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Sancon Resources Recovery, Inc. Announces Record Preliminary 2008 Second Quarter Results

July 23, 2008

 
 
Sancon Resources Recovery, Inc. (OTCBB:SRRY), a rapidly growing environmental services and industrial waste recycling company, with operations in both China and Australia, today announced record preliminary second quarter results for the period ended June 30, 2008.

The Company generated record 2008 second quarter revenue of approximately $2.93 million, a 73.3% increase compared to $1.69 million in the 2008 second quarter. Revenue increased due to strong growth in China. Gross profit increased 641% to $1.26 million compared to $0.17 million in the year earlier period. Gross profit declined from $1.51 million in the 2008 first quarter due to damage to roads and highways in certain cities the Company does business in as a result of the Wenchuan earthquake. This damage increased the amount of time it took to complete waste collections, increasing the cost to the Company. Many of the roads and highways have since been repaired.

Gross margin increased from 10.3% in the 2007 second quarter to 43% in the 2008 second quarter due to increased sales of higher margin services in China. 2008 second quarter net income was a record $0.37 million, or $0.02 per diluted share, compared to a loss of $(0.06) million or $0.00 per share in the year earlier period. The 2008 second quarter was the Company's second consecutive quarter of profitability. 2008 first quarter net income was a record $0.79 million, or $0.04 per diluted share, compared to a loss of $(0.16) million, or $(0.01) per share in the year earlier period.

Despite the strong revenue growth in the 2008 second quarter, the Company's revenue would have been even higher except for the disruption caused by the earthquake that impacted Sancon's ability to offer environmental services in certain areas that were impacted by the earthquake. Profitability was also impacted by the Company's decision to increase spending to develop ways to turn waste glass material into new usable products and materials, which it believes will allow it to generate additional sources of revenue and investments in additional infrastructure to support anticipated growth throughout the balance of 2008 and 2009.

"We are pleased to announce our second consecutive quarter of profitability," said Jack Chen, Sancon's Chief Executive Officer. "Despite challenges presented by the earthquake in China, which impacted our ability to offer services in certain markets, we continued to expand our customer base and market. The market in China is substantial and still in its early stages of growth, and we have positioned the Company to benefit from the Chinese government's mandate to clean up the environment in the next 15 years. We will continue to strategically increase our recycling plants and depots to support growth in new Chinese cities and to expand the services we provide customers in our target markets."

The Company expects to provide a business outlook for fiscal 2008 when it announces results in mid-August and will hold a conference call for the investment community to discuss its results. Details on the timing of the conference call will follow.


About Sancon Resources Recovery Inc

Sancon Resources Recovery, Inc. is an environmental service and waste management company that operates recycling facilities in China and Australia. Sancon specializes in the collection and recovery of industrial and commercial solid wastes such as plastic, paper, cardboard, and glass. The recycled materials are re-used by Sancon's manufacturing customers in China to make a wide variety of new products including outdoor furniture, construction materials, building materials, road surface, and various new products. Sancon's China operation is licensed by the Chinese government for waste management services, and is certified with ISO 9001 and ISO14001 standards. 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.