Mountain China Resorts (Holding) Limited (TSX VENTURE:MCG) ("MCR" or the
"Company") today reported its financial results for the fiscal year ended
December 31, 2012. 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, 2012, the Company generated revenues from resort operations of $9.45 million
and a net loss of $17.85 million or $0.06 per share compared to $6.66 million
and a net loss of $42.66 million or $0.21 per share. Resort Operations EBITDA
from continuing operations for the 2012 year were $2.54 million compared to
negative $0.8 million in the 2011 year.
Resort operations expenses from continuing operations totaled $8.08 million for
the year ended December 31, 2012 compared to $6.43 million in 2011. 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 $1.51
million for the year ended December 31, 2012 compared to $1.46 million in 2011.
This amount mainly comprised executive employee costs, public company costs, and
corporate information technology costs.
Depreciation and amortization expense from continuing operations totaled $11.18
million for the year ended December 31, 2012 compared to $12.38 million in 2011.
The Group incurred financing cost of $8 million for the year ended December 31,
2012 from continuing operations compared to $7.41 million in 2011. Financing
costs were mainly related to the loan interest, and also included bank
administrative fees, and service charges.
Cash and cash equivalents totaled $14.08 million and working capital was
negative $60.66 million as at December 31, 2012.
Operations Sun Mountain Yabuli
The 2012-2013 MCR's Sun Mountain Yabuli Resort winter season operations
commenced on November 24, 2012 and closed on March 24, 2013. The 2011-2012
winter season operations commenced on November 26, 2011 and closed on March 25,
2012. 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, 2012 was
$9.45 million versus $6.66 million in 2011.
Sun Mountain Yabuli - Real Estate Development
At the end of Fiscal 2010, the Company had finished working on the exterior
decoration of the 55 villas of which three were completed with interior
finishing. At this time of the reporting date, certain construction is still
needed on the exterior grounds to complete lighting, roads and utility
connections. Management expected to be able to begin selling the villas and use
the proceeds to complete the construction. As of December 31, 2012 the Company
had not been successful in selling any of the villas. Management is of the
opinion that in order to complete sales it is necessary to first complete the
exterior construction. Management estimates these additional construction costs
to be $4,486 and has plans to commence construction in the summer of 2013.
Since 2010, due to a combination of temporary Chinese government policies trying
to cool down the rapid growing housing price in mainland China, the property
investment demand have 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 had 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, 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
---------------------------------------------------------------------------
For the For the
year ended year ended
(in thousands of Canadian dollars except for per December December
share data) 31, 2012 31, 2011
---------------------------------------------------------------------------
Revenue $9,453 $6,658
---------------------------------------------------------------------------
Operating expenses (8,084) (6,428)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Other income 2,680 435
---------------------------------------------------------------------------
General and administrative expenses (1,508) (1,459)
---------------------------------------------------------------------------
Depreciation and amortization (11,176) (12,383)
---------------------------------------------------------------------------
Operating loss (8,635) (13,177)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total non-operating income and expenses (9,350) (31,190)
---------------------------------------------------------------------------
Deferred income tax recovery 133 1,712
---------------------------------------------------------------------------
Results of discontinued operation - -
---------------------------------------------------------------------------
Net loss $(17,852) $(42,655)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net loss per share (Basic and Diluted) (0.06) (0.21)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Weighted average number of shares outstanding
(Basic and Diluted) 294,130,414 203,143,543
---------------------------------------------------------------------------
Balance Sheet Key Indicators
December December
(in thousands of Canadian dollars except for ratios) 31, 2012 31, 2011
Current Ratio(1) 0.40:1 0.41:1
Free Cash 9,080 772
Working Capital(2) (60,611) (62,787)
Total Assets 151,815 168,207
Total Debt(3) 120,511 118,152
Total Equity(4) 31,304 50,055
Total Debt to Total Equity Ratio 3.85:1 2.36:1
(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 December
31, 2012 31, 2011
(in thousands of Canadian dollars)
Accumulated deficit $291,358 $273,506
Working capital (deficiency) $60,661 $62,787
SUBSEQUENT EVENTS
On February 17, 2013, the convertible debenture with CZL of $7,600 (Note 15
(b)(ii)) was due. The Company did not repay the loan and it is currently in
default.
In April 2013 the Company was made aware by the bank with an outstanding balance
of $39,315, that they are taking legal actions to demand repayment. As of the
reporting date that Company has not received any formal claim.
Fiscal 2012 Major Corporate Developments
Club Med Resorts management has further improved the revenue of Sun Mountain
Yabuli Resort
In 2012, Club Med started its first summer operation from July 14 till September
2, 2012 for a total of 50 days at the Sun Mountain Yabuli Resort. The resort
provided outdoor activities including: archery, cross country mountain
bike/hiking, mountain top afternoon tea party, etc. The first summer operation
of ClubMed promoted the Yabuli summer brand, so that guests from all over the
country could experience Yabuli beautiful summer scenery. The revenue created in
the summer operations reached $1.2 million in 2012, and management is expecting
the revenue to be further increased to $1.5 million in the 2013 summer
operation.
New bank loan for the amount of RMB 140 million
On February 14, 2012, the Company secured a new bank loan for the amount of
$22.36 million (RMB 140 million) with the Harbin Bank (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%, with interest to be paid on a
monthly basis commencing February 16, 2012. The principal of the New Bank Loan
is repayable in four instalments of $5.59 million (RMB 35 million) each,
starting with the first instalment repayment due on August 15, 2013 and each
subsequent instalment repayment due every six month thereafter. The original
23.96 million (RMB 150 million) bank loan with the same bank was repaid with
advances 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 $1.60 million (RMB 10 million) of its own funds to repay
bridge loan from the third party trust company.
Debt Restructuring
On February 8, 2012, the Company entered into a Debt Settlement Agreement with
Melco Leisure and Entertainment Group Limited ("Melco" or "MLE") for the
settlement of a loan in the principal of US$12 million made by Melco to the
Company (the "MCR Loan") and a loan in the principal of US$11 million (the "MCRI
Loan", and together with the MCR Loan, the "Melco Loans" or "MLE Loan") made by
Melco to Mountain China Resorts Investment Limited ("MCRI"), the Company's
Cayman subsidiary, both in 2008. On May 29, 2012, the Company and Melco entered
into Amended and Restated Debt Settlement Agreement to clarify details of the
loan settlement mechanism and procedures to implement the settlement of the
Melco Loans. As of the reporting date, the Company has not implemented the
transactions contemplated under the Amended and Restated Debt Settlement
Agreement at this time. The Melco Loans have matured on 31 March 2013, so that
the entire Melco Loans now become immediately due and payable.
Non-Brokered Private Placement
On February 22, 2012, the Company announced that it has closed the non-brokered
private placement of 105,700,000 common shares (the "Shares") initiated in
September 16, 2011, 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 Shares were issued to the
corresponding shareholders.
Loan Defaults
On March 2, 2012, Yabuli Resort missed the second principal repayment in the
amount of $4.79 million (RMB 30 million) under its $39.93 million (RMB 250
million) loan agreement with the China Construction Bank ("Construction Bank").
On March 31, 2013 the Company defaulted on its third principal payment of 6.34
million (RMB 40 million). According to the Loan Agreement between Yabuli and
Construction Bank, Construction Bank has the right to accelerate Yabuli's
obligation to repay the entire unpaid principal plus interest immediately and to
take legal actions to enforce on the security. The collaterals associated with
the loan agreement are made up of the Company's land use rights and property and
equipment with a carrying value of approximately $68.64 million as at December
31, 2012. During the Company's initial negotiation with the bank, the bank
required the Company to repay the interest. However, the Company has stopped the
interest payment starting from February 2012. As a result, negotiations have
ceased and the bank has indicated their intention to take possession of the
pledged assets if the loan principal and interest are not repaid in full. On
December 31, 2012 the principal and interest owing was $39,315. As of the
reporting date that Company has not received any formal claim.
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 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Mountain China Resorts (Holding) Limited
Mr. Han Gang
Chief Financial Officer and Director
0086-10-66420868
investor_relations@mountainchinaresorts.com
www.mountainchinaresorts.com
Mountain China Resorts (TSXV:MCG)
Historical Stock Chart
From May 2024 to Jun 2024
Mountain China Resorts (TSXV:MCG)
Historical Stock Chart
From Jun 2023 to Jun 2024
