SOURCE: Sancon Resources Recovery Inc

August 15, 2007 15:15 ET

Sancon Reports Second Quarter Results for 2007 and Continually Grows Stronger

SHANGHAI, CHINA--(Marketwire - August 15, 2007) - Sancon Resources Recovery Inc. (OTCBB: SRRY), a growing industrial waste recycling company with operations in China and Australia, today announced it reported operating results for the quarter ending June 30, 2007.

2007 Q1 Highlights are:

--  2007 Q2 revenues grew 878% to $1.7 million from $0.17 million in 2006
--  Gross profit increased to $0.2 million in 2007 Q2 from $0.08 million
    in 2006 Q2.
--  Investment into new operations in China with signing of a major

Sancon reported sales of $1,689,650 in second quarter of 2007, representing an 878% increase compared to the sales of $172,725 in the same period of 2006. The sharp increases were mainly due to the significant sales amount contributed from its wholly owned new subsidiary which started its operation in third quarter of 2006, and restructuring of existing divisions. The new companies are engaged in the trading, processing and import of recycling waste materials. The cost of sales for the quarter was $1,516,097 compared to the cost of sales of $90,618 in same quarter of 2006. The significant increase of cost of sales is in line with the increase of sales during the quarter ended June 30, 2007. Selling, General and Administrative Expenses (SG&A expenses) increased by $132,640 or 175% to $208,365 in Q2 2007 compared to the same period of 2006.

Highlights of the financial results for year-to-date ending June 30, 2007 are:

--  2007 year to date revenues grew 900% to $2.90 million from $0.29
    million in 2006.
--  Gross profit year to date increased to $0.37 million in 2007 from
    $0.14 million in 2006.

Sancon reported sales for the first half of 2007 have almost grown tenfold, from $286,047 US dollars for the same period in 2006, to $2,897,829 US dollars. The sharp increase reflects the company's focus of expanding its business activities in the recycling of plastic waste materials. Going forward into second half of 2007, sales are expected to continue to increase from the current level, as Sancon starts to invest in China and setting up new operations in four cities in China initially to sever major international clients. The new operation expects to expand into additional cities in China to add on more waste material processing centers.

The gross profit for the first half of 2007 was $365,581, representing 153% increase compared to $144,702 for the same period in 2006. The increase of the gross profit was a direct result of increase in revenue. However the gross margin dropped from 50% in 2006 to 12% in 2007 mainly due to lower gross margin business from its plastic waste material trading businesses. The waste collection, reprocessing and recovery business operated in Australia continue to enjoy higher margins. The new trading business is highly complementary to the waste reprocessing business for gaining a bigger footprint in the market place and winning more end customers. New China operations expect to be higher margin as it involves additional services provided to customers.

Sancon continues to grow in second half of 2007

"We are pleased with the company's continued strong growth in 2007 from last year," stated CEO of Sancon, Mr. Jack Chen. "Sancon continues to execute its goal of reaching $8 million annual revenue target in 2007. Our profit has suffered as a result of the rising Australian dollars against the US dollars, which made the cost of export more expensive. However we are pleased to see a strong demand in China for our recycled materials and our waste management services. With our new investment in China and contracting a large international consumer company as our first client in China, Sancon has opened four waste management operations in China in four key cities. With an experienced, hands-on management team we are positioning ourselves in the China market to offer integrated waste services for many of international companies whom are looking for a waste management solution in a responsible manner provided by a reputable company like Sancon."

Mr. Chen added, "We have also added the service of security destruction in addition to our waste management services. Many international companies operating in China has expressed their interests in using our services to be environmentally responsible as well as protecting their intellectual rights and trade secrets. The new investment in China will enable us to service our clients throughout China from a network of waste management centers. We are very excited with the growth prospects coming from China and anticipate positively impacting our financials."

About Sancon Resources Recovery

Sancon Resources Recovery, Inc. (OTCBB: SRRY) collects, reprocesses and resells industrial and commercial solid wastes such as plastic, paper, cardboard, and glass. The recycled materials can be reused by Sancon's manufacturing customers in China for making wide variety of products such as outdoor furniture, construction materials, road surface, etc and new materials. Sancon also trades in recycled plastic wastes originated from countries such as the US, Japan, and European countries to satisfy the growing demand for recycled materials by manufacturers. Sancon's operating facilities are based in China, Australia, and Hong Kong. The use of recycled raw materials is both environmentally friendly and an important method to lower production costs for manufacturers. For more information:

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.

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