Recon Reports Fiscal Year 2013 Financial Results

               Recon Reports Fiscal Year 2013 Financial Results

PR Newswire

BEIJING, Sept. 30, 2013

BEIJING, Sept. 30, 2013 /PRNewswire-FirstCall/ -- Recon Technology, Ltd
(Nasdaq: RCON), an oilfield services provider that operates primarily in the
People's Republic of China (the "Company"), today announcedincreasing
revenues and a generally improving operations in the fiscal year ended June
30, 2013.

Fiscal Year 2013 Highlights

  oTotal revenuesincreased by RMB 1.04 million or 1.4% in FY2013 to RMB
    76.59 million($12.38 million), due to continued development of our
    horizontal fracturing business.
  oGross profits increased 3.2% in FY2013 to RMB 25.05 million($4.05
    million).
  oGross margin improved to 32.71% as compared to 32.13% in FY 2012.
  oIncome before income taxes showed strong improvement from a loss of RMB
    3.73 million to income of RMB 906 thousand ($146 thousand).
  oComprehensive net incomeattributable to Reconin FY 2013 was
    approximatelyRMB 37 thousand ($6 thousand), an improvement of 99.03%
    compared to net loss attributable to Recon of RMB 3.82 million ($617
    thousand) for FY 2012.
  oDiluted Earning per Share attributable to Recon for FY 2013 wasRMB 0.01
    ($0.002), compared to diluted losses per share of RMB 0.97 in FY 2012.
  oAdjust EBITDA in FY 2013 was RMB 4.70 million ($760 thousand), showing a
    substantial improvement of 518.3% over FY 2012.

Mr. Yin Shenping, CEO of Recon, noted, "Our goal this year has been to grow
into an integrator of oil field and oil well services. We have built on our
particular strength in fracturing services in 2013 and plan to leverage our
relationships with customers who use our fractured products to build into a
full-service provider for our industry. Moving forward, we plan to develop our
service offerings in the different stages of the process, from exploration to
production of wells."

Mr. Yin continued, "We will also expand our business into the shale gas and
mine gas industries based on our final strategy, which is to be leading
integrator of oilfield service and products with advanced technology. We
recognize the potential market share available in China's domestic gas
industry. We believe that our products are applicable not just to this
industry, but also to complementary industries in China and abroad. We expect
that our investment of time and effort in research and development of
automation products will benefit us not only in our current industry but also
in these complementary industries moving forward."

"In addition, we recently acquired a 32.33% interest of a US based oil and gas
company in June 2013. We believe this investment will serve as a solid basis
from which we will continue to strengthen a general mutual trust and
understanding of these various global markets which will result in providing
our company with an opportunity to explore exporting our services and products
to the US and other markets."

Fiscal Year 2013 Results

Total revenuesfor the year ended June 30, 2013 were approximately RMB 76.6
million ($12.4 million), an increase of approximately RMB1.0 million or 1.4%
from RMB75.5 million for the year ended June 30, 2012. This increased was
mainly driven by development of our fracturing service business.

Gross profit increased to approximately RMB25.1 million ($4 million) for the
year ended June 30, 2013 from approximately RMB24.3 million for the year ended
June 30, 2012. Our gross profit as a percentage of revenue increased to 32.7%
for the year ended June 30, 2013 from 32.1% for the same period in FY2012.

Selling and distribution expenses increased by 21.2%, from approximately
RMB5.1 million for the year ended June 30, 2012 to approximately RMB6.1
million ($1 million) for the same period of FY2013. This increase was
primarily due to the increased expenses related to shipping, traveling and
maintenance expenses.

General and administrative expenses decreased by 33.4%, or approximately
RMB5.6 million ($0.9 million), from approximately RMB16.5 million in the year
ended June 30, 2012 to approximately RMB11.0 million ($1.8 million) as related
to the same period in FY2013. General and administrative expenses were 21.8%
of total revenues in 2012 and 14.3% of total revenues in FY2013.

Research and development expenses increased by 35.8%, from approximately
RMB6.3 million for the year ended June 30, 2012 to approximately RMB8.5
million ($1.4 million) for the same period of 2013. This increase was
primarily due to the increases in R&D expenditures on our furnaces and
fracturing services.

Loss from operations was approximately RMB0.6 million ($0.1 million) for the
year ended June 30, 2013, compared to a loss of approximately RMB3.5 million
for the same period in FY2012. This decrease in loss from operations is
attributed primarily to the increases in general revenue and decrease in our
general and administrative expenses.

Net income attributable to ordinary shareholders was RMB39,698 ($6,415) for
the year ended June 30, 2013, an improvement of approximately RMB4 million
($0.6 million) from net loss attributable to ordinary shareholders of
approximately RMB3.8 million for same period in FY2012.

Adjusted EBITDA improved by approximately RMB5.8 million ($1 million) to
approximately RMB4.7 million ($0.8 million) for the year ended June 30, 2013
compared to loss of approximately RMB1.1 million for the same period in 2012
as a result of increased revenues and lower operating expenses. Compared to
net income attributable to ordinary shareholders, we believe this EBITDA value
more accurately reflects our operations.

As of June 30, 2013, cash and cash equivalents was RMB12.4 million ($2
million). Except for RMB6.07 million ($0.98 million) of short-term borrowings
and RMB10 million ($1.6 million) short-term bank loan, there were no other
financing activities and contingent liabilities.

Net cash provided by operating activities was approximately RMB24.8 million
($4 million) for the year ended June 30, 2013. This was an increase of
approximately RMB46.5 million ($7.5 million) compared to net cash used in
operating activities of approximately RMB21.7 million for year ended June 30,
2012. This increase was mainly due to the fact that we earned net profit in
fiscal 2013 while we experienced net losses in fiscal 2012.

Net cash used in investing activities was approximately RMB2.1 million ($0.3
million) for the year ended June 30, 2013, an increase of RMB1.3 million ($0.2
million) from RMB0.8 million for the same period of 2012. The increase in net
cash used in investing activities was mainly due to an approximately RMB1.5
million increase in long-term investment for a 32.2% equity investment in a
U.S. oil and natural gas company offset by RMB0.2 million increase in proceeds
from disposal of fixed assets and a decrease of approximately RMB86,000 in
purchase of property and equipment.

Net cash used in financing activities amounted to approximately RMB14.2
million ($2.3 million) for the year ended June 30, 2013, compared to cash
flows provided by financing activities of approximately RMB22.7 million for
the year ended June 30, 2012. During the year ended June 30, 2013, we repaid
RMB23 million ($3.7 million) in commercial bank loans and received RMB10
million ($1.6 million) in loans from two banks, which were guaranteed by one
of our shareholders.

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,
                              2012             2013             2013
ASSETS                        RMB              RMB              U.S. Dollars
Current assets
                                              
Cash and cash equivalents         3,533,283        12,350,392   $  1,995,797
                              RMB              RMB
Notes receivable                  -                2,578,855       416,738
Trade accounts receivable,        61,993,942       38,648,780      6,245,561
net
Trade accounts receivable-        20,394,749       18,744,364      3,029,049
related parties, net
Inventories, net                  24,281,300       13,271,070      2,144,577
Other receivables, net            8,074,096        19,131,503      3,091,610
Other receivables- related        17,729           742,528         119,991
parties
Purchase advances, net            16,250,616       18,412,507      2,975,422
Purchase advances- related        1,093,534        394,034         63,675
parties
Tax recoverable                   2,790,722        575,650         93,024
Prepaid expenses                  535,336          2,853,956       461,192
Deferred tax asset                1,106,801        1,006,721       162,684
Total current assets              140,072,108      128,710,360     20,799,320
Property and equipment, net       1,774,820        1,709,846       276,307
Long-term investment              -                1,549,450       250,388
Long-term other receivable        10,302,349       3,502,680       566,026
                                              
Total Assets                      152,149,277      135,472,336  $  21,892,041
                              RMB              RMB
LIABILITIES AND EQUITY
Current liabilities
                                              
Short-term bank loans             23,000,000       10,000,000   $  1,615,979
                              RMB              RMB
Trade accounts payable            11,905,560       7,384,165       1,193,265
Trade accounts payable-           5,339,231        3,994,718       645,538
related parties
Other payables                    2,341,826        1,964,691       317,490
Other payable- related            1,099,259        4,239,675       685,122
parties
Deferred revenue                  3,291,073        3,381,382       546,424
Advances from customers           936,124          470,700         76,064
Accrued payroll and               949,579          1,992,783       322,030
employees' welfare
Accrued expenses                  476,416          488,730         78,978
Taxes payable                     9,681,620        6,754,428       1,091,501
Short-term borrowings-            4,123,306        5,503,279       889,318
related parties
Short-term borrowings- other      2,767,066        570,375         92,171
Total current liabilities         65,911,060       46,744,926      7,553,880
Commitments and Contingency
Equity
Common stock, ($ 0.0185 U.S.
dollar par value, 25,000,000
shares authorized; 3,951,811      529,979          529,979         85,641
shares issued and outstanding
as of June 30, 2012 and June
30, 2013)
Additional paid-in capital        67,643,791       69,516,447      11,233,710
Appropriated retained             2,378,961        3,023,231       488,548
earnings
Unappropriated retained           9,354,535        8,749,963       1,413,975
earnings
Accumulated other                 (290,496)        (293,201)       (47,378)
comprehensive loss
Total controlling                 79,616,770       81,526,419      13,174,496
shareholders' equity
Non-controlling interest          6,621,447        7,200,991       1,163,665
Total equity                      86,238,217       88,727,410      14,338,161
                                              
Total Liabilities and Equity      152,149,277      135,472,336  $  21,892,041
                              RMB              RMB



RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                               For the years ended
                               June 30,
                                   2012             2013         2013
                                   RMB              RMB          USD
Revenues
                                                                 
                                                
Hardware and software          RMB 53,646,920       41,408,517    6,691,529
                                                RMB
                                                                 $
Service                            13,985,465       25,464,003     4,114,929
Hardware and software -            7,909,994        9,713,209      1,569,634
related parties
Total revenues                     75,542,379       76,585,729     12,376,092
Cost of revenues
                                               
Hardware and software              37,740,629       26,617,786   $ 4,301,378
                               RMB              RMB
Service                            8,945,100        18,567,123     3,000,408
Hardware and software -            4,584,221        6,346,850      1,025,637
related parties
Total cost of revenues             51,269,950       51,531,759     8,327,423
Gross profit                       24,272,429       25,053,970     4,048,669
Selling and distribution           5,054,219        6,126,095      989,964
expenses
General and administrative         16,484,972       10,978,942     1,774,174
expenses
Research and development           6,270,919        8,513,680      1,375,793
expenses
Operating expenses                 27,810,110       25,618,717     4,139,931
Loss from operations               (3,537,681)      (564,747)      (91,262)
Other income (expenses)
Subsidy income                     554,856          2,257,344      364,782
Interest income                    335,517          570,442        92,182
Interest expense                   (962,824)        (1,557,204)    (251,641)
Gain from foreign currency         (46,303)         233,478        37,730
exchange
Other income (expense)             (78,097)         (32,901)       (5,317)
Income (loss) before income        (3,734,532)      906,412        146,474
tax
Provision (benefit) for income     (220,050)        286,871        46,358
tax
Net Income (loss)                  (3,514,482)      619,541        100,116
Less: Net income attributable      305,653          579,843        93,701
to non-controlling interest
Net Income (loss) attributable                 
to Recon Technology, Ltd           (3,820,135)      39,698       $ 6,415
                               RMB              RMB
Comprehensive income (loss)
Net income (loss)                  (3,514,482)      619,541        100,116
Foreign currency translation       (1,599)          (3,004)        (487)
adjustment
Comprehensive income (loss)        (3,516,081)      616,537        99,629
Less: Comprehensive income
attributable to                    305,830          579,543        93,653
non-controlling interest
Comprehensive income (loss)    
attributable to Recon              (3,821,911)  RMB 36,994       $ 5,976
Technology, Ltd                RMB
Earnings (loss) per common                     
share - basic                      (0.97)           0.01         $ 0.00
                               RMB              RMB
Earnings per common share -                    
diluted                            (0.97)           0.01         $ 0.00
                               RMB              RMB
Weighted - average shares          3,951,811        3,951,811      3,951,811
-basic
Weighted - average shares          3,951,811        3,951,811      3,951,811
-diluted



RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
                             For the years ended June 30,
                             2012              2013              2013
                             RMB               RMB               U.S. Dollars
Cash flows from operating
activities:
                                              
Net income (loss)                (3,514,482)       619,541       $ 100,116
                             RMB               RMB
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation                     361,790           618,552         99,957
Loss from disposal of            8,056             38,006          6,142
equipment
Provision/(recovery of) for      3,919,052         (749,121)       (121,056)
doubtful accounts
Stock based compensation         1,239,788         1,852,656       299,385
Deferred tax                     (648,668)         100,080         16,173
(benifit)/provision
Changes in operating assets
and liabilities:
Trade accounts receivable        (42,916,527)      25,107,519      4,057,322
Trade accounts                   5,588,423         672,175         108,622
receivable-related parties
Notes receivable                 1,276,574         (2,578,855)     (416,738)
Other receivable, net            447,706           (4,263,858)     (689,031)
Other receivables related        4,365,271         (724,799)       (117,126)
parties, net
Purchase advance, net            (4,488,357)       (2,190,796)     (354,028)
Purchase advance-related         (103,706)         699,500         113,038
party, net
Tax recoverable                  (2,790,722)       2,215,072       357,951
Prepaid expense                  480,963           (2,318,620)     (374,684)
Inventories                      (1,705,206)       11,010,230      1,779,230
Trade accounts payable           5,585,072         (4,521,395)     (730,648)
Trade accounts                   5,339,231         (1,344,513)     (217,270)
payable-related parties
Other payables                   380,902           (377,135)       (60,944)
Other payables-related           1,037,782         3,140,416       507,485
parties
Deferred income                  870,576           90,309          14,594
Advances from customers          153,179           (465,424)       (75,212)
Accrued payroll and              791,755           1,043,204       168,580
employees' welfare
Accrued expenses                 131,401           12,314          1,990
Taxes payable                    2,489,497         (2,927,192)     (473,028)
Net cash provided by (used       (21,700,650)      24,757,866      4,000,820
in) operating activities
Cash flows from investing
activities:
Purchase of property and         (1,031,028)       (753,583)       (121,777)
equipment
Long-term investment             -                 (1,549,450)     (250,388)
Proceeds from disposal of        18,787            162,000         26,179
equipment
Net cash used in investing       (1,012,241)       (2,141,033)     (345,986)
activities
Cash flows from financing
activities:
Proceeds from short-term         23,000,000        10,000,000      1,615,979
bank loans
Repayments of short-term         (5,000,000)       (23,000,000)    (3,716,751)
bank loans
Proceeds from short-term         2,153,780         579,073         93,577
borrowings
Proceeds from                    4,991,907         1,962,450       317,128
borrowings-related parties
Repayment of short-term          (1,130,000)       (2,775,764)     (448,558)
borrowings
Repayment of short-term          (1,780,000)       (582,477)       (94,127)
borrowings-related parties
Capital contribution in VIE      500,000           20,000          3,232
Net cash provided by (used       22,735,687        (13,796,718)    (2,229,520)
in) financing activities
Effect of exchange rate
fluctuation on cash and cash     24,543            (3,006)         (488)
equivalents
Net increase in cash and         47,339            8,817,109       1,424,826
cash equivalents
Cash and cash equivalents at     3,485,944         3,533,283       570,971
beginning of year
Cash and cash equivalents at                  
end of year                      3,533,283         12,350,392    $ 1,995,797
                             RMB               RMB
Supplemental cash flow
information
Cash paid during the period                   
for interest                     442,719           1,356,581     $ 219,221
                             RMB               RMB
Cash paid during the period                   
for taxes                        494,087           832,028       $ 134,454
                             RMB               RMB

SOURCE Recon Technology, Ltd.

Website: http://www.recon.cn
 
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