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TheStreet Open House

Recon Reports Second Quarter 2012 Financial Results

Stocks in this article: RCON

BEIJING, Feb. 16, 2012 /PRNewswire-Asia/ -- 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 announced its financial results for the second fiscal quarter ended December 31, 2011.

Second Quarter 20 12 Highlights

  • Total revenues in the three months ended December 31, 2011 decreased slightly to RMB30.84 million ( $4.85 million) from RMB32.18 million in the three months ended December 31, 2010. New business, much of it from existing clients, factored heavily in reducing declines in revenues. Total revenues in the six months ended December 31, 2011 decreased more significantly to RMB35.79 million ( $5.62 million) from RMB53.98 million in the six months ended December 31, 2010, due largely to the deconsolidation of one variable interest entity ("VIE") in 2010.
  • Net income attributable to ordinary shareholders for the second quarter of fiscal year 2012 was RMB1.40 million ( $219 thousand), compared to a net loss attributable to ordinary shareholders of RMB20.68 million in the same quarter last year. Net loss attributable to ordinary shareholders improved from RMB19.83 million for the six month period ended December 31, 2010 to RMB2.01 million ( $316 thousand) for the six month period ended December 31, 2011.
  • Adjusted EBITDA was RMB2.16 million ( $339 thousand) for the three months ended December 31, 2011, up 121.41% compared to RMB(10.08 million) in the same quarter last year. Adjusted EBITDA was RMB(643 thousand) ( $(101 thousand)) for the six months ended December 31, 2011, an improvement of 91.35% compared to RMB(7.44 million) in the same period last year.
  • Diluted net income (loss) per share was RMB0.35( $0.06) and RMB(0.51) ( $(0.08)), respectively, for the three and six months ended December 31, 2011, compared to diluted net loss per share of RMB5.23 and RMB5.02 for respective periods ended December 31, 2010.

"Recon has met a number of challenges over the last twelve months," said Mr. Yin Shenping, CEO of Recon, "Jining ENI Energy Technology Co., Ltd. ('ENI') was previously one of our contractually controlled affiliates until December 16, 2010, when it was deconsolidated from our company. As a trading business, ENI acted as an agency to obtain purchase orders and earned through the sale price differentials. Since 2010, some of our large clients handled through ENI, especially SINOPEC, adjusted their procurement policies to increase direct purchases from strategic manufacturers rather than purchase from agencies like ENI. Business for ENI therefore decreased sharply. In addition, several of ENI's key employees resigned. Our management believes that even though ENI's deconsolidation from our company resulted in short-term losses, our company has already begun to recover, as demonstrated by improvements in net income and EBITDA this quarter. As a result, we do not believe the deconsolidation will have a significant impact on our long-term business development."

Mr. Yin continued, "Looking to our future, we continue to believe that our company should keep developing our proprietary products and services. We aim to serve as a professional integrator of products and services, rather than simply acting as equipment suppliers. To achieve this, we also devoted additional resources to our R&D activities, primarily for testing our furnaces and horizontal well fracturing technologies. This year, we will seek to expand our sales of existing core products and promote our recently developed proprietary oil/water separator and horizontal well fracturing technology."

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