Mountain China Resorts Reports Second Quarter 2011 Financial and Operational Results

BEIJING, CHINA--(Marketwire - Aug. 29, 2011) - Mountain China Resorts (Holding) Limited (TSX VENTURE:MCG) ("MCR" or the "Company"), today reported its financial results for the three and six-month periods ended June 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 June 30, 2011, the Company generated revenues from resort operations of $0.016 million and a net loss of $4.898 million or $0.02 per share. The loss in the second quarter was primarily due to no ski operations as Yabuli Resorts closed at late March.

For the six month period ended June 30, 2011, the Company generated revenues from resort operations of $4.089 million and a net loss of $7.177 million, or $0.04 per share. Sun Mountain Yabuli Resort's skiing season ended on March 20, 2011; winter season operations will resume in November 2011. Operating EBITDA for the 2011 first six months was negative $0.578 million compared to negative $0.916 million (over the same period in 2010).

Cash and cash equivalents totaled $1.014 million and working capital was negative $20.406 million as at June 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 second quarter and the six-month period ended June 30, 2011 was $0.016 million and $4.089 million respectively. Operating EBITDA was negative $0.478 million in the second quarter and $0.578 million in the first half of 2011.

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 this date, 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. 2 of these potential buyers have orally 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
(in thousands of Canadian dollars except for per share data)	For the three-month period ended June 30, 2011			For the three-month period ended June 30, 2010			For the six-month period ended June 30, 2011			For the six-month period ended June 30, 2010
Revenue	$	16		$	13		$	4,089		$	1,771
Operating expenses		(494	)		(1,878	)		(3,511	)		(2,687	)
Other income		8			2			9			6
General and administrative expenses		(913	)		(815	)		(1,565	)		(1,324	)
Depreciation and amortization		(2,346	)		(2,251	)		(4,658	)		(4,740	)
Impairment of PPE		-			-			(69	)		-
Operating loss		(3,730	)		(3,722	)		(5,705	)		(6,974	)
Total non-operating income and expenses		(1,183	)		2,428			(2,429	)		978
Recovery of/(provision for) future income taxes		15			13			957			31
Net loss	$	(4,898	)	$	(1,690	)	$	(7,177	)	$	(6,594	)
Net loss per share (Basic and Diluted)		(0.02	)		(0.10	)		(0.04	)		(0.04	)
Weighted average number of shares outstanding (Basic and Diluted)		203,092,285			133,295,698			203,092,285			133,295,698

Balance Sheet Key Indicators
(in thousands of Canadian dollars except for ratios)	June 30, 2011		December 31, 2010
Current Ratio1	0.57:1		1.24:1
Free Cash	1,014		2,404
Working Capital2	(20,406	)	5,648
Total Assets	179,434		186,063
Total Debt3	115,526		114,767
Total Equity4	63,908		71,296
Total Debt to Total Equity Ratio	1.81:1		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

On April 24, 2011, MCR announced that Mr. Li Wing Kuen, Philip and Mr. Hongfei Zhang were appointed as board of directors effective April 1, 2011. Mr. Li was also appointed as the Chairman of the Company's Audit Committee and Compensation Committee and is a voting member of the Company's Governance & Nominating Committee. As at August 29, 2011, the composition of the board is six (6) non-independent directors and two (2) independent directors.

As the Company announced on April 27, 2011, 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 approved the appointment of DNTW as the successor auditor of the Company, with such appointment being effective as of April 8, 2011.

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.