Recon Technology, Ltd. Reports Fiscal Year 2015 Financial Results

BEIJING, Sept. 25, 2015 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON), ("Recon" or the "Company"), a leading independent oilfield services provider operating primarily in China, today reported its financial results for the fiscal year 2015, which ended June 30, 2015.

FY2015 Financial Highlights:

• Total revenues for FY2015 were RMB51.5 million ($8.5 million), a decrease of 44.9% from FY2014.
• Gross profit for FY2015 was RMB10.1million ($1.7 million), a decrease of 68.8% from FY2014. Gross margin was 19.6% for FY2015 compared to 34.7% for FY2014.
• Operating loss was RMB35.5 million ($5.8 million) for FY2015, compared to operating income of RMB2.8 million for FY2014.
• Net loss attributable to Recon for FY2015 was RMB31.5 million ($5.2 million), or RMB6.45 ($1.06) per diluted share, compared to net income attributable to Recon of RMB0.8 million, or RMB0.18 per diluted share, for FY2014.
• Adjusted EBITDA (non-GAAP) was negative RMB10.8 million ($1.8 million) for FY2015, compared to positive RMB8.8 million for FY2014.
• Adjusted net loss attributable to Recon was RMB9.9 million ($1.6 million), or RMB2.03 ($0.33) per diluted shares, for FY2015, compared to adjusted net income attributable to Recon of RMB5.1 million, or RMB1.17 per diluted share, for FY2014.

Mr. Shenping Yin, Chairman and CEO of Recon stated, "The past twelve months have been difficult for us as our major customers cut their capital budgets, canceled or delayed new projects in light of slowing domestic production for oil and gas and plunges in oil and gas prices. As a result, we faced continued challenges throughout the fiscal year of 2015 and saw declines in overall revenues for the first time in the Company history. While the oil and gas industry is likely to continue to face multifaceted challenges in the near term, we firmly believe that we are well prepared to withstand the storm and to capitalize on an eventual recovery of the oil and gas industry."  

FY2015 Financial Results

Revenues

For the twelve months ended June 30, 2015, total revenues decreased by RMB41.9 million, or 44.9%, to RMB51.5 million ($8.5 million) from RMB93.4 million for the same period of last fiscal year as a result of weakness across all of our businesses, particularly during the first half of fiscal year 2015. Revenues from non-related party hardware and software sales decreased by RMB37.2 million, or 43.2%, to RMB49.0 million ($8.0 million) for the twelve months ended June 30, 2015, compared to RMB86.2 million for the same period of last fiscal year. Revenues from related-party hardware and software sales decreased by RMB4.3 million, or 64.0%, to RMB2.4 million ($0.4 million) for the twelve months ended June 30, 2015, compared to RMB6.7 million for the same period of last fiscal year. Revenues from service decreased by RMB0.4 million, or 78.3%, to RMB0.1 million ($0.02 million) for the twelve months ended June 30, 2015, compared to RMB0.5 million for the same period of last fiscal year.

Gross profit and gross margin

Gross profit decreased by RMB22.3million, or 68.8%, to RMB10.1 million ($1.7 million) for the twelve months ended June 30, 2015 from RMB32.4 million for the same period of last fiscal year. Overall gross margin was 19.6% for the twelve months ended June 30, 2015, compared to 34.7% for the same period of last fiscal year.

Operating income (loss) and operating (loss) margin

Selling and distribution expenses increased by RMB6.0 million, or 113.7%, to RMB11.3 million ($1.9 million) for the twelve months ended June 30, 2015 from RMB5.3 million for the same period of last fiscal year. General and administrative expenses increased by RMB13.9 million, or 86.1%, to RMB30.1 million ($5.0 million) for the twelve months ended June 30, 2015 from RMB16.2 million for the same period of last fiscal year. Research and development expenses decreased by RMB3.9 million, or 48.5%, to RMB4.2 million ($0.7 million) for the twelve months ended June 30, 2015 from RMB8.1 million for the same period of last fiscal year. Total operating expenses increased by RMB16.0 million, or 54.2%, to RMB45.6 million ($7.5 million) for the twelve months ended June 30, 2015 from RMB29.6 million for the same period of last fiscal year.

Operating loss was RMB35.5 million ($5.8million) for the twelve months ended June 30, 2015, compared to operating income of RMB2.8 million for the same period of last fiscal year. Operating loss margin was 68.9% for the twelve months ended June 30, 2015, compared to operating margin of 3.0% for the same period of last fiscal year. 

Net income (loss)

Net loss for the twelve months ended June 30, 2015 was RMB31.5 million ($5.2 million), compared to net income of RMB1.8 million for the same period of last fiscal year. After deduction of non-controlling interest, net loss for our shareholders was RMB31.5 million ($5.2 million), or RMB6.45 ($1.06) per diluted share, for the twelve months ended June 30, 2015, compared to net income attributable to our shareholders of RMB0.8 million, or RMB0.18 per diluted share, for the same period of last fiscal year. 

Non-GAAP Measures

Adjusted EBITDA (non-GAAP), which we define as net income (loss) adjusted for income tax expense, interest expense, one-time write down expenses, provision for slow moving inventories, loss from investment, non-cash stock compensation expense, depreciation and amortization, was negative RMB10.8 million ($1.8 million) for the twelve months ended June 30, 2015, compared to RMB8.8 million for the same period of last fiscal year. Adjusted net loss attributable to our shareholders was RMB9.9 million ($1.6 million), or RMB2.03 ($0.33) per diluted shares, for the twelve months ended June 30, 2015, compared to adjusted net income attributable to our shareholders of RMB5.1 million, or RMB1.16 per diluted share, for the same period of last fiscal year.

Financial Position  

As of June 30, 2015, the Company had cash and cash equivalents of RMB12.3 million ($2.0 million), short-term bank loans of RMB7.0 million ($1.1 million), and short-term borrowings from related parties of RMB16.9 million ($2.8 million), compared to RMB18.1 million, RMB10.0 million, and RMB5.2 million, respectively, at June 30, 2014. Working capital as of June 30, 2015 was RMB72.4 million ($11.9 million) as compared to RMB83.1 million at June 30, 2014. Net cash used in operating activities was RMB15.1 million ($2.5 million) for the twelve months ended June 30, 2015, compared to RMB8.0 million for the same period of last fiscal year. Net cash used in investing activities was RMB1.7 million ($0.3 million) for the twelve months ended June 30, 2015, compared to RMB0.3 million for the same period of last fiscal year. Net cash provided by financing activities was RMB11.1 million ($1.8 million) for the twelve months ended June 30, 2015, compared to RMB14.0 million for the same period of last fiscal year. During the fiscal year twelve-month period, we repaid RMB3.0 million ($0.5 million) in short term bank loans and received RMB11.7 million ($1.9 million) net proceeds from a related party. In June 2015, we had stock offerings to issue 297,197 shares of common stocks through an at-the-market offering, and received net proceeds of RMB2.3 million ($0.4 million).

Recent Development 

On August 6, 2015, the Company announced that it will set up a scientific research and training base (the "Workstation") in collaboration with the College of Information Science & Technology of Nanjing Agricultural University ("CIST-NAU").  With current enrollment of over 26,400 full-time students, including over 9,400 full-time master's and doctoral students, NAU is a premier university under the administration of Ministry of Education. Often ranked among the nation's top 100 universities, NAU is a national key university with both Project 211 and Project 985 designations.

On July 29, 2015, the Company entered into a memorandum of understanding (the "MOU") with Qinghai Huayou Downhole Technologies Co., Ltd. ("QHHY"), a PRC corporation and oilfield service provider in Qinghai province, to acquire 100% stake in QHHY with a combination of cash and the Company stock (the "Transaction"). The terms and conditions of a definitive agreement are currently being negotiated between the two parties. Further details will be disclosed upon completion of the definitive agreement.

On June 17, 2015, the Company announced that Wednesday, June 3, 2015's issue of the Wall Street Journal included an article entitled, "Six Faces in the Race to Pump More Oil" (the "Article"). Mr. Shenping Yin, Chairman and Chief Executive Officer of Recon, was among the "Six Faces" featured in the Article. The Article can be found at: http://graphics.wsj.com/global-oil-men.

On June 10, 2015, the Company announced that it had received Contractor (Subcontractor) Qualification (the "Qualification") from Jianghan Oilfield Construction Engineering Company ("JOCEC"), a subsidiary of China Petroleum & Chemical Corporation (NYSE: SNP) ("Sinopec"). The Qualification, which is valid for one year from June 4, 2015 and extendable on a yearly basis thereafter, qualifies Recon as a general contractor (subcontractor) to participate in certain construction and engineering projects at JOCEC ranging from the expansion and renovation of existing facilities to the construction of new facilities.  In connection with the Qualification, the Company also announced that it has secured a contract with JOCEC worth approximately RMB550,000.

About Recon

Recon Technology, Ltd. is China's first independent oil and gas field service company listed on NASDAQ (RCON). Working closely with leading global partners, Recon has achieved rapid growth supplying China's largest oil and gas exploration companies, including Sinopec and China National Petroleum Corporation, with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measures. The solutions Recon provides are aimed at increasing gas and petroleum extraction levels, reducing impurities, improving safety and lowering production costs. For additional information, please visit www.recon.cn.

Cautionary Statements

Statements made in this release with respect to Recon's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Recon. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "intend," "seek," "may," "might," "could" or "should," and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions, judgments and beliefs in light of the information currently available to it. Recon cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, 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. Therefore investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements. 

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：

Recon Technology, Ltd.

Ivy Xia

Tel: +86-10-8494-5799

Email: info@recon.cn

Weitian Investor Relations

Tina Xiao

Tel: +1-917-609-0333

Email: tina.xiao@weitian-ir.com

 

 

 

 

 

 

 

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SOURCE Recon Technology, Ltd.