SOURCE: Sancon Resources Recovery Inc

August 18, 2010 08:00 ET

Sancon Announces 2010 Second Quarter Results

SHANGHAI, CHINA--(Marketwire - August 18, 2010) - Sancon Resources Recovery, Inc. (OTCBB: SRRY) (or "Sancon"), a growing environmental services and waste recycling company with operations in both China and Australia, announced today results for its 2010 second quarter ended June 30, 2010.

Financial highlights of 2010 second quarter:

-- Revenue of $3.07 million, an increase of 12% compare to the same period
   in 2009.
-- Gross profit of $1.49 million, an increase of 5% compare to the same
   period in 2009.
-- Gross margin stayed at around 50%.
-- EBITDA of $0.6 million, an increase of 2% compared to the same period
   in 2009.

Results of Operations -- Comparison between the three months ended June 30, 2010 and the same periods in 2009

The Company generated revenue of $3.07 million in the 2010 second quarter, representing $324,127 or 12% increase compared to $2.74 million in the 2009 Second quarter. Revenue from China operation increased $176,274 or 8% from $2.21 million in 2009 second quarter to $2.38 million in 2010 second quarter. Revenue from Australia operation has increased by $147,893 or 28% from $536,019 in 2009 second quarter to $683,912 in 2010 second quarter. The increase in revenue in China operation is partially because of acquisition of the newly started waste paper and cardboards collection business in June 2010. Although exports are still suffering from the global economic crisis, our Australia operation business is gradually recovering.

Gross profit increased $72,834 or 5% to $1.49 million in the second quarter 2010 from $1.42 million in the second quarter 2009. Gross profit of China operation increased $49,169 or 5% from $1.09 million in 2009 second quarter to $1.13 million in 2010 second quarter. In Australia, gross profit also increased by $23,665 or 7% from $333,352 in 2009 second quarter to $357,017 in 2010 second quarter. Gross margin dropped slightly from 52% in the 2009 second quarter to 49% in the 2010 second quarter.

Net income for 2010 second quarter was $0.537 million, or $0.02 basic and diluted earnings per share, compared to $0.535 million or $0.02 basic and diluted earnings per share one year ago.

Results of Operations -- Comparison between the six months ended June 30, 2010 and the same periods in 2009

The Company generated revenue of $6.14 million in the 2010 half year, representing $798,181 or 15% increase compared to $5.34 million in the 2009 half year. Revenue from China operation increased $370,322 or 8% from $4.42 million in 2009 half year to $4.79 million in 2010 half year. Revenue from Australia operation has increased by $427,859 or 47% from $918,401 in 2009 half year to $1,346,260 in 2010 half year.

Gross profit increased $290,674 or 11% to $3.02 million for the six months period ended June 30, 2010 from $2.73 million for the same period in 2009. Gross profit of China operation increased by $119,614 or 6% from $2.16 million in 2009 half year to $2.28 million in 2010 half year. In Australia, gross profit also increased by $171,060 or 30% from $572,544 in 2009 half year to $743,604 for the same period in 2010. Gross margin dropped slightly from 51% in the 2009 half year to 49% in the 2010 half year.

Net income for 2010 half year was $1.1 million, or $0.05 basic and diluted earnings per share, compared to $1.11 million, or $0.05 basic and diluted earnings per share one year ago.

"The revenue and gross profit from our existing business continues to increase in 2010 second quarter. We are still seeking and selecting consolidation opportunities that will complement our existing business in the waste and environmental services space," said Jack Chen, Sancon's Chief Executive Officer. "Our new waste paper and cardboards collection business has started in June 2010. We believe the new business will provide additional growth to our business forward. We will be updating our shareholders on our expansion progress throughout the year."

About Sancon Resources Recovery, Inc.

Sancon Resources Recovery, Inc. is an environmental service company specializing in the collection, processing, and selling of the reprocessed waste material such as plastic, metal, paper, cardboard, glass etc. The recycled materials are re-used by Sancon's manufacturing clients to make a wide variety of new products that include outdoor furniture, construction materials, building materials, packaging materials, and various other products. The use of recycled raw materials is both environmentally friendly and an important method to lower production costs for manufacturers to stay competitive. Sancon also invests in the renewable energy area by sponsoring the development of biofuel production technique that thrives on the supplies of carbon dioxide. Sancon currently has recycling plants based in Melbourne, Australia and China. For more information please visit: www.sanconinc.com

Forward-looking statements:

The statements made in this press release, which are not historical facts, may contain certain forward-looking statements concerning potential developments affecting the business, prospects, financial condition and other aspects of the company to which this release pertains. The actual results of the specific items described in this release, and the company's operations generally, may differ materially from what is projected in such forward-looking statements. Although such statements are based upon the best judgments of management of the company as of the date of this release, significant deviations in magnitude, timing and other factors may result from business risks and uncertainties including, without limitation, the company's dependence on third parties, general market and economic conditions, technical factors, the availability of outside capital, receipt of revenues and other factors, many of which are beyond the control of the company. The company disclaims any obligation to update information contained in any forward-looking statement.

                      SANCON RESOURCES RECOVERY, INC.
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)

                                  Assets

                                                            As at
                                                  ------------------------
                                                    June 30,   December 31,
                                                      2010         2009
                                                  -----------  -----------
  Current assets
    Cash and cash equivalents                     $ 4,823,713  $ 3,703,716
    Trade receivables, net                            961,142      988,673
    Inventory                                          42,654       16,013
    Deferred Tax Asset                                 31,710       33,057
    Other current assets                              231,944      285,933
    Advance and prepayment                            132,677       49,502
    Held to maturity securities                       128,500      129,000
                                                  -----------  -----------
      Total current assets                          6,352,340    5,205,894

  Property, plant & equipment, net                  1,190,846      958,041
  Security deposit                                     25,944        9,824
  Held to maturity securities-non current             129,489      129,993
  Investment                                                -       42,678
  Goodwill                                             27,688            -
                                                  -----------  -----------
    Total Assets                                  $ 7,726,307  $ 6,346,430
                                                  ===========  ===========


                     Liabilities and Stockholders' Equity

Liabilities
  Current liabilities
    Trade payables                                $   864,508  $   886,034
    Capital lease - current                            10,103       15,925
    Tax payables                                       75,732       97,779
    Due to related parties                            551,510      420,504
    Loan Payable-current                               27,322       26,199
    Accrued expenses and other payables               376,147      371,593
                                                  -----------  -----------
      Total current liability                       1,905,322    1,818,034

  Long term liability
    Capital lease                                      20,911       21,799
    Loan Payable                                       42,427       56,117
                                                  -----------  -----------
    Total liability                                 1,968,660    1,895,950
                                                  -----------  -----------

Stockholders' Equity
  Share Capital
    Authorized: 500,000,000 common shares, par
     value $0.001 per share
    Issued and Outstanding: 22,964,996 shares
     as of June 30, 2010 and December 31, 2009         22,965       22,965
  Additional paid-in capital                          887,268      860,449
  Deferred Compensation                              (117,000)    (124,800)
  Other comprehensive income                           51,623       71,641
  Retained Earnings                                 4,566,214    3,461,642
                                                  -----------  -----------
    Total                                           5,411,069    4,291,897
  Non-controlling interest                            346,577      158,583
                                                  -----------  -----------
    Total stockholders' equity                      5,757,646    4,450,480
                                                  -----------  -----------
    Total liabilities & stockholders' equity      $ 7,726,307  $ 6,346,430
                                                  ===========  ===========




                        SANCON RESOURCES RECOVERY, INC.
                      CONSOLIDATED STATEMENTS OF INCOME
                                (UNAUDITED)

                              For the three months   For the six months
                             periods ended June 30, periods ended June 30,
                                2010       2009        2010        2009
                             ----------  ---------- ----------  ----------

Net Sales                    $3,067,299  $2,743,132 $6,135,808  $5,337,627
Cost of sales                 1,575,990   1,324,657  3,144,096   2,606,589
                             ----------  ---------- ----------  ----------
  Gross profit                1,491,309   1,418,475  3,021,712   2,731,038

Operating Expenses
  Depreciation                   64,990      46,011    121,644      90,310
  Selling, General and
   Administrative               923,966     821,652  1,799,625   1,519,605
                             ----------  ---------- ----------  ----------
    Total operating expenses    988,956     867,663  1,921,269   1,609,915
                             ----------  ---------- ----------  ----------
Operating Income                502,353     550,812  1,100,443   1,121,123

Other Income (Expense)
  Other income
   /(Expense),net                 4,180      10,977     (9,014)     37,651
  Investment loss prior to
   acquisition                   (2,370)          -     (3,139)          -
  Gain on acquisition            34,805           -     34,805           -
  Interest income
   /(Expense),net                 2,063         128      2,489       1,413
                             ----------  ---------- ----------  ----------
  Total other income (expense)   38,678      11,105     25,141      39,064
                             ----------  ---------- ----------  ----------

Income from continued
 operations before income
 taxes and discontinued
 Operation                      541,031     561,917  1,125,584   1,160,187

Discontinued Operation
  Loss from Discontinued
   Operation                          -           -          -         (50)
  Loss on Disposal of a
   subsidiary                         -           -          -      (1,834)
                             ----------  ---------- ----------  ----------
Loss on Discontinued
 Operations                           -           -          -      (1,884)
                             ----------  ---------- ----------  ----------

Income before income taxes
 and non-controlling
 interest                       541,030     561,917  1,125,584   1,158,303

Less:Income taxes                 2,310      19,247     11,385      36,012

Less: Net income attributed
 to non-controlling interest      1,459       7,945      9,627      14,849

                             ----------  ---------- ----------  ----------
Net income                      537,262     534,725  1,104,572   1,107,442

Other comprehensive item:
Foreign currency translation
 gain/(loss)                    (19,222)     34,754    (20,018)     33,060

                             ----------  ---------- ----------  ----------
Net comprehensive income     $  518,040  $  569,479 $1,084,554  $1,140,502
                             ==========  ========== ==========  ==========

Earnings per share:
  Basic earnings per share
   -continued operations     $     0.02  $     0.02 $     0.05  $     0.05
                             ==========  ========== ==========  ==========
  Basic earnings per share
   -discontinued operations  $        -  $        - $        -  $        -
                             ==========  ========== ==========  ==========
  Basic earnings per share   $     0.02  $     0.02 $     0.05  $     0.05
                             ==========  ========== ==========  ==========
  Basic weighted average
   shares outstanding        22,964,996  22,918,329 22,964,996  22,766,663
                             ==========  ========== ==========  ==========
  Diluted earnings per share
   -continued operations     $     0.02  $     0.02 $     0.05  $     0.05
                             ==========  ========== ==========  ==========
  Diluted earnings per share
   -discontinued operations  $        -  $        - $        -  $        -
                             ==========  ========== ==========  ==========
  Diluted earnings per share $     0.02  $     0.02 $     0.05  $     0.05
                             ==========  ========== ==========  ==========
  Diluted weighted average
   shares outstanding        23,039,996  22,918,329 23,083,417  22,766,663
                             ==========  ========== ==========  ==========

Contact Information

  • Contact:
    Sancon Resources Recovery, Inc.
    Ms Maggie Zhang
    +86 21 6775 6099
    info@sanconinc.com