Recon Technology Revenue and Profit Growth Continue at Double Digit Rate. Q3'10 Revenue Up 111%, Net Income Up 50%
Strong Results Reflect Continued Business Expansion
BEIJING, May 18 /PRNewswire-Asia-FirstCall/ -- Recon Technology, Ltd. (Nasdaq: RCON), a leading Chinese non-state-owned oil field services provider, today reported financial results for its FY '10 third quarter ended March 31, 2010.
Q3 FY '10 Highlights
-- Revenue increased 111.2% to $3.85 million from $1.82 million in Q3 FY
'09 due to the rapid development of our core business and expansion
into a new market.
-- Gross profit increased 96.5% to $1.72 million for Q3 FY '10 from $0.87
million in Q3 FY '09.
-- Income from operations rose 75.6% to $1.01 million compared with $0.57
million in Q3 FY '09 due to an increase in sales.
-- Net income available for common shareholders was $0.66 million, an
increase of 50.1% from the same period of 2009.
-- Diluted EPS was $0.17, compared to $0.20 per diluted share in Q3 FY '09,
reflecting an increase in shares issued associated with the company's
2009 IPO.
-- Gross margin was 44.7%, compared to 48.0% in Q3 FY '09
-- Weighted average number of diluted shares outstanding was 4 million,
compared to 2.25 million in Q3 FY '09.
First Nine Months FY '10 Highlights
-- Revenue was $14.46 million, an increase of 59.0% over $9.09 million for
the nine months ended March 31, 2009.
-- Gross profit increased 74.4% to $6.26 million vs. $3.59 million for the
same period in 2009
-- Gross margin increased to 43.3% for the nine months ended March 31,
2010 from 39.5% for the nine months ended March 31, 2009.
-- Income from operations was $3.73 million, a gain of 59.8% from $2.33
million for the same period in 2009, primarily attributable to the
increase in sales.
-- Net income available for common shareholders was $2.56 million, an
increase of 42.5% over the first nine months of FY '09.
-- Diluted EPS was $0.68, compared to $0.80 per diluted share for the
first nine months of FY '09, reflecting an increase in shares issued
associated with the company's 2009 IPO.
-- Weighted average number of diluted shares outstanding was 3.76 million,
compared to 2.25 million for the nine months ended March 31, 2009.
Liquidity and Capital Resources
The company's cash balance on March 31, 2010 was approximately $3.26 million. Recon had short-term debt to its internal management team of $1.1 million and no outside or long-term debt. Working capital was $16.6 million. Controlling stockholders' equity totaled $15.5 million. The current ratio was 3.06, up from 1.90 on June 30, 2009. Net cash provided in financing activities totaled $9.0 million for the nine months ended March 31, 2010, which included the debt from the management team to supplement working capital and from the Company's IPO on July 30, 2009.
Management Commentary
Shenping Yin, Recon's Chief Executive Officer, said, "I am very pleased to see continued growth of our business. It is a strong credential of our capability to serve the increasingly sophisticated demand of our clients and to expand to new market area."
"Rising energy demand associated with China's continued economic growth, government initiatives to increase safety and security in the Chinese energy industry and focus by oil and gas field operators for digital operation are all positive indicators for Chinese oil field service providers," commented Mr. Yin.
"I am also happy to see the new 36 Guidelines issued on May 13th by Chinese State Council to expand market access for private investment in the monopolized sectors including upstream oil and gas exploration (Chinese version government document available at http://www.gov.cn/zwgk/2010-05/13/content_1605218.htm ) I believe we are well-positioned to leverage our industry expertise and established business relationships to identify and capitalize on the growth opportunities," concluded Mr. Yin.
The financial statements follow.
About Recon Technology, Ltd.
Recon Technology, Ltd is a non-state-owned oil field service company in China. The company provides services designed to automate the extraction of petroleum for Chinese oil and gas fields. The company has developed software and hardware to manage the oil extraction process in real-time. More information may be found at http://www.recon.cn or e-mail: [email protected].
Recon's online investor kit, including an investment profile, press releases, current price quotes, stock charts and more is available at http://www.hawkassociates.com/profile/rcon.cfm. To receive notification of future releases via e-mail, subscribe at http://www.hawkassociates.com/about/alert/ .
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.
For more information, please contact:
Investor Contact:
In USA
Hawk Associates
Julie Marshall
Frank Hawkins
Tel: +1-305-451-1888
Email: [email protected]
In China
Recon Technology Ltd
Peggy Yuan
Investor Relations
Tel: +86-10-8494-5799
Email: [email protected]
RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF BALANCE SHEETS
Chinese Yuan (Renminbi) U.S. Dollars
June 30, March 31, March 31,
2009 2010 2010
ASSETS (Unaudited) (Unaudited)
Current assets
Cash and cash equivalents 2,727,735 22,292,927 $3,261,059
Trade accounts receivable, net of
allowance for doubtful accounts of
RMB604,953 ($88,570) and
RMB1,993,588($291,627),
respectively 44,103,981 87,749,487 12,836,191
Trade accounts receivable-related
parties, net of allowance for
doubtful accounts of RMB350,498
($51,316)and RMB0($0), respectively 7,458,302 -- --
Other receivable, net of allowance
for doubtful accounts of
RMB1,291,923 ($189,149) and
RMB158,968($23,254), respectively 2,048,015 6,565,432 960,406
Other receivable-related parties,
net of allowance for doubtful
accounts of RMB169,074 ($24,754)
and RMB0($0), respectively 507,541 -- --
Purchase advances, net of allowance
for doubtful accounts of
RMB1,239,234 ($181,435) and
RMB654,740($95,777), respectively 5,637,082 38,239,189 5,593,714
Purchase advances-related parties 73,028 -- --
Prepaid expenses 338,072 1,116,579 163,336
Inventories 10,710,018 13,152,071 1,923,914
Deferred offering costs 1,622,048 -- --
Total current assets 75,225,822 169,115,685 24,738,621
Property and equipment, net of
accumulated depreciation of
RMB1,006,761 ($147,398) and
RMB1,085,419($158,778),
respectively 1,406,876 1,505,068 220,165
76,632,698 170,620,753 $24,958,785
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable 15,601,101 17,582,246 $2,571,970
Trade accounts payable-related
parties 189,744 -- --
Other payables 1,767,005 2,607,624 381,449
Other payables-related parties 73,579 -- --
Deferred income 2,361,605 4,184,521 612,121
Advances from customers 910,215 25,650 3,752
Accrued payroll and employees'
welfare 393,074 296,635 43,392
Accrued expenses 262,083 293,760 42,972
Taxes payable 9,182,676 18,884,422 2,762,455
Short-term notes payable 3,143,792 3,602,881 527,037
Short-term notes payable-related
parties 3,344,377 4,147,657 606,729
Deferred tax liabilities 2,365,225 3,694,658 $540,463
Total current liabilities 39,594,476 55,320,053 8,092,341
Redeemable common stock 1,434,342 --
Equity
common stock, $0.0185 U.S. dollar
par value, 25,000,000 shares
authorized; 2,139,203 and 3,951,811
shares issued and outstanding as of
June 30, 2009 and March 31, 2010 300,534 529,637 77,476
Additional paid-in capital 8,732,266 68,734,489 10,054,635
Appropriated retained earnings 1,687,772 3,286,861 480,809
Unappropriated retained earnings 18,043,692 33,720,232 4,932,671
Accumulated other comprehensive
income -- (128,902) (18,856)
Total controlling shareholders'
equity 28,764,264 106,142,317 15,526,736
Non-controlling interest, net of tax 6,839,616 9,158,383 1,339,709
Total equity 35,603,880 115,300,700 16,866,444
Liabilities and Equity 76,632,698 170,620,753 $24,958,785
RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Chinese Yuan (Renminbi)
For the Nine Months ended
March 31,
2010 2009
(Unaudited) (Unaudited)
Revenues
Hardware 90,932,348 57,656,322
Service 7,675,214 1,495,662
Software 226,496 226,496
Hardware - related parties -- 2,143,590
Software - related parties -- 649,572
Total revenues 98,834,057 62,171,642
Cost of revenues 56,007,688 37,608,500
Gross margin 42,826,369 24,563,142
Selling and distribution expenses 7,557,188 4,760,272
General and administrative expenses 9,803,491 3,867,763
Operating expenses 17,360,679 8,628,035
Income (loss) from operations 25,465,690 15,935,107
Subsidy income 1,178,034 2,038,015
Interest income 5,693 12,608
Interest expense (110,075) (152,405)
Other income (expenses) 471,914 --
Income before income taxes and non-
controlling interest 27,011,256 17,833,325
Provision for income taxes (7,189,566) (3,481,115)
Income from continuing operations 19,821,690 14,352,210
Income from operations of
discontinued subsidiaries, net of
income taxes -- (442,547)
Net income 19,821,690 13,909,663
Non-controlling interest, net of tax (2,318,767) (1,574,687)
Accrued dividend for redeemable
common stock -- (51,331)
Net income available for common
shareholders 17,502,923 12,283,645
Basic earnings per share:
Income from continuing operations RMB5.28 RMB6.71
Income from discontinued operations RMB-- RMB(0.21)
Net income RMB5.28 RMB6.50
Net income available for common
shareholders RMB4.66 RMB5.74
Basic weighted average common stock
outstanding 3,753,350 2,139,203
Diluted earnings per share:
Income from continuing operations RMB5.27 RMB6.37
Income (loss) from discontinued
operations RMB-- RMB(0.20)
Net income RMB5.27 RMB6.18
Net income available for common
shareholders RMB4.65 RMB5.46
Diluted weighted average common stock
outstanding 3,763,408 2,251,811
Comprehensive income(loss)
Net income 19,821,690 13,858,332
Foreign currency translation
adjustment 119,992 --
Comprehensive income (loss) 19,941,682 13,858,332
Comprehensive income (loss)
attributable to non-controlling
interest 2,330,766 1,574,687
Comprehensive income (loss)
attributable to common shareholders 17,610,916 12,283,645
Chinese Yuan (Renminbi) U.S. Dollars
For the Three Months For the Nine
ended Months ended
March 31, March 31,
2010 2009 2010
(Unaudited) (Unaudited) (Unaudited)
Revenues
Hardware 24,578,963 12,124,602 $13,301,787
Service 1,709,402 95,662 1,122,747
Software -- 226,495 33,132
Hardware - related parties -- -- --
Software - related parties -- -- --
Total revenues 26,288,365 12,446,759 14,457,667
Cost of revenues 14,538,530 6,467,134 8,192,930
Gross margin 11,749,835 5,979,625 6,264,737
Selling and distribution expenses 1,534,090 1,422,598 1,105,482
General and administrative expenses 3,337,591 640,148 1,434,077
Operating expenses 4,871,681 2,062,746 2,539,559
Income (loss) from operations 6,878,153 3,916,878 3,725,178
Subsidy income 20,000 373,400 172,325
Interest income (79) 683 833
Interest expense (32,762) (92,376) (16,102)
Other income (expenses) 389,668 (38,167) 69,033
Income before income taxes and non-
controlling interest 7,254,979 4,160,419 3,951,267
Provision for income taxes (2,082,801) (230,006) (1,051,706)
Income from continuing operations 5,172,178 3,930,413 2,899,561
Income from operations of
discontinued subsidiaries, net of
income taxes -- (442,547) -
Net income 5,172,178 3,487,866 2,899,561
Non-controlling interest, net of tax (647,827) (456,265) (339,194)
Accrued dividend for redeemable
common stock -- (17,044) --
Net income available for common
shareholders 4,524,351 3,014,557 $2,560,367
Basic earnings per share:
Income from continuing operations RMB1.31 RMB1.84 $0.77
Income from discontinued operations RMB-- RMB(0.21) $--
Net income RMB1.31 RMB1.63 $0.77
Net income available for common
shareholders RMB1.14 RMB1.41 $0.68
Basic weighted average common stock
outstanding 3,951,811 2,139,203 3,753,350
Diluted earnings per share:
Income from continuing operations RMB1.29 RMB1.75 $0.77
Income (loss) from discontinued
operations RMB-- RMB(0.20) $--
Net income RMB1.29 RMB1.55 $0.77
Net income available for common
shareholders RMB1.13 RMB1.34 $0.68
Diluted weighted average common stock
outstanding 4,002,298 2,251,811 3,763,408
Comprehensive income(loss)
Net income 5,172,178 3,470,822 2,899,561
Foreign currency translation
adjustment 119,992 -- 17,553
Comprehensive income (loss) 5,292,170 3,470,822 $2,917,114
Comprehensive income (loss)
attributable to non-controlling
interest 659,826 456,265 340,950
Comprehensive income (loss)
attributable to common shareholders 4,632,344 3,014,557 $2,576,164
RECON TECHNOLOGY, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine For the Nine
Months ended Months ended
March 31, March 31,
2009 2010
Chinese Yuan Chinese Yuan U.S. Dollars
(Renminbi) (Renminbi)
Cash flows from operating
activities: (Unaudited) (Unaudited) (Unaudited)
Net income (loss) available for
common shareholders 19,821,690 14,352,210 $2,899,561
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 263,036 248,401 38,477
Share-based compensation expenses 1,178,701 -- 172,423
Accrued dividend for redeemable
common stock -- 51,331 --
Movement of deferred taxation 1,329,433 -- 194,472
Changes in operating assets and
liabilities: --
Trade accounts receivable, net (43,645,506) (20,455,176) (6,384,562)
Trade accounts receivable-related
parties, net 7,458,302 (1,630,676) 1,091,017
Other receivable, net (4,517,417) (501,661) (660,818)
Other receivable related parties,
net 507,541 117,794 74,244
Purchase advance, net (33,963,030) (134,115) (4,968,188)
Prepaid expense (778,507) (354,169) (113,882)
Inventories (2,442,053) 1,441,121 (357,229)
Trade accounts payable 1,981,145 3,528,582 289,806
Trade accounts payable-related
parties (189,744) (965,826) (27,756)
Other payables 840,619 (1,767,525) 122,968
Other payables-related parties 73,579 (1,337,918) 10,763
Deferred income 1,822,916 (1,508,896) 266,660
Advances from customers (884,565) 107,345 (129,396)
Accrued payroll (96,439) -- (14,107)
Accrued employees' welfare -- (81,921) --
Accrued expense 31,677 (18,333) 4,634
Taxes payable 9,701,746 6,044,796 1,419,193
Net cash (used in) provided by
operating activities (41,506,877) (2,864,636) $(6,071,719)
Cash flows from investing
activities:
Purchases of property and equipment (371,162) (781,397) (54,294)
Proceeds from sale of property and
equipment 320 -- 47
Cash paid from short-term notes
receivable -- (1,356,496) --
Net cash used in investing
activities (370,842) (2,137,893) $(54,248)
Cash flows from financing
activities:
Proceeds from stock issuance 60,209,057 -- 8,807,516
Proceeds from short-term notes
payable 459,089 1,831,655 67,157
Proceeds from short-term notes
payable-related party 803,280 184,377 117,506
Net cash (used in) provided by
financing activities 61,471,426 2,016,032 $8,992,178
Effect of exchange rate fluctuation
on cash and cash equivalent (28,514) -- (4,171)
Net change in cash 19,565,192 (3,037,828) $2,862,040
Cash and cash equivalents at
beginning of period 2,727,735 7,637,421 399,019
Cash and cash equivalents at end of
period 22,292,927 4,599,593 $3,261,059
Supplemental cash flow information
Cash paid during the period for
interest -- -- --
Cash paid during the period for
taxes 98,834 323,340 14,458
SOURCE Recon Technology, Ltd.
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