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Mountain China Resorts Reports 2018 First Quarter Financial and Operational Results

BEIJING, -- Mountain China Resorts (Holding) Limited reported its financial results for the quarter ended March 31, 2018. 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 quarter ended March 31, 2018, the Company generated revenues from resort operations of $5.46    million and a net loss of $0.28 million or $0.0 per share compared to $9.90 million and a net profit of $0.47 million or $0.00 per share in 2017 from continuing operation. Resort Operations EBITDA from continuing operations for 2018 were $1.22 million compared to $3.85 million last year. Major reason for the decrease in revenue was that in the debt settlement carried out in the second quarter of 2017, the Company sold four subsidiaries to one of its creditors. After disposal of four subsidiaries, the Ski operation related assets and cash flow have been moved out from MCR, including ski equipment rent income, ski pass for using the lift, ski instructors services fee, slide income, and advertisement income. MCR only keeps two hotels and the cash flow from these hotels and MCR pays to Sun Village for using the lift and their ski instructors. 

Resort operations expenses from continuing operations totaled $4.06 million for the quarter ended March 31, 2018 compared to $5.82 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 resort’s senior management, marketing and sales, information technology, insurance and accounting. The decrease was caused by the debt settlement stated above.

Other income totaled $0.09 million (2017: 0.16 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 (“G&A expenses”) totaled $0.27 million for the quarter ended March 31, 2018 compared to $0.39 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 $0.78 million for the quarter ended March 31, 2018 compared to $1.91 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 $0.23 million for the quarter ended March 31, 2018 compared to $1.76 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 $0.83 million (2017: 1.21 million) and working capital was negative $61.21 million as at March 31, 2018 (2017: 60.23 million).

Operations Sun Mountain Yabuli

The 2016-2017 MCR’s Sun Mountain Yabuli Resort winter season operations commenced on November 25th, 2016 and closed on April 2nd, 2017 (121 days in total). The 2017-2018 MCR’s Sun Mountain Yabuli Resort winter season operations commenced on October 27th, 2017 and closed on March 26th, 2018 (151 days in total). The revenue of Sun Mountain Yabuli Resort operation comprises mainly by mountain operation, beverage, skiing-related services and hotel lodging before the debt settlement carried out in May, 2017. After disposal of four subsidiaries, the Ski operation related assets and cash flow have been moved out from MCR, including ski equipment rent income, ski pass for using the lift, ski instructors services fee, slide income, and advertisement income. MCR only keeps two hotels and the cash flow from these hotels and MCR pays to Sun Village for using the lift and their ski instructors. The Sun Mountain Yabuli 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 as the superior ski experience in China.

The Company reported a revenue decrease of 45% in the first quarter of 2018 compared to the same period in 2017. Major reason for the decrease in revenue was that in the debt settlement carried out in the second quarter of 2017, the Company sold 4 subsidiaries to one of its creditors. Including Zhiye, SV, SAS and three mountains. After disposal of four subsidiaries, the Ski operation related assets and cash flow have been moved out from MCR, including ski equipment rent income, ski pass for using the lift, ski instructors services fee, slide income, and advertisement income. MCR only keeps two hotels and the cash flow from these hotels and MCR pays to Sun Village for using the lift and their ski instructors.  Historically, revenue from hotels are mainly generated by Club Med operations. Revenue from Club Med in the first quarter of 2018 was $4.39 million compared to $3.71 million in 2017, which represents an increase of 18%.

Sun Mountain Yabuli – 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 properties’ 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.

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. 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.

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