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Recon Technology, Ltd. Reports Fiscal Year 2015 Financial Results

The following excerpt is from the company's SEC filing.

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,

(thousands)

Change

93,447

RMB

51,513

Hardware and software

86,229

48,981

Service

Hardware and software - related parties

Gross margin

Operating (loss) margin

Net income (loss) attributable to RCON

(31,456

(5,166

Diluted earnings (loss) per share

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

For the Twelve Months Ended June 30,

(31,456)

Provision for income taxes

(2,552

Interest expenses and foreign currency adjustment

Change in fair value of warrants liability

(4,034

Write down of accounts receivable

10,684

Provision for slow moving inventories

Loss from investment

Restricted shares issued for consulting services

Loss from warrants red

emption

Stock compensation expense

Depreciation and amortization

Adjusted EBITDA

(10,797

(1,773

Loss from warrants redemption

Adjusted net income (loss) attributalbe to RCON

(9,901

(1,626

Adjusted earnings per diluted share

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...


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