Mountain China Resorts Reports First Quarter Financial and Operational Results

BEIJING, CHINA--(Marketwire - June 29, 2011) -Mountain China Resorts (Holding) Limited (TSX VENTURE:MCG)(TSX VENTURE:MCG.WT) ("MCR" or the "Company"), today reported its financial results for the first quarter of fiscal 2011 ending March 31, 2011. MCR reports its results in Canadian Dollars.

Transition to IFRS

Effective January 1, 2011, MCR has adopted International Financial Reporting Standards (IFRS) for financial reporting, has used January 1, 2010 as the transition date. The financial statements for the quarter ended March 31, 2011, including the corresponding comparative information, have been prepared in accordance with International Accounting Standard IFRS 1 "First‐time Adoption of International Financial Reporting Standards", and with International Accounting Standard IAS 34 "Interim Financial Reporting" as issued by the International Accounting Standard Board ("IASB"). The Company previously prepared its interim and annual consolidated financial statements in accordance with Canadian Generally Accepted Accounting Principles ("GAAP") ("Canadian GAAP" or "Previous GAAP"). Unless otherwise noted, fiscal 2011 comparative information has been prepared in accordance with IFRS. The adoption of IFRS has no significant impact on the Company's operations, strategic decisions and cash flows.

Business and Corporate Developments

MCR announced a number of significant financial and operational developments during and subsequent to the quarter ended March 31, 2011, which are expected to enable the Company to resume positive operations at Sun Mountain Yabuli Resort.

Completion of $7.6 million Convertible Bond with Century Zone Limited

On February 18, 2011, the Company has completed its convertible bond financing (the "Offering") with Century Zone Limited for aggregate gross proceeds of $7.6 million. The convertible bond is due on February 17, 2013, has an interest rate of LIBOR + 3% and a conversion price of $0.15. As reported in the previous press release of the Company, the Company will extend an offer to existing shareholders who are "accredited investors", to participate in the Offering on the same terms as those entered into with Century Zone Limited up to an aggregate amount of $2 million and any such additional subscriptions was originally expected to complete on or prior to April 30th, 2011. However, as of the date of this Press Release, the Company has not yet launched the said offering of convertible bond to other shareholders. The Company will issue another press release reporting the update to shareholders and investors in due course.

Appointment of DNTW Chartered Accountants, LLP ("DNTW") as new auditor

Deloitte Touché Tohmatsu ("Deloitte") tendered its resignation at its own initiative as auditor of the Company effective February 14, 2011. On April 27, 2011, the Board has approved the appointment of DNTW as the successor auditor of the Company, with such appointment being effective as of April 8, 2011.

Appointment of new directors

As announced on April 24, 2011, the board has approved the appointment of Mr. Hongfei Zhang and Mr. Li Wing Kuen, Philip to the board of directors (the "Board") effective April 1, 2011. The appointments were subsequently approved by TSXV.

Financial Results

Total revenue and net results from continuing operations were driven by resort operations for the three-month period ended March 31, 2011 and 2010 with no real estate sales activities undertaken during these periods. Revenue from continuing operations totaled $4.07 million (RMB27.52 million) for the three-month period ended March 31, 2011 ("2011 Period") versus $1.76 million (RMB 11.62 million) for the same period in 2010 ("2010 Period"). Total operating EBITDA from continuing operations for the 2011 Period improved significantly to $0.41 million compared to negative $0.76 million for the 2010 Period and was attributable to improvement of resort operation and company-wide cost reduction efforts. Net loss in the three-month period in 2011 was $2.28 million versus $4.90 million in the 2010 period.

Cash and cash equivalents totaled $2.94 million and working capital was $4.30 million as at March 31, 2011.

Operations and Real Estate Development

Sun Mountain Yabuli-Operations

MCR's Sun Mountain Yabuli Resort opened for winter operations on November 18, 2009 and closed for operations on April 4, 2010 for a 138 day operating season. The 2010-2011 winter season operations commenced on November 27, 2010 and closed for operations on March 20, 2011. The revenue of Sun Mountain Yabuli skiing operation comprises mainly mountain operation, beverage, skiing-related services and hotel lodging. Skiing-related services includes rental of ski clothes, goggles, lockers, gloves, etc, sales of ski equipment and skiing training services offered in snow school. It also includes the mountain operation which is using the facilities built in the mountain, such as sight-seeing trams, now tubing and alpine. Operation expense within the resorts are mainly attributable to snow making, 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. Revenue from the Yabuli Resort for the 2011 Period was $4.07 million with Resort Operations EBITDA of $1.06 million versus $1.76 million with Resort Operations EBITDA of negative $0.10 million in the 2010 Period.

The 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 the superior ski experience in China.

Sun Mountain Yabuli-Real Estate

Since May 2010, the Company has been working on the exterior decoration of the 55 homes (a total of 75 homes) of which three were completed with interior finishing. As of the date of this press release, 55 homes are ready for sale subject to final internal decoration pursuant to the request of buyers. The sales team is developing in order to market the homes extensively across the country. There are about 10 buyers, who are members of the China Entrepreneurs Forum and other prominent businessmen in China, showing their intention to buy 10 homes. However, no formal sale and purchase agreement has yet been reached for any of the potential buyers. Further actions are still in process to finalize these sales.

Update on Changchun Resort

On November 17, 2010, the Company announced its updates with respect to certain developments that have taken place with respect to its Changchun Resort. The government of Erdao district of Changchun city in the Jilin province of the People's Republic of China (the "Erdao Government") holds the view that the Changchun Resort, is still owned by the government and it may, through Changchun Lianhua Mountain Agricultural Project Development Company Limited ("CCL Agricultural"), manage the same to the Company's exclusion. The Company disagrees with the Erdao Government's position. The Company had engaged Global Law Office, a reputable law firm in PRC, to do legal due diligence on the assets before they were acquired by the Company. Global Law Office had advised the Company that the assets acquired are not state-owned assets and the same may be validly transferred to the Company. Because of CCL Agricultural's and the Erdao Government's action, the Company has been deprived of management of the Changchun Resort. The Company has engaged in discussions with the Erdao Government, Changchun Lianhua Mountain Sports & Travel Development Company Changchun Sports and CCL Agricultural with an aim of resolving this matter. If the current situation cannot be resolved through negotiations, the Company may have to resort to legal means to protect its rights in relation to Changchun Resort.

As a result of the foregoing, the Company has lost control of the company itself and has therefore written off the full value of the assets and liabilities of the Company and reported it as a loss from discontinued operations.

For reporting purposes, the results of operation of Beidahu Resort and Changchun Resort have been disclosed separately from those of continuing operations for the period presented.

Financial Highlights

Summary Financial Results

(all numbers prepared in accordance with IFRS; In CAD$'000, except for ratios & per share amounts)

Balance Sheet Key Indicators

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, adverse industry events for the ski and real estate industries, 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, 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.