB48.8 million for the same period of
FY2012, primarily driven by increased sales from the Hardware business as well
as the Fracturing Service business.

Gross profit increased to RMB20.6 million ($3.3 million) for the nine months
ended March 31, 2013, up 15.7% from the same period of FY2012. Gross margin
decreased to 33.0% for the nine months ended March 31, 2013 from 36.5% for the
same period of FY 2012. This was mainly related to margin contraction in our
furnace business as a result of higher material and labor costs.

Selling and distribution expenses increased by 32.7% to RMB4.7 million ($0.7
million) for the nine months ended March 31, 2013 from RMB3.5 million for the
same period FY 2012. This increase was primarily due to increased shipping
costs and maintenance expenses. General and administrative expenses decreased
by 15.5% to RMB8.5 million ($1.3 million) for the nine months ended March 31,
2013 from RMB10.0 million for the same period FY 2012. Research and
development expenses were RMB6.3 million ($1 million) for the nine months
ended March 31, 2013, up 18.2% from the same period of FY2012. Overall,
operating expenses were RMB19.4 million ($3.1 million) for the nine months
ended March 31, 2013, up 3.0% from the same period of FY2012.

Income from operations was RMB1.2 million ($0.2 million) for the nine months
ended March 31, 2013, compared to a loss of RMB1.0 million for the same period
of FY2012. This increase in income from operations can be attributed primarily
to an increase in total revenue and decrease in general and administrative
expenses as a percentage of total revenue.

Net income attributable to ordinary shareholders was RMB1.7 million ($0.3
million) for the nine months ended March 31, 2013, an improvement of RMB3.6
million from net loss of RMB1.9 million for the same period of FY2012. Diluted
earnings per share was RMB0.43 ($0.07) for the nine months ended March 31,
2013, compared to diluted loss per share of RMB0.48 for the same period of
FY2012.

Adjusted EBITDA was RMB5.9 million ($0.9 million) for the nine months ended
March 31, 2013, 1,750.7% increasedcompared to RMB0.3 million for the same
period of FY2012.

                                        For the Nine Months Ended
                                        March 31,
Reconciliation of Adjusted EBITDA       2012              2013         2013
to Net Income (Loss)                   RMB               RMB          USD
Net income (loss)                   RMB (1,564,708)  RMB 2,300,423  $ 366,218
Provision for income taxes              345,964           302,550      48,164
Interest expense                        502,013           1,494,887    237,979
Stock compensation expense              784,010           1,358,726    216,303
Depreciation, amortization and          252,842           467,914      74,490
accretion
Adjusted EBITDA                     RMB 320,121      RMB 5,924,500  $ 943,154

For the nine months ended March 31, 2012, net cash provided by operating
activities was RMB17.3 million ($2.8 million). This was an increase of RMB26.5
million ($4.2 million) compared to net cash used in operating activities of
RMB9.2 million for the same period of FY2012. 

Net cash used in financing activities amounted to RMB14.1 million ($2.2
million) for the nine months ended March 31, 2013, compared to net cash
provided by financing activities of RMB8.8 million for the same period of
FY2012. During the fiscal 2013 nine-month period, we repaid RMB21.7 million
($3.4 million) commercial bank loan and received a RMB8.35 million ($1.3
million) loan from two banks, which was guaranteed by one of our shareholders.

Net cash used in investing activities was RMB0.5 million ($0.1 million) for
the nine months ended March 31, 2013, compared to RMB0.6 million for the same
period of FY2012. The slight decrease was mainly due to approximately RMB0.2
million increase in proceeds from disposal of fixed assets and offset by
approximately RMB0.1 million increase in purchase of property and equipment.

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 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



RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                             As of June 30,   As of March 31,  As of March 31,
                             2012             2013             2013
ASSETS                       RMB              RMB              U.S. Dollars
Current assets
                                             
Cash and cash equivalents       3,533,283        6,452,691    $   1,027,237
                             RMB              RMB
Trade accounts receivable,       61,993,942       49,012,257       7,802,512
net
Trade accounts receivable-       20,394,749       17,693,490       2,816,717
related parties, net
Inventories, net                 24,281,300       14,884,099       2,369,476
Other receivables, net          8,074,096        17,858,793       2,843,033
Other receivables- related       17,729           1,056,696        168,221
parties
Purchase advances, net           16,250,616       21,687,064       3,452,475
Purchase advances- related       1,093,534        1,394,034        221,923
parties
Tax recoverable                  2,790,722        -                -
Prepaid expenses                535,336          809,686          128,898
Deferred tax asset               1,106,801        1,094,438        174,229
Total current assets             140,072,108      131,943,248      21,004,721
Property and equipment, net      1,774,820        1,795,564        285,845
Long-term other receivable       10,302,349       5,228,053        832,280
Total Assets                 RMB 152,149,277  RMB 138,966,865  $   22,122,846
LIABILITIES AND EQUITY
Current liabilities
Short-term bank loans        RMB 23,000,000   RMB 9,697,048    $   1,543,723
Trade accounts payable           11,905,560       6,262,528        996,964
Trade accounts payable-          5,339,231        5,449,388        867,516
related parties
Other payables                  2,341,826        2,290,687        364,666
Other payable- related           1,099,259        5,998,879        954,992
parties
Deferred revenue                 3,291,073        3,135,904        499,221
Advances from customers          936,124          1,181,120        188,029
Accrued payroll and              949,579          1,663,438        264,811
employees' welfare
Accrued expenses                 476,416          343,163          54,630
Taxes payable                    9,681,620        6,693,590        1,065,587
Short-term borrowings-           4,123,306        5,751,381        915,592
related parties
Short-term borrowings- other     2,767,066        570,375          90,801
Total current liabilities        65,911,060       49,037,501       7,806,532
Commitments and Contingency
Equity
Common stock, ($ 0.0185 U.S.
dollar par value, 25,000,000
shares authorized; 3,951,811
shares issued and                529,979          529,979          84,370
outstanding as
of June 30, 2012 and March
31, 2013)
Additional paid-in capital       67,643,791       69,053,281       10,992,945
Appropriated retained            2,378,961        2,378,961        378,719
earnings
Unappropriated retained          9,354,535        11,051,996       1,759,424
earnings
Accumulated other                (290,496)        (307,385)        (48,936)
comprehensive loss
Total controlling                79,616,770       82,706,832       13,166,522
shareholders' equity
Non-controlling interest         6,621,447        7,222,532        1,149,792
Total equity                     86,238,217       89,929,364       14,316,314
Total Liabilities and Equity RMB 152,149,277  RMB 138,966,865  $   22,122,846







RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                For the nine months ended                      For the three months ended
                March 31,                                      March 31,
                2012             2013             2013         2012              2013             2013
                RMB              RMB              USD          RMB               RMB              USD
Revenues
Hardware        RMB 30,162,440   RMB 30,766,627   $ 4,897,897  RMB   6,997,916   RMB 4,161,583    $ 662,504
Service             5,547,005        20,567,637     3,274,267        1,990,000       62,678         9,978
Software            3,952,991        5,192,712      826,654          -               -              -
Software -          -                2,273,504      361,931          -               2,273,504      361,931
related parties
Hardware -          9,143,503        3,736,107      594,770          4,031,206       1,004,030      159,837
related parties
Total revenues      48,805,939       62,536,587     9,955,519        13,019,122      7,501,795      1,194,250
Cost of             30,979,868       41,915,938     6,672,812        6,786,052       3,346,344      532,722
revenues
Gross profit        17,826,071       20,620,649     3,282,707        6,233,070       4,155,451      661,528
Selling and
distribution        3,537,806        4,693,193      747,133          1,273,126       1,790,199      284,991
expenses
General and
administrative      10,008,519       8,452,540      1,345,603        4,193,772       3,966,782      631,492
expenses
Research and
development         5,318,048        6,284,834      1,000,515        662,743         552,645        87,978
expenses
Operating           18,864,373       19,430,567     3,093,251        6,129,641       6,309,626      1,004,461
expenses
Income (loss)       (1,038,302)      1,190,082      189,456          103,429         (2,154,175)    (342,933)
from operations
Other income
(expenses)
Subsidy income      554,856          2,143,669      341,262          540,756         1,343,669      213,906
Interest income     3,089            443,391        70,586           286             137,803        21,938
Interest            (502,013)        (1,494,887)    (237,979)        (225,718)       (618,473)      (98,458)
expense
Gain from
foreign             -                339,876        54,107           -               (185)          (29)
currency
exchange
Other income        (236,374)        (19,158)       (3,050)          (26,764)        (109,881)      (17,493)
(expense)
Income (loss)
before income       (1,218,744)      2,602,973      414,382          391,989         (1,401,242)    (223,069)
tax
Provision
(benefit) for       345,964          302,550        48,164           132,883         (152,382)      (24,258)
income tax
Net Income          (1,564,708)      2,300,423      366,218          259,106         (1,248,860)    (198,811)
(loss)
Less: Net
income
attributable to     325,867          602,961        95,988           140,410         (2,127)        (339)
non-controlling
interest
Net Income
(loss)
attributable to RMB (1,890,575)  RMB 1,697,462    $ 270,230    RMB   118,696     RMB (1,246,733)  $ (198,472)
Recon
Technology, Ltd
Comprehensive
income (loss)
Net income          (1,564,708)      2,300,423      366,218          259,106         (1,248,860)    (198,811)
(loss)
Foreign
currency            (119,795)        (16,889)       (2,689)          (119,973)       (717)          (114)
translation
adjustment
Comprehensive       (1,684,503)      2,283,534      363,529          139,133         (1,249,577)    (198,925)
income (loss)
Less:
Comprehensive
income              313,888          601,084        95,690           128,449         (2,207)        (351)
attributable to
non-controlling
interest
Comprehensive
income (loss)
attributable to RMB (1,998,391)  RMB 1,682,450    $ 267,839    RMB 10,684      RMB (1,247,370)  $ (198,574)
Recon
Technology, Ltd
Earning (loss)
per common      RMB (0.48)       RMB 0.43         $ 0.07       RMB   0.03        RMB (0.32)       $ (0.05)
share - basic
and diluted
Weighted -
average shares      3,951,811        3,951,811      3,951,811        3,951,811       3,951,811      3,951,811
-basic and
diluted



RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             For the nine months ended March 31,
                             2012              2013              2013
                             RMB               RMB               U.S. Dollars
Cash flows from operating
activities:
Net income (loss)            RMB (1,564,708)   RMB 2,300,423     $ 366,218
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation                     252,842           467,914         74,490
Loss from disposal of           18,887            26,845          4,274
equipment
Provision/(recovery of) for      1,695,435         (82,420)        (13,121)
doubtful accounts
Stock based compensation         784,010           1,358,726       216,303
Deferred tax                     (315,125)         12,363          1,968
(benefit)/provision
Changes in operating assets
and liabilities:
Trade accounts receivable        (16,718,352)      13,156,606      2,094,467
Trade accounts                   -                 2,701,259       430,027
receivable-related parties
Notes receivable                 1,276,574         -               -
Other receivable, net            2,301,650         (4,641,896)     (738,968)
Other receivables related        -                 (1,038,967)     (165,398)
parties, net
Purchase advance, net            (10,691,586)      (5,597,453)     (891,087)
Purchase advance-related         -                 (300,500)       (47,838)
party, net
Tax recoverable                  -                 2,790,722       444,269
Prepaid expense                  (1,409,973)       (274,350)       (43,675)
Inventories                      6,586,927         9,397,201       1,495,988
Trade accounts payable           6,462,714         (5,643,032)     (898,343)
Trade accounts                   -                 110,157         17,536
payable-related parties
Other payables                   2,087,020         (51,139)        (8,141)
Other payables-related           -                 4,899,620       779,996
parties
Deferred income                  (899,460)         (155,169)       (24,702)
Advances from customers          30,705            244,996         39,002
Accrued payroll and              (41,042)          713,859         113,643
employees' welfare
Accrued expenses                 (34,268)          (133,253)       (21,213)
Taxes payable                    934,906           (2,988,030)     (475,680)
Net cash provided by (used       (9,242,844)       17,274,482      2,750,015
in) operating activities
Cash flows from investing
activities:
Purchase of property and         (564,831)         (676,504)       (107,696)
equipment
Proceeds from disposal of        4,900             161,000         25,630
equipment
Net cash used in investing       (559,931)         (515,504)       (82,066)
activities
Cash flows from financing
activities:
Proceeds from short-term         9,000,000         8,350,000       1,329,279
bank loans
Repayments of short-term         (5,000,000)       (21,652,952)    (3,447,044)
bank loans
Proceeds from short-term         574,597           -               -
borrowings
Proceeds from                    4,198,901         3,658,102       582,352
borrowings-related parties
Repayment of short-term         (500,000)         (2,275,764)     (362,290)
borrowings
Repayment of short-term          -                 (2,232,477)     (355,399)
borrowings-related parties
Capital contribution in VIE      500,000           20,000          3,184
Net cash provided by (used       8,773,498         (14,133,091)    (2,249,918)
in) financing activities
Effect of exchange rate
fluctuation on cash and cash     (100,863)         293,521         46,724
equivalents
Net increase (decrease in)       (1,130,140)       2,919,408       464,755
cash and cash equivalents
Cash and cash equivalents at     3,485,944         3,533,283       562,482
beginning of period
Cash and cash equivalents at RMB 2,355,804     RMB 6,452,691     $ 1,027,237
end of period
Supplemental cash flow
information
Cash paid during the period  RMB 334,014       RMB 1,356,581     $ 215,961
for interest
Cash paid during the period  RMB 481,723       RMB 832,028       $ 132,455
for taxes

SOURCE Recon Technology, Ltd.

Website: http://www.recon.cn
Website: http://www.weitian-ir.com