BEIJING, Nov. 30, 2018 (GLOBE NEWSWIRE) — Mountain China Resorts (Holding) Limited (TSXV: MCG) (âMCRâ or the âCompanyâ), reported its financial results for the quarter ended September 30, 2018. MCR reports its results in Canadian Dollars.
Club Med carried out 2018 summer operations from July 1st, to August 26th, 2018 (57 days in total). Total revenue and the net results were from resort operations with no real estate sales revenue during the Reporting Period. For the quarter ended September 30, 2018, the Company generated revenues from resort operations of $0.51 million and a net loss of $1.54 million or $0.00 per share compared to $0.10 million and a net loss of $2.99 million or $0.01 per share in 2017 from continuing operation. Resort operations expenses from continuing operations totaled $1.05 million for the quarter ended September 30, 2018 compared to $0.58 million in 2017. 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 resortâs senior management, marketing and sales, information technology, insurance and accounting. The increase in both revenue and operations expenses were attributable to 2018 Club Med summer operations. Resort Operations EBITDA from continuing operations for 2018 were negative $0.67 million compared to $0.66 million last year. Major reason for the decrease in EBITDA was that during the three and nine months ended September 30, 2017 the Company received a tax return from local government amounted to $1.51 million.
Other income totaled $0.09 million (2017: 1.60 million, including a tax return of $1.51 million), major components of other income include income of $0.09 million (2017 – $0.09 million) recognized from the deposit paid by Club Med.
Corporate general and administrative expenses (âG&A expensesâ) totaled $0.23 million for the quarter ended September 30, 2018 compared to $0.46 million in 2017. This amount mainly comprised executive employee costs, public company costs, and corporate information technology costs. The decrease was caused by the debt settlement stated above.
Depreciation and amortization expense totaled $0.79 million for the quarter ended September 30, 2018 compared to $1.52 million in 2017. The decrease in depreciation and amortization 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 September 30, 2018 compared to $1.66 million in 2017. 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 in 2018 was mainly caused by the debt settlement in 2017 in which bank loans balance was reduced to $nil.
Cash totaled $2.09 million (2017: 1.21 million) and working capital was negative $63.60 million as at September 30, 2018 (2017: 60.23 million).
Operations Sun Mountain Yabuli
Club Med carried out 2018 summer operations from July 1st, to August 26th, 2018 (57 days in total). Historically the Company had carried out Club Med summer operations around August to September from 2012 to 2014. The resort provided outdoor activities in summer including: archery, cross country mountain bike/hiking, mountain top afternoon tea parties and so on. In 2015, based on the historical data of unsatisfactory performance in summer and also as a result of unfavorable environment of competition among summer resort destinations, the Company had decided not to carry out Club Med summer operations to cut loss. In 2018, management and Club Med decided to re-launch the summer operations. Total revenue generated in 2018 summer operations amounted to $0.5 million (2014 summer operations â $0.7 million). The decrease was probably caused 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.
Sun Mountain Yabuli â Real Estate Development
Before the debt settlement, the Company owned 55 villas located adjacent to the ski hills. The construction on the villas began in 2008 and were tentatively ready for sale in 2010. At the time of debt settlement, certain construction was needed on the exterior grounds to complete lighting, roads and utility connections and the Company has not been successful in selling any of the villas. Considering the economic environment and the propertiesâ incomplete status, management determined that there was very limited recoverable amount with the villas at the moment, and an impairment of $22,795 was provided as of December 31, 2013 to reduce book value of the villas to a nominal $1. In debt settlement carried out in 2017, all villas were transferred to Sanren as a part of the debt settlement. After debt settlement, MCR will focus on hotel operations.
Summary Financial Results
|(in thousands of Canadian dollars except for per share data)||For the quarter ended
September 30, 2018
|ã||For the quarter ended
September 30, 2017
|General and administrative expenses||(227)||ã||(459)|
|Depreciation and amortization||(791)||ã||(1,519)|
|Operating loss from continuing operations||(1,465)||ã||(857)|
|Total non-operating income and expenses||(70)||ã||(2,131)|
|Deferred income tax recovery||–||ã||6|
|Profit/(Loss) from continuing operations||(1,535)||ã||(2,988)|
|Profit/(Loss) from discontinued operations||–||ã||–|
|Earnings (loss) per share from continuing operations (Basic and Diluted)||(0.00)||ã||(0.01)|
|Weighted average number of shares outstanding (Basic and Diluted)||308,859,103||ã||308,859,103|
Balance Sheet Key Indicators
|(in thousands of Canadian dollars except for ratios)||September
|Total non-current liabilities||834||1,125|
|Total Debt to Total Equity Ratio||(8)||(39.02)|
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 Companyâs 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.
Despite of the financial difficulty, management is confident in the development of both the industry and the Company in the future. The debt settlement in 2017 reduced the balance of bank loans to $nil and moved the majority part of construction payables out of the Company, and the Company still own the hotels free from pledge which generates half of the total revenue in the past. The government of Heilongjiang Province had demonstrated strong incentive to support the skiing industry and the Company by increasing local infrastructure investment. Revenue from ClubMed in winter season has been maintained on a stable level. Management is also working on various means to attract new investment into the Company.
|September 30,||December 31,|
|(in thousands of Canadian dollars)|
|Accumulated deficit||$ 337,188||$ 332,921|
|Working capital (deficiency)||$ ï¼63,596ï¼||$ ï¼60,235ï¼|
There has been no substantial subsequent event up to the reporting date.
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 Companyâs Sun Mountain Yabuli Resort was awarded Best Resort Makeover in Asia by TIME Magazine. Yabuli is also the permanent home of the China Entrepreneurâs Forum the leading and most influential community of Chinaâs 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 Financial Officer and Director
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, MCRâs 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 MCRâs ability to implement its business strategies, dispose of assets or raise sufficient capital, MCRâs ability to obtain additional financial resources and sufficient working capital, MCRâs 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.
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 companyâs 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.