Sancon Resources Recovery, Inc. (OTCBB:SRRY) (or “Sancon”), a rapidly growing environmental services and waste recycling company with operations in both China and Australia, announced today results for its 2009 third quarter ended September 30, 2009.
Results of Operations - Comparison between the three months ended September 30, 2009 and the same periods in 2008
The Company generated revenue of $2.81 million in the 2009 third quarter, representing $190,880 or 6% decrease compared to $3 million in the 2008 third quarter. Revenue from China operation decreased $122,122 or 5% from $2.31 million in 2008 third quarter to $2.19 million in 2009 third quarter. Our China operation has maintained its quarterly sales performance similar to 2008 despite the challenging economic environment. Decrease in revenue from Australia operation has narrowed to $68,758 or 10% from $691,679 in 2008 third quarter to $622,921 in 2009 third quarter to reflect the improving economic activities in Australia. Sancon expects Australian operation will continue to improve in the coming quarters.
Gross profit decreased $569,675 or 32% to $1.19 million in the third quarter 2009 from $1.76 million in the third quarter 2008. Gross profit of China operation decreased $610,084 or 42% from $1.45 million in 2008 third quarter to $840,000 in 2009 third quarter. However, gross profit of the Australia operation increased by $55,409 or 18% from $301,664 in 2008 third quarter to $357,073 in 2009 third quarter. Gross margin decreased from 59% in the 2008 third quarter to 42% in the 2009 third quarter.
Net income for 2009 third quarter was $0.5 million, or $0.02 per share, compared to $0.46 million, or $0.01 per share one year ago. Although the sales and gross profit decreased in the third quarter 2009, the significant reduction in SG&A expenses in our China operation lead to the increase in net income. The company continues to strengthen its balance sheet position with $3.3 million cash balance.
Results of Operations - Comparison between the nine months ended September 30, 2009 and the same period in 2008
The revenue for the nine months period ended September 30, 2009 was $8.15 million, representing $154,361 or 2% increase compared to the revenue of $8 million in the same period of 2008. Revenue from China operation increased $646,661 or 11% from $5.96 million for the nine months period ended September 30, 2008 to $6.61 million for the same period in 2009. In the year of 2008, revenue from our Australia operation decreased by $492,300 or 24% from $2.03 million for the nine months period ended September 30, 2008 to $1.54 million for the same period in 2009. That is mainly due to the economic problems in Australia.
Gross profit decreased $0.73 million or 16% to $3.93 million for the nine months period ended September 30, 2009 from $4.65 million in the same period of 2008. The decrease of the gross profit is mainly due to the significant increase in cost of sales from the China operation. All these costs were related to our market expansion programs and the change of shipping mode required by the customers. Gross margin decreased from 58% for the nine months period ended September 30, 2008 to 48% for the nine months period ended September 30, 2009.
Net income for the nine months period ended September 30, 2009 was $1.61 million, or $0.07 per share, compared to $1.45 million, or $0.07 per share in the year ago period, an increase of $164,131 or 11%. In order to control the cost, the company has eliminated numerous outsourced services and consulting fees. This contributed greatly to the increase of net income for the nine months period ended September 30, 2009
“In spite of the slight decrease in revenue and gross profit in 2009 third quarter, our net income continues to increase. Our Australia and China operation are both emerging out of the global economic crisis with more efficiency. We are very pleased to achieve the ninth consecutive quarter of profitability and achieving a year on year growth at the same time,” said Jack Chen, Sancon's Chief Executive Officer. “We have recently concluded a preliminary memorandum of understanding with an electronic waste processing company in Hunan, China. Relying on this company's R&D team, the MoU also include building China's largest waste battery recycling site on a 10-hectare land. In Australia, we have founded the Algal Fuels Consortium together with Government of South Australia, South Australian Research & Development Institute (SARDI), Flinders University, Commonwealth Scientific Industrial Research Organization (CSIRO), and Flinders Partners. The consortium is finalizing a technology for generating biomass from Captured CO2 emissions. Sancon has the right to commercialize this renewable energy technology in Australia and China. We believe these strategic initiatives will position us favorably into 2010 and beyond.”
About Sancon Resources Recovery Inc.
Sancon Resources Recovery, Inc. is an environmental service company that specializes in the collection, processing, and selling of the reprocessed 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 by sponsoring the development of biofuel production technique that thrives on 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 | ||||||||||
| September 30, 2009 | December 31, 2008 | |||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 3,250,522 | $ | 2,220,509 | ||||||
| Trade receivables, net | 977,547 | 289,240 | ||||||||
| Inventory | 6,517 | 7,270 | ||||||||
| Deferred Tax Asset | 37,291 | 22,107 | ||||||||
| Other receivables | 317,070 | 64,929 | ||||||||
| Advances and prepayments | 72,989 | 75,389 | ||||||||
Current assets of entity disposed of | - | 156,994 | ||||||||
| Total current assets | 4,661,936 | 2,836,438 | ||||||||
| Property, plant & equipment, net | 852,190 | 927,044 | ||||||||
| Other receivable | - | - | ||||||||
| Security deposit | 9,602 | 7,598 | ||||||||
| Marketable securities | 259,000 | 128,938 | ||||||||
| Investment | 43,813 | - | ||||||||
| Total Assets | $ | 5,826,541 | $ | 3,900,018 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
| Liabilities | ||||||||||
| Current liabilities | ||||||||||
| Trade payables | $ | 995,382 | $ | 747,786 | ||||||
| Capital lease - current | 2,846 | 8,735 | ||||||||
| Accrued expenses and other payables | 186,782 | 252,424 | ||||||||
| Tax payables | 109,818 | 110,314 | ||||||||
| Due to related parties | 391,755 | 415,304 | ||||||||
| Other payables | 108,076 | 116,178 | ||||||||
Current liability of entity disposed of | - | 24,950 | ||||||||
| Total current liability | $ | 1,794,659 | $ | 1,675,691 | ||||||
| Long term liability | ||||||||||
| Capital lease | $ | 36,872 | $ | 29,175 | ||||||
| Total liability | $ | 1,831,531 | $ | 1,704,866 | ||||||
| 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 September 30, 2009 and 22,614,996 December 31, 2008 respectively | 22,965 | 22,615 | ||||||||
| Additional paid-in capital | 860,449 | 808,299 | ||||||||
| Non-Controlling interest in subsidiary | 147,874 | 127,829 | ||||||||
| Deferred Compensation | (128,700 | ) | (194,400 | ) | ||||||
| Other comprehensive income | 113,013 | 62,854 | ||||||||
| Retained Earnings | 2,979,409 | 1,367,955 | ||||||||
| Total stockholders' equity | 3,995,010 | 2,195,152 | ||||||||
| Total liabilities & stockholders' equity | $ | 5,826,541 | $ | 3,900,018 | ||||||
| SANCON RESOURCES RECOVERY, INC. | ||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||
For the three months periods | For the nine months periods | |||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||||
| Net Sales | $ | 2,811,917 | $ | 3,002,797 | $ | 8,149,544 | $ | 7,995,183 | ||||||||||
| Cost of sales | 1,617,521 | 1,238,726 | 4,224,110 | 3,343,469 | ||||||||||||||
| Gross profit | 1,194,396 | 1,764,071 | 3,925,434 | 4,651,714 | ||||||||||||||
| Operating Expenses | ||||||||||||||||||
| Depreciation | 54,958 | 11,493 | 145,268 | 89,699 | ||||||||||||||
| Selling, General and Administrative | 588,521 | 1,461,943 | 2,108,126 | 2,949,104 | ||||||||||||||
| Total operating expenses | 643,479 | 1,473,436 | 2,253,394 | 3,038,803 | ||||||||||||||
| Operating income | 550,917 | 290,635 | 1,672,040 | 1,612,911 | ||||||||||||||
| Other Income (Expense) | ||||||||||||||||||
| Other income | (43,380 | ) | (71,865 | ) | (5,729 | ) | (72,740 | ) | ||||||||||
| Interest income | 3,019 | 2,265 | 4,432 | 28,801 | ||||||||||||||
| Total other income | (40,361 | ) | (69,600 | ) | (1,297 | ) | (43,939 | ) | ||||||||||
Income from continued operations before income taxes and | 510,556 | 221,035 | 1,670,743 | 1,568,972 | ||||||||||||||
| Discontinued Operation | ||||||||||||||||||
| Loss from Discontinuing Operation | - | 3,155 | (50 | ) | (37,066 | ) | ||||||||||||
| Gain/(Loss) on Disposal of Subsidiary | - | - | (1,834 | ) | 3,820 | |||||||||||||
| Gain(loss)on Discontinued Operations | - | 3,155 | (1,884 | ) | (33,246 | ) | ||||||||||||
| Income before income taxes | 510,556 | 224,190 | 1,668,859 | 1,535,726 | ||||||||||||||
| Less: Income taxes | 1,348 | (122,167 | ) | 37,360 | 46,365 | |||||||||||||
| Less: Net income attributed to non-controlling interest | 5,196 | (109,952 | ) | 20,045 | 42,038 | |||||||||||||
| Net income | 504,012 | 456,309 | 1,611,454 | 1,447,323 | ||||||||||||||
| Other comprehensive item: | ||||||||||||||||||
| Foreign currency translation gain | 17,099 | (14,445 | ) | 50,159 | 28,018 | |||||||||||||
| Net comprehensive income | $ | 521,111 | $ | 441,864 | $ | 1,661,613 | $ | 1,475,341 | ||||||||||
| Earnings per share: | ||||||||||||||||||
| Basic & diluted earnings/(loss) per share continued operations | $ | 0.02 | $ | 0.02 | $ | 0.07 | $ | 0.07 | ||||||||||
| Basic earnings/(loss) per share discontinued operations | $ | - | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
| Basic & diluted earnings/(loss) per share | $ | 0.02 | $ | 0.02 | $ | 0.07 | $ | 0.07 | ||||||||||
| Basic & diluted weighted average shares outstanding | 22,964,996 | 22,110,600 | 22,833,746 | 21,518,293 | ||||||||||||||
Contacts:
American Consulting & Research, LLC for Sancon Resources Recovery, Inc.
Patricia
Oppito, 917-520-5372
poppito@nyc.rr.com
or
Sancon
Resources Recovery, Inc.
Jack Chen, +86 21 6775 6099 (CEO)
info@sanconinc.com
