Mountain China Resorts (Holding) Limited (TSX VENTURE:MCG) ("MCR"
or the "Company"), today reported its financial results for the
three and nine-month periods ended September 30, 2011 (the
"Reporting Period"). The Company reports in Canadian Dollars.
Financial Results
Total revenue and the net results were from resort operations
with no real estate sales revenue during the Reporting Period. For
the three-month period ended September 30, 2011, the Company
generated revenues from resort operations of $0.039 million and a
net loss of $5.327 million or $0.02 per share. The loss in the
third quarter was primarily because there has not been any ski
operation at the Company's Yabuli Resorts since it closed in late
March of 2011.
For the nine-month period ended September 30, 2011, the Company
generated revenues from resort operations of $4.128 million and a
net loss of $12.506 million, or $0.05 per share. Sun Mountain
Yabuli Resort's skiing season ended on March 20, 2011. Winter
season operations has recently resumed on November 26, 2011. Resort
Operations EBITDA for the 2011 first nine months was positive
$0.153 million compared to negative $1.266 million (over the same
period in 2010).
Cash and cash equivalents totaled $0.923 million and working
capital was negative $22.876 million as at September 30, 2011.
Operations Sun Mountain Yabuli
Sun Mountain Yabuli Resort opened for winter operations on
November 27, 2010 and closed for operations on March 20, 2011.
Revenue at the Yabuli Resort for the third quarter and the
nine-month period ended September 30, 2011 was $0.039 million and
$4.128 million respectively. Resort Operations EBITDA was negative
$0.425 million in the third quarter and positive $0.153 million for
the nine-month period ended September 30, 2011.
Sun Mountain Yabuli - Real Estate Development
Since May 2010, the Company has been working on the exterior
decoration of the 55 homes of which three were completed with
interior finishing. As of this date, 55 homes are ready for sale
subject to final interior decoration pursuant to the request of
prospective buyers. The sales team is developing a marketing plan
in order to market the homes extensively across the country. There
are about 10 prospective buyers, who are members of the China
Entrepreneurs Forum and other prominent businessmen in China, and
who are expressing interests to buy 10 homes. Two of these
potential buyers have verbally agreed to purchase 2 homes subject
to the finalization of the written terms and conditions to be set
out in the purchase agreement and the signing of the same. For the
remaining 8 potential buyers, no sale and purchase agreement has
yet been reached. Further actions are still in process to finalize
these sales.
Financial Highlights
Summary Financial Results
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For the For the For the For the
(in thousands of three-month three-month nine-month nine-month
Canadian dollars period ended period ended period ended period ended
except for per September September September September
share data) 30, 2011 30, 2010 30, 2011 30, 2010
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Revenue $ 39 $ 111 $ 4,128 $ 1,882
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Operating
expenses (464) (461) (3,975) (3,148)
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Other income 3 1488 12 1,494
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General and
administrative
expenses (429) (407) (1,993) (1,731)
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Depreciation and
amortization (2,418) (2,256) (7,076) (6,996)
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Impairment of PPE - - (69) -
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Operating loss (3,269) (1,525) (8,974) (8,499)
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Total non-
operating income
and expenses (2,096) (1) (4,526) 977
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Recovery
of/(provision
for) future
income taxes 38 17 994 48
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Results of
discontinued
operation - - - (629)
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Net loss $ (5,327) $ (1,509) $ (12,506) $ (8,103)
----------------------------------------------------------------------------
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Net loss per
share (Basic and
Diluted) (0.02) (0.01) (0.05) (0.05)
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Weighted average
number of shares
outstanding
(Basic and
Diluted) 203,092,285 202,825,011 203,137,075 161,803,232
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Balance Sheet Key Indicators
(in thousands of Canadian dollars except September 30, December 31,
for ratios) 2011 2010
Current Ratio(1) 0.56:1 1.24:1
Free Cash 923 2,404
Working Capital(2) (22,876) 5,648
Total Assets 188,056 186,063
Total Debt(3) 124,366 114,767
Total Equity(4) 63,908 71,296
Total Debt to Total Equity Ratio 1.95:1 1.61:1
(1) Current ratio is defined as total current assets divided by total
current liabilities
(2) Working capital is defined as total current assets less total current
liabilities
(3) Total debt is defined as total current liabilities plus total non-
current liabilities
(4) Total equity is equal to the total shareholders' equity
The ability of the Company to meet its current obligations is
dependent on its ability to source financing and/or investment from
external sources due to its limited income generating capability
while in a development stage. The ability of the Company to arrange
such financing in the future will depend in part upon prevailing
capital and financial market conditions, as well as upon the
business success of the Company. Historically, the Company has been
successful in obtaining funding and is actively seeking new
financing sources, including via Chinese and foreign banks,
shareholder investment and/or loan and divestment of assets, to
meet operational obligations. There can be no assurance that the
Company will be able to arrange such financing. If the financing
efforts are unsuccessful or are not available on acceptable terms
the Company may not have sufficient funds to meet its obligations
or on-going operations and may need to suspend part or all of its
operations and consider other alternatives.
Corporate Developments
As part of the Company's convertible bond financing (the "CB
Offering") with Century Zone Limited for aggregate gross proceeds
of $7.6 million in February 18, 2011, the Company had planned to
extend an offer to existing shareholders who are "accredited
investors", to participate in the CB Offering on the same terms as
those entered into with Century Zone Limited up to an aggregate
amount of $2,000,000 to be completed on or prior to April 30, 2011.
However, the Company has now decided to not proceed with the
initial planned offer of convertible bond to accredited investor
shareholders as the market for the Company's securities has changed
significantly since the completion of the CB Offering and the
Company has also initiated a non-brokered private placement for CDN
$19,026,000 through the issuance of 105,700,000 common shares at
the price of $0.18 per share.
On September 16, 2011, the Company successfully elected eight
directors at its annual and special general meeting of
shareholders. The directors elected to serve for the ensuing year
are Zhenhua Mao, Tsui Che Yin Frank, Wing Kuen Philip Li, Ermanno
Pascutto, Jingru Guan, Gang Han, Lian Wang and Hongfei Zhang. As at
September 30, 2011, the composition of the board is six (6)
non-independent directors and two (2) independent directors.
On September 16, 2011, the Company's shareholders approved the
appointment of DNTW as the auditor of the Company at its annual and
special general meeting of shareholders.
About MCR
MCR is the premier developer of four season destination ski
resorts in China. MCR is transforming existing China ski properties
into world-class, four seasons luxury mountain resorts with
excellent real estate investment opportunities for discerning
buyers. In February 2009, the Company's Sun Mountain Yabuli Resort
was awarded Best Resort Makeover in Asia by TIME Magazine. Yabuli
is also the permanent home of the China Entrepreneur's Forum the
leading and most influential community of China's most
distinguished and successful entrepreneurs and business leaders
with over 5,000 members from across a variety of key
industries.
www.mountainchinaresorts.com
FORWARD LOOKING INFORMATION
Information in this press release that is not current or
historical factual information may constitute forward-looking
information within the meaning of securities laws, and actual
results may vary from the forward-looking information. Implicit in
this information are assumptions regarding future operations,
plans, expectations, anticipations, estimates and intentions, such
as the plans to develop the ski resorts in China. These
assumptions, although considered reasonable by MCR at the time of
preparation, may prove to be incorrect. Readers are cautioned that
actual future operating results and economic performance of MCR are
subject to a number of risks and uncertainties, including general
economic, market and business conditions, uncertainty relating to
land use rights in China, adverse industry events for the ski and
real estate industries, real estate prices in general in China,
MCR's ability to make and integrate acquisitions, the requirements
of recent Chinese regulations relating to cross-border mergers and
acquisitions, the inability to obtain required approvals or
approvals may be subject to conditions that are unacceptable to the
parties, changing industry and government regulation, as well as
MCR's ability to implement its business strategies, dispose of
assets or raise sufficient capital, MCR's ability to obtain
additional financial resources and sufficient working capital,
MCR's ability to complete the announced non-brokered private
placement, seasonality, weather conditions, competition, currency
fluctuations and other risks, and could differ materially from what
is currently expected as set out above.
Forward-looking information contained in this press release is
based on current estimates, expectations and projections, which MCR
believes are reasonable as of the date of this press release. MCR
uses forward-looking statements because it believes such statements
provide useful information with respect to the operation and
financial performance of MCR, and cautions readers that the
information may not be appropriate for other purposes. Readers
should not place undue importance on forward-looking information
and should not rely upon this information as of any other date.
While MCR may elect to, it does not undertake to update this
information at any particular time except as required by applicable
law.
NON-IFRS MEASURES
Throughout this news release we use certain non-IFRS measures
such as the term "EBIDTA" to analyze operating performance. We
define EBITDA as operating revenues less operating expenses from
continuing operations and therefore reflect earnings before
interest, income tax, depreciation and amortization,
non-controlling interest and any non-operating and non-recurring
items. These non-IFRS measures do not have a standardized meaning
prescribed by IFRS and may not be comparable to similarly titled
measures presented by other companies. These non-IFRS measures are
referred to in this news release because we believe they are
indicative measures of a company's performance and are generally
used by investors to evaluate companies in the resort operations
and resort development industries. Figures used in calculation of
EBITDA are in compliance with IFRS, therefore no reconciliation is
needed.
The TSX Venture Exchange nor its Regulation Services Provider
has neither approved nor disapproved the contents of this press
release.
The TSX Venture Exchange nor its Regulation Services Provider
does not accept responsibility for the adequacy or accuracy of this
release.
Contacts: Mountain China Resorts (Holding) Limited Mr. Han Gang
Chief Financial Officer and Director
0086-10-66420868investor_relations@mountainchinaresorts.comwww.mountainchinaresorts.com
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