Recon Technology, Ltd Reports Financial Year Results for Fiscal Year 2022

BEIJING, Oct. 28, 2022 /PRNewswire/ — Recon Expertise, Ltd (NASDAQ: RCON) (“Recon” or the “Firm”), a China-based impartial options integrator within the oilfield service and environmental safety, electrical energy and coal chemical industries, in the present day introduced its monetary outcomes for fiscal yr 2022.

Fiscal Yr Ended June 30, 2022 Monetary Spotlight:

• Whole income elevated by roughly RMB35.9 million ($5.3 million) or 74.8% to RMB83.8 million ($12.5 million) for the yr ended June 30, 2022 from RMB47.9 million for a similar interval in 2021.
• Gross revenue elevated to RMB19.4 million ($2.9 million) for the yr ended June 30, 2022, from RMB7.2 million for a similar interval in 2021.
• Gross margin elevated to 23.2% for the yr ended June 30, 2022 from 15.1% for a similar interval in 2021.
• Analysis and improvement bills elevated from RMB5.8 million for the yr ended June 30, 2021 to RMB9 million for a similar interval in 2022.
• Internet revenue elevated by RMB120.2 million ($17.9 million) to RMB94.3 million ($14.1 million) for the yr ended June 30, 2022 from web lack of RMB 25.9 million for a similar interval in 2021.

Administration Commentary

Mr. Shenping Yin, Founder and CEO of Recon mentioned: “Recon delivered document efficiency through the fiscal yr ended June 30, 2022 because of rising oil costs and elevated funding by oil corporations. Manufacturing actions of our clients ramped up, leading to elevated calls for for our automation merchandise and wastewater remedy options and companies. The development in our working actions introduced a simultaneous enhance in each income and the price of income. On the similar time, as our clients recovered, we had been capable of signal contracts with higher priced phrases and no have to proceed with our low-price coverage we adopted within the final two years, our gross revenue and gross margin had been additionally improved dramatically.”

“Because of Recon’s natural operational and monetary efficiency, dedication to disciplined spending and confidence in free money circulate sustainability, our income, gross revenue grew by 74.8% and 169.4% respectively for the yr ended June 30, 2022 from similar interval final yr. Our web revenue additionally elevated to RMB94.3 million from a web lack of RMB25.9 million. We’re persevering with to see sturdy development potential in our enterprise and we’ll maintain this good momentum to create sustainable values for our stakeholders.”

Fiscal 2022 Monetary Outcomes:

Income

Whole revenues for the yr ended June 30, 2022 had been roughly RMB83.8 million ($12.5 million), a rise of roughly RMB35.9 million ($5.3 million) or 74.8% from RMB47.9 million for a similar interval in 2021. The general enhance in income was primarily as a consequence of enhance from all our enterprise strains benefited with the rise in oil and gasoline costs and electrical energy costs through the yr ended June 30, 2022. Particularly,

• Income from automation product and software program elevated by RMB13.4 million ($2.0 million) or 72.3%. The rise was primarily brought on by 1) completion of prior delayed initiatives and in addition new wants in from Ji Dong oilfield as oil worth elevated; 2) restoration of Shenhua Group’s requirement; and three) rising contribution from operation and upkeep companies concerning metering devices as Chinese language corporations positioned rising emphasis on security in power and chemical corporations, a brand new enterprise assets developed by the Firm from yr 2021.
• Income from tools and equipment elevated by RMB1.4 million ($0.2 million) or 8.7% as a consequence of elevated demand for tools from oilfield corporations to extend manufacturing as a consequence of rising oil costs.
• Income from oilfield environmental safety elevated by RMB14.3 million ($2.1 million) or 129.4%. This was primarily contributed to constantly elevated reequipment of our wastewater remedy and oily sludge remedy. As oil costs rise and the rise of oilfield manufacturing, administration consider income from this section will keep secure.
• Income from platform outsourcing companies elevated by RMB6.8 million ($1.0 million) or 263.7%.

Price of income

Price of revenues elevated from RMB40.7 million for the yr ended June 30, 2021 to RMB64.4 million ($9.6 million) for a similar interval in 2022. This enhance was primarily brought on by the elevated price of income from automation product and software program, oilfield environmental safety and platform outsourcing companies segments, which was partially offset by the decreased price of income from tools and equipment section through the yr ended June 30, 2022.

Gross revenue

Gross revenue elevated to RMB19.4 million ($2.9 million) for the yr ended June 30, 2022 from RMB7.2 million for a similar interval in 2021. Gross revenue as a share of income elevated to 23.2% for the yr ended June 30, 2022 from 15.1% for a similar interval in 2021.

• For the yr ended June 30, 2021, unfavourable gross revenue from automation product and software program was roughly RMB1.4 million, and for the yr ended June 30, 2022, the Firm generated gross revenue of RMB2.1 million ($0.3 million), representing a rise in gross revenue of roughly RMB3.5 million ($0.5 million) or 250.6%. In yr 2021, we primarily carried out contracts that had been signed through the Covid-19 and low oil worth interval, throughout which we used a low-margin technique to take care of our cooperation enterprise with shoppers. As oil worth enhance in 2022, clients recovered and contract phrases had been improved and margin elevated and the margin share can even be larger.
• For the years ended June 30, 2021 and 2022, gross revenue from tools and equipment was roughly RMB4.5 million and RMB6.7 million ($1.0 million), respectively, representing a rise of roughly RMB2.2 million ($0.3 million) or 47.6%. This was primarily pushed by excessive oil worth and extra calls for for heating furnaces with larger margin reasonably than equipment with decrease margin.
• For the years ended June 30, 2021 and 2022, gross revenue from oilfield environmental safety was roughly RMB3.0 million and RMB5.1 million ($0.8million), respectively, representing a rise of roughly RMB2.1 million ($0.3 million) or 70.5%. The rise in gross revenue from oilfield environmental safety was primarily attributable to the elevated manufacturing of oily sludge.
• For the years ended June 30, 2021 and 2022, gross revenue from platform outsourcing companies was roughly RMB1.1 million and RMB5.5 million ($0.8 million), respectively, representing a rise of roughly RMB4.4 million ($0.7 million) or 402.3 %, this was primarily as a result of we solely consolidate six-month consequence from January 2021 in fiscal yr 2021 whereas we consolidated an entire twelve months’ end in fiscal yr 2022. In addition to, from the attitude of margin as a share of income, it was elevated from 42.7% to 59.0% as a result of our prices had been primarily personnel bills, which had been comparatively secure, whereas our revenues grew sooner year-over-year leading to larger gross margins.

Working bills

Promoting bills elevated by 26.3% or RMB2.1 million ($0.3 million), from RMB8.0 million within the yr ended June 30, 2021 to RMB10.1 million ($1.5 million) in the identical interval of 2022.

Basic and administrative bills elevated by 81.2% or RMB37.3 million ($5.6 million), from RMB45.9 million within the yr ended June 30, 2021 to RMB83.3 million ($12.4 million) in the identical interval of 2022.

The Firm additionally recorded an allowance for credit score losses of RMB8.2 million for the yr ended June 30, 2021 as in comparison with a web restoration of credit score losses of RMB0.7 million ($0.1 million) for a similar interval in 2022.

Analysis and improvement bills elevated from RMB5.8 million for the yr ended June 30, 2021 to RMB9.0 million ($1.3 million) for a similar interval of 2022.

Loss from operations

Loss from operations was RMB82.3 million ($12.3 million) for the yr ended June 30, 2022, in comparison with a lack of RMB61.6 million for a similar interval of 2021. This RMB20.7 million ($3.1 million) enhance in loss from operations was primarily because of the enhance in working expense partially offset by the rise in gross revenue as mentioned above.

Acquire on fairness methodology funding

The Firm recorded a acquire from remeasurement beforehand held funding in Future Fuel Station (Beijing) Expertise, Ltd (“FGS”), a subsidiary of two mainland China variable curiosity entities with contractual ties to the Firm’s subsidiary, Recon Hengda Expertise (Beijing) Co., Ltd., previous to the consolidation of FGS’ controlling curiosity because of step acquisition for an quantity of RMB979,254 for the yr ended June 30, 2021.

Change in truthful worth of warrant legal responsibility

Change in truthful worth of warrants issued on June 14, 2021 by means of yr ended June 30, 2021 was RMB35.4 million, and the change in truthful worth of warrants was RMB174.5 million ($26.1 million) for the yr ended June 30, 2022.

Impairment loss on goodwill

The Firm acknowledged the surplus of buy worth over the truthful worth of property acquired and liabilities assumed of the enterprise acquired was recorded as goodwill because of the step acquisition of FGS. Along side the preparation of consolidated monetary assertion for yr ended June 30, 2022, the Firm carried out analysis on the impairment of goodwill and recorded an impairment loss on goodwill of RMB2.3 million ($338,457) for the yr ended June 30, 2022.

Curiosity revenue

Curiosity revenue was RMB5.4 million ($0.8 million) for the yr ended June 30, 2022, in comparison with curiosity revenue of RMB0.9 million for a similar interval of 2021.

Different loss, web

Different web loss was RMB1.6 million ($0.2 million) for the yr ended June 30, 2022, in comparison with different web lack of RMB2.1 million for a similar interval of 2021.

Internet revenue (loss)

Because of the elements described above, web revenue was RMB94.3 million ($14.1 million) for the yr ended June 30, 2022, a rise of RMB120.2 million ($17.9 million) from web lack of RMB25.9 million for a similar interval of 2021.

Money

As of June 30, 2022, we had money within the quantity of roughly RMB317.0 million ($47.3 million). As of June 30, 2021, we had money within the quantity of roughly RMB344.0 million.

Latest improvement

On Oct. 25, 2022, the Firm introduced that Nanjing Recon Expertise Co. has entered right into a 2-year outsourced service settlement with a home buyer to supply upkeep and overhaul companies in an quantity totaling roughly RMB3.2 million. Nanjing Recon Expertise Co. is a variable curiosity entity of Hengda Expertise (Beijing) Co., Ltd., a mainland China subsidiary of Recon.

On Sep. 12, 2022, the Firm introduced that FGS is increasing on its earlier cooperation settlement with its newest packing cooperation memorandum with Hui Tong Tian Xia Petrochemical (Dalian) Co. Ltd (“Huitong Dalian”), to collectively launch a brand new era of business options to serve the nationwide business logistics fleet extra effectively and to discover low carbon sustainability with logistics corporations by bringing carbon impartial options. Huitong Dalian is a number one Chinese language firm targeted on fleet gas administration and is an affiliate of Beijing Hui Tong Tian Xia IOT Expertise CO. Ltd (“G7”).

On Could 11, 2022, the Firm introduced that the mainland China variable curiosity entity with whom its subsidiary, Recon Hengda Expertise (Beijing) Co., Ltd. has entered right into a 3-year service settlement with one home oilfield shopper to supply a complete-set of options for greasy wastewater remedies. In response to the precise manufacturing capability of the shopper and the settlement phrases set within the settlement, the contract quantity is predicted to be RMB3.5 million per yr.

On Apr. 13, 2022, the Firm introduced that FGS has entered right into a strategic enterprise cooperation settlement with the Kunming Department of China Minsheng Financial institution Corp., Ltd.

About Recon Expertise, Ltd (“RCON”)

Recon Expertise, Ltd (NASDAQ: RCON) is the Folks’s Republic of China’s first NASDAQ-listed non-state owned oil and gasoline discipline service firm. Recon provides China’s largest oil exploration corporations, Sinopec (NYSE: SNP) and The China Nationwide Petroleum Company (“CNPC”), with superior automated applied sciences, environment friendly gathering and transportation tools and reservoir stimulation measure for rising petroleum extraction ranges, decreasing impurities and decreasing manufacturing prices. By means of the years, RCON has taken main positions inside a number of segmented markets of the oil and gasoline filed service business. RCON additionally has developed secure long-term cooperation relationship with its main shoppers. For extra data please go to: http://www.recon.cn/.

Ahead-Wanting Statements

Recon consists of “forward-looking statements” throughout the which means of the federal securities legal guidelines all through this press launch. A reader can establish forward-looking statements as a result of they aren’t restricted to historic reality or they use phrases equivalent to “scheduled,” “could,” “will,” “may,” “ought to,” “would,” “anticipate,” “consider,” “anticipate,” “undertaking,” “plan,” “estimate,” “forecast,” “objective,” “goal,” “dedicated,” “intend,” “proceed,” or “will seemingly consequence,” and comparable expressions that concern Recon’s technique, plans, intentions or beliefs about future occurrences or outcomes. Ahead-looking statements are topic to dangers, uncertainties and different elements that will change at any time and should trigger precise outcomes to vary materially from people who Recon anticipated. Many of those statements are derived from Recon’s working budgets and forecasts, that are based mostly on many detailed assumptions that Recon believes are affordable, or are based mostly on varied assumptions about sure plans, actions or occasions which we anticipate will or could happen sooner or later. Nevertheless, it is rather tough to foretell the impact of recognized elements, and Recon can not anticipate all elements that might have an effect on precise outcomes that could be essential to an investor. All forward-looking data ought to be evaluated within the context of those dangers, uncertainties and different elements, together with these elements disclosed below “Threat Elements” in Recon’s most up-to-date Annual Report on Kind 20-F and any subsequent half-year monetary filings on Kind 6-Ok filed with the Securities and Change Fee. All forward-looking statements are certified of their entirety by the cautionary statements that Recon makes on occasion in its SEC filings and public communications. Recon can not guarantee the reader that it’ll notice the outcomes or developments Recon anticipates, or, even when considerably realized, that they’ll consequence within the penalties or have an effect on Recon or its operations in the way in which Recon expects. Ahead-looking statements converse solely as of the date made. Recon undertakes no obligation to replace or revise any forward-looking statements to mirror occasions or circumstances arising after the date on which they had been made, besides as in any other case required by legislation. Because of these dangers and uncertainties, readers are cautioned to not place undue reliance on any forward-looking statements included herein or that could be made elsewhere on occasion by, or on behalf of, Recon.

For extra data, please contact:

Firm
Ms. Liu Jia
Chief Monetary Officer
Recon Expertise, Ltd
Cellphone: +86 (10) 8494-5799
E mail: [email protected]

Investor Relations
Janice Wang
Wealth Monetary Providers LLC
Cellphone: +86 13811768559
      +1 628 283 9214
E mail: [email protected]

SOURCE Recon Expertise, Ltd