BEIJING, May 31, 2019 (GLOBE NEWSWIRE) -- Mountain China Resorts (Holding) Limited (TSXV: MCG) (“MCR” or the “Company”), today reported its financial results for the quarter ended March 31, 2019. MCR reports its results in Canadian Dollars.
Financial Results
Total revenue and the net results were from resort operations sales revenue during the Reporting Period. For the quarter ended March 31, 2019, the Company generated revenues from resort operations of $4.04 million and a net loss of $0.12 million or $0.00 per share compared to $5.46 million and a net loss of $0.28 million or $0.00 per share in 2018 from continuing operations. Resort Operations EBITDA from continuing operations for the first quarter of 2019 were $0.68 million compared to $1.22 million last year. Major reason for the decrease in revenue was that since the second half of 2018, the Ski industry has been adversely affected by the overall economic downturn of China as a result of the macro-environment of trade war between China and the U.S., as well as a series of economic policies adopted by Chinese government to drop leverage rate. 2018-2019 winter operations were under negative influence of those macroeconomic environment.
Resort operations expenses totaled $3.15 million for the quarter ended March 31, 2019 compared to $4.06 million in 2018. Operation expense within the resorts are mainly attributable to grooming, staffing, fuel and utilities, which also include the G&A expenses relating to these resort’s senior management, marketing and sales, information technology, insurance and accounting. Gross margin decreased from 26% in 2018 to 22% in 2019. The drop in gross margin was due to unsatisfied amount of revenue generated in 2018-2019 winter operations.
Other income totaled $0.10 million (2018: 0.09 million) recognized from the deposit paid by Club Med.
Corporate general and administrative expenses (“G&A Expenses”) totaled $0.30 million for the quarter ended March 31, 2019 compared to $0.27 million in 2018. This amount mainly comprised executive employee costs, public company costs, and corporate information technology costs.
Depreciation and amortization expense totaled $0.78 million for the quarter ended March 31, 2019 compared to $0.78 million in 2018. The decrease in depreciation and amortization from 2017 to 2018 was mainly caused by the debt settlement in 2017 in which properties and equipment with a book value of $5.24 million was disposed.
The Group incurred interest expenses of $0.32 million for the quarter ended March 31, 2019 compared to $0.23 million in 2018. Financing costs mainly related to the loan interests, accretion expenses of convertible bonds, and also included bank administrative fee, and service charge. The decrease in interest expense from 2017 to 2018 was mainly caused by the debt settlement in 2017 in which bank loans balance was reduced to $nil.
Cash totaled $1.69 million (December 31, 2018: 1.13 million) and working capital was negative $68.19 million as at December 31, 2018 (December 31, 2018: 69.13 million).
Operations Sun Mountain Yabuli
The 2017-2018 MCR’s Sun Mountain Yabuli Resort winter season operations commenced on October 27th, 2017 and closed on March 26th, 2018 (151 days in total). The 2017-2018 MCR’s Sun Mountain Yabuli Resort winter season operations commenced on November 1st, 2018 and closed on April 7th, 2019 (160 days in total). The revenue of Sun Mountain Yabuli Resort operation comprises mainly by mountain operation, beverage, skiing-related services and hotel lodging before the debt settlement carried out in May, 2017. After disposal of four subsidiaries, most of the Ski operations related assets and cash flow have been moved out from MCR, including ski equipment rent income, ski pass for using the lift, ski instructors services fee, slide income, and advertisement income. MCR only keeps two hotels and the cash flow from these hotels and MCR pays to Sun Village for using the lift and their ski instructors. The Sun Mountain Yabuli Resort attracted both regional and destination visitors from city ski clubs as well as independent travelers. Consistent with the response from conference and event attendees, visitors consistently ranked the Sun Mountain Yabuli Resort as the superior ski experience in China.
The Company reported a revenue decrease of 26% in first quarter of 2019 compared to 2018. Major reasons for the decrease in revenue was that since the second half of 2018, the Ski industry has been adversely affected by the overall economic downturn of China as a result of the macro environment of trade war between China and the U.S, as well as a series of economic policies adopted by Chinese government to drop leverage rate. 2018-2019 winter operations were under negative influence of those macroeconomic environment.
Financial Highlights
Summary Financial Results
| (in thousands of Canadian dollars except for per share data) | For the quarter ended March 31, 2019 | For the quarter ended March 31, 2018 | ||||
| Revenue | 4,039 | 5,460 | ||||
| Operating expenses | (3,153 | ) | (4,059 | ) | ||
| Other income | 96 | 93 | ||||
| General and administrative expenses | (302 | ) | (274 | ) | ||
| Depreciation and amortization | (776 | ) | (776 | ) | ||
| Operating loss from continuing operations | (96 | ) | 444 | |||
| Total non-operating income and expenses | (25 | ) | (721 | ) | ||
| Deferred income tax recovery | - | - | ||||
| Profit/(Loss) from continuing operations | (121 | ) | (277 | ) | ||
| Profit/(Loss) from discontinued operations | - | - | ||||
| Net Profit/(loss) | (121 | ) | (277 | ) | ||
| Earnings (loss) per share from continuing operations (Basic and Diluted) | (0.00 | ) | (0.00 | ) | ||
| Weighted average number of shares outstanding(Basic and Diluted) | 308,859,103 | 308,859,103 | ||||
Balance Sheet Key Indicators
| (in thousands of Canadian dollars except for ratios) | March 31, 2019 | December 31, 2018 | ||
| Current Ratio | 0.06 | 0.05 | ||
| Free Cash | 1,689 | 1,133 | ||
| Working Capital | (68,191 | ) | (69,134 | ) |
| Total Assets | 62,385 | 62,292 | ||
| Total non-current liabilities | 677 | 771 | ||
| Total Debt | 73,026 | 73,519 | ||
| Total Equity | (10,641 | ) | (11,227 | ) |
| Total Debt to Total Equity Ratio | (6.86 | ) | (6.55 | ) |
Note:
Current ratio is defined as total current assets divided by total current liabilities
Total debt is defined as total current liabilities plus total non-current liabilities
The Company has an accumulated deficit and a working capital deficiency which cast a substantial doubt on the Company’s ability to continue as a going concern. The Company's ability to meet its obligations as they fall due and to continue to operate as a going concern is dependent on further financing and ultimately, the attainment of profitable operations. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Management of the Company plans to fund its future operation by obtaining additional financing through loans or private placements. However, there is no assurance that the Company will be able to obtain additional financing.
| March 31, 2019 | December 31, 2018 | |
| (in thousands of Canadian dollars) | ||
| Accumulated deficit | $ 341,984 | $ 341,863 |
| Working capital (deficiency) | $ 68,191 | $ 69,134 |
SUBSEQUENT EVENTS
There has been no substantial subsequent event up to the reporting date.
2019 FIRST QUARTER MAJOR CORPORATE DEVELOPMENTS
MCR reported a 33% decrease in revenue for 2019 Q1
Club Med 2018-2019 winter season operations commenced on November 1st, 2018 and closed on April 7th, 2019. During the first quarter of 2019, total revenue was $4.04 million (2018 - $5.46 million), which represents a decline of 26% as compared with 2018. Major reasons for the decrease in revenue was that since the second half of 2018, the Ski industry has been adversely affected by the overall economic downturn of China as a result of the macro environment of trade war between China and the U.S, as well as a series of economic policies adopted by Chinese government to drop leverage rate.
The cooperation contract with Club Med will expire after 2019-2020 winter operations, management had started negotiation with Club Med on the renewal of the contract.
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. 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.
For more information, please contact:
Mountain China Resorts (Holding) Limited
Mr. Han Gang
Chief Executive Officer and Director
Tel: 0086-10-66420868
Email: investor_relations@mountainchinaresorts.com
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.
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.