Mountain China Resorts Reports Year-End 2011 Financial and Operational Results

BEIJING, CHINA--(Marketwire - April 29, 2012) - Mountain China Resorts (Holding) Limited (TSX VENTURE:MCG) ("MCR" or the "Company"), today reported its financial results for the fiscal year ended December 31, 2011. MCR reports its results 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 year ended December 31, 2011, the Company generated revenues from resort operations of $6.66 million and a net loss of $23.13 million or $0.11 per share compared to $4.37 million and a net loss of $21.30 million or $0.12 per share. Resort Operations EBITDA from continuing operations for the 2011 year were negative $0.79 million compared to negative $5.69 million in the 2010 year.

Resort operations expenses from continuing operations totaled $6.43 million for the year ended December 31, 2011 compared to $6.24 million in 2010. Operations expenses within the resorts are mainly attributable to snow making, grooming, staffing, fuel and utilities, which also include the G&A expenses relating to the resort's senior management, marketing and sales, information technology, insurance and accounting.

Corporate general and administrative expenses ("G&A expenses") totaled $1.46 million for the year ended December 31, 2011 compared to $4.54 million in 2010. This amount mainly comprised executive employee costs, public company costs, and corporate information technology costs.

Depreciation and amortization expense from continuing operations totaled $12.38 million for the year ended December 31, 2011 compared to $11.07 million in 2010.

The Group incurred interest expenses of $5.29 million for the year ended December 31, 2011 from continuing operations compared to $4.06 million in 2010. Interest expenses mainly related to the loan interest, and also included bank administrative fees, and service charges.

Cash and cash equivalents totaled $15.77 million and working capital was negative $62.79 million as at December 31, 2011.

Operations Sun Mountain Yabuli

The 2011-2012 MCR's Sun Mountain Yabuli Resort winter season operations commenced on November 26, 2011 and closed on March 25, 2012. The 2010-2011 winter season operations commenced on November 27, 2010 and closed on March 20, 2011. The revenue of Sun Mountain Yabuli Resort operation comprises mainly by mountain operation, beverage, skiing-related services and hotel lodging. Skiing-related services includes rental of ski equipment, goggles, lockers, gloves, etc, sales of ski equipment and skiing training services offered in the ski school. It also includes the mountain operation which is using the facilities built in the mountain, such as sight-seeing trams, snow tubing and alpine. Revenue from the Yabuli Resort for the year ended December 31, 2011 was $6.66 million versus $4.37 million in 2010.

Sun Mountain Yabuli - Real Estate Development

At the end of Fiscal 2010, the Company had completely finished working on the exterior decoration of 55 villas, including roofs, windows, painting and tiles. Three of the 55 villas were completed with interior finishing, including wall paint, carpets, wood floors, kitchen cabinets, countertops and other necessary furniture. 20 villas were left in its foundation stage (a total of 75 villas have been built) until the sales of the decorated villas begin. Flattened dirt roads were also constructed to connect each villas and the main street. As of the date of this MD&A, 55 villas are ready for sale and subject to internal decoration pursuant to the request of buyers. Generally, buyers in China are cultured to have their decoration plan personalized, therefore, majority of homes sold in China are not decorated interiorly, but rather completely remained in cement.

There were about 10 potential buyers, who are members of the China Entrepreneurs Forum and other prominent businessmen in China, who showed their interest of buying villas in Yabuli during the China Entrepreneurs Forum annual meeting in 2010 and 2011. Two (2) of these potential buyers had 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 in 2010. For the remaining potential buyers, no sale and purchase agreement was reached. However, no villas were sold at the end of this reporting period due to the turning of the real estate market in China in 2011.

Since then, due to a combination of temporary Chinese government policies trying to cool down the rapid increasing housing prices in mainland China, the property investment demand in China has gone down significantly, which also impacted the Yabuli area. At the same time, with a tight expense budget and shortage of working capital, the Company has decided for the time being not to take the risk by inputting its limited working capital into the villa's remaining public infrastructure construction (for example: public lighting, cement roads, landscape engineering) and a full scale marketing and advertising regime. However, the Company does have confidence with its first of a kind skiing in and skiing out villas in China. And the Company will be reasonably flexible with its pricing when the market shows sign of a turn around. No other detail milestones for the above matter are available from the Company as the related government policies are set to be temporary but with durations undetermined.

Financial Highlights

Summary Financial Results

(in thousands of Canadian dollars except for per share data)		For the year ended December 31, 2011			For the year ended December 31, 2010
Revenue		$ 6,658			$ 4,372
Operating expenses		(6,428	)		(6,237	)
Other income		435			722
General and administrative expenses		(1,459	)		(4,542	)
Depreciation and amortization		(12,383	)		(11,065	)
Impairment of PPE		(306	)		(328	)
Operating loss		(13,483	)		(17,078	)
Total non-operating income and expenses		(11,363	)		(2,324	)
Deferred income tax recovery		1,712			1,028
Results of discontinued operation		-			(2,921	)
Net loss		$ (23,134	)		(21,295	)
Net loss per share (Basic and Diluted)		(0.11	)		(0.12	)
Weighted average number of shares outstanding (Basic and Diluted)		203,143,543			171,827,559

Balance Sheet Key Indicators

(in thousands of Canadian dollars except for ratios)	December 31, 2011		December 31, 2010
Current Ratio1	0.41:1		1.24:1
Free Cash	15,772		2,404
Working Capital2	(62,787	)	5,648
Total Assets	187,728		181,218
Total Debt3	118,152		112,663
Total Equity4	69,576		68,555
Total Debt to Total Equity Ratio	1.70:1		1.64:1

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 Company has an accumulated deficit, a working capital deficiency and has defaulted on a bank loan, which casts 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 and private placements and through the sale of the properties held for sale. However, there is no assurance that the Company will be able to obtain additional financing or sell the properties held for sale.

	December 31,		December 31,	January 1,
	2011		2010	2010
(in thousands of Canadian dollars)
Accumulated deficit	$253,985		$230,851	$209,554
Working capital (deficiency)	(62,287	)	5,648	57,773

SUBSEQUENT EVENTS

On February 8, 2012, the Company entered into a Debt Settlement Agreement with MLE for the settlement of the MLE Loans (the "MLE Loans Settlement") by way of cash payment, villa transfer and share conversion subject to satisfaction of a number of conditions, including, among other conditions, approval of disinterested shareholders and approval of the TSX Venture Exchange. Currently, the Company is in discussion with MLE for further entering into an Amended and Restated Debt Settlement Agreement so as to clarify the details of the MLE Loans Settlement for implementation.

On February 14, 2012, the Company secured a new bank loan for the amount of RMB 140 million (the "New Bank Loan"). The New Bank Loan carries a three year term with a maturity date of February 15, 2015 and a fixed annual interest rate of 7.315%, which interest to be paid on a monthly basis commencing February 16, 2012. The principal of the New Bank Loan is repayable in four installments of RMB 35 million each, starting with the first installment repayment due on August 15, 2013 and each subsequent installment repayment due every six month thereafter. The original RMB 150 million bank loan with the same bank was repaid with advance from a short term bridge loan made by a third party trust company when it was due in on February 9, 2012. The Company then used the advance from the New Bank Loan and RMB 10 million of its own funds to repay bridge loan from the third party trust company.

On February 22, 2012, the Company announced that it has closed the non-brokered private placement of 105,700,000 common shares (the "Shares"), priced at $0.18 per Share for gross proceeds of $19 million (the "Offering"). The proceeds from the Offering will be used for general working capital and for the repayment of certain debentures. The Shares are subject to a TSX Venture Exchange hold period of four months and one day from closing of the Offering. On March 9, 2012, the respected Shares have been issued to the corresponding shareholders.

On March 2, 2012, Yabuli Resort missed the second installment principal repayment in the amount of RMB 30 million under its RMB 250 million loan agreement. According to the Loan Agreement between Yabuli and the China Construction Bank (the "Bank"), the Bank has the right to accelerate Yabuli's obligation to repay the entire unpaid principal plus interest immediately and taking necessary legal actions to enforce on the security. However, during the Company's initial negotiation with the Bank, representatives of the Bank have advised the Company that the Bank will not take immediate actions against Yabuli or the Company. The Company is currently optimistic regarding the on going negotiation with the Bank for postponement of this second installment principal payment for two years. Proper continues disclosure will be excised according to the future developments.

Fiscal 2011 Major Corporate Developments

On February 18, 2011, the Company 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 planned to 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 $2,000,000 and any such additional subscriptions was originally expected to complete on or prior to April 30, 2011. However, the Company has decided to not proceed with the initial planned offer of convertible bond to accredited investor shareholders after a Board Meeting on November 28, 2011, as the market for the Company's securities has changed significantly since the completion of the Offering.

On September 16, 2011, the Company has arranged a non-brokered private placement, to be completed after receiving final acceptance of TSX Venture Exchange, for up to CDN $19,026,000 through the issuance of 105,700,000 common shares at the price of $0.18 per share. The Company intends to use the proceeds of the private placement for its working capital and restructuring of certain convertible debentures. On February 22, 2012, the company received the final approval from the TSX Venture Exchange. With the proceeds already received, the Company issued the 105,700,000 shares to the corresponding shareholders on March 9, 2012.

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. 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.

Mr. Bernard Pouliot, who was an independent director of the Company, resigned from his directorship effective November 30, 2010. Mr. Edward Chow also resigned from the board of directors (the "board") of the Company effective December 31, 2010. Mr. Chow was an independent director of the Company. The board approved the appointment of Mr. Li Wing Kuen, Philip and Mr. Hongfei Zhang 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.

On September 16, 2011, shareholders of 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 November 28, 2011, the Company further increased its directors from eight (8) to ten (10), appointing Mr. CHEN, Dongsheng and CHEN, Shi as directors of the Company. Mr. CHEN, Dongsheng is the founder and currently the President and CEO of Taikang Life Insurance Co. Ltd., one of the largest life insurance companies in China. Mr. CHEN, Dongsheng holds a doctorate degree in economics from the Wu Han University of China. Mr. CHEN, Shi is the President of Hong Kong Kangrui Investment Co. Ltd. and has participated in numbers of economic research projects for the government of Hong Kong SAR. Mr. Chen holds a master degree in economics from the Wu Han University of China and a doctorate degree in economics from The Graduate School of Chinese Academy of Social Sciences. Furthermore, the Company has appointed Mr. Wang Lian, currently our Director of Corporate Finance and Investor Relations, onto our Audit Committee. As at December 31, 2011, the composition of the board is eight (8) non-independent directors and two (2) independent directors.

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.