BEIJING, CHINA--(Marketwire - Nov. 29, 2011) - 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
| (in thousands of Canadian dollars except for per share data) | For the three-month period ended September 30, 2011 | For the three-month period ended September 30, 2010 | For the nine-month period ended September 30, 2011 | For the nine-month period ended September 30, 2010 | ||||||||
| Revenue | $ | 39 | $ | 111 | $ | 4,128 | $ | 1,882 | ||||
| Operating expenses | (464 | ) | (461 | ) | (3,975 | ) | (3,148 | ) | ||||
| Other income | 3 | 1488 | 12 | 1,494 | ||||||||
| General and administrative expenses | (429 | ) | (407 | ) | (1,993 | ) | (1,731 | ) | ||||
| Depreciation and amortization | (2,418 | ) | (2,256 | ) | (7,076 | ) | (6,996 | ) | ||||
| Impairment of PPE | - | - | (69 | ) | - | |||||||
| Operating loss | (3,269 | ) | (1,525 | ) | (8,974 | ) | (8,499 | ) | ||||
| Total non-operating income and expenses | (2,096 |
) | (1 |
) | (4,526 |
) | 977 |
|||||
| Recovery of/(provision for) future income taxes | 38 |
17 |
994 |
48 |
||||||||
| Results of discontinued operation | - | - | - | (629 | ) | |||||||
| Net loss | $ | (5,327 | ) | $ | (1,509 | ) | $ | (12,506 | ) | $ | (8,103 | ) |
| Net loss per share (Basic and Diluted) | (0.02 | ) | (0.01 | ) | (0.05 | ) | (0.05 | ) | ||||
| Weighted average number of shares outstanding (Basic and Diluted) | 203,092,285 | 202,825,011 | 203,137,075 | 161,803,232 |
Balance Sheet Key Indicators
| (in thousands of Canadian dollars except for ratios) | September 30, 2011 |
December 31, 2010 |
|
| Current Ratio1 | 0.56:1 | 1.24:1 | |
| Free Cash | 923 | 2,404 | |
| Working Capital2 | (22,876 | ) | 5,648 |
| Total Assets | 188,056 | 186,063 | |
| Total Debt3 | 124,366 | 114,767 | |
| Total Equity4 | 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.
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.
Contact Information:
Mr. Han Gang
Chief Financial Officer and Director
0086-10-66420868
investor_relations@mountainchinaresorts.com
www.mountainchinaresorts.com