Mountain China Resorts Reports 2019 Third Quarter Financial & Operational Results
Mountain China Resorts (Holding) Limited (TSXV: MCG) (“MCR” or the “Company”), today reported its financial results for the quarter ended September 30, 2019. MCR reports its results in Canadian Dollars.
Financial Results
Total revenue and the net results were from resort operations sales revenue during the Reporting Period. For the quarter ended September 30, 2019, the Company generated revenues from resort operations of $nil million and a net loss of $0.33 million or $0.00 per share compared to $0.51 million and a net loss of $1.54 million or $0.00 per share in 2018 from continuing operations. Resort Operations EBITDA from continuing operations for the third quarter of 2019 were negative $0.41 million compared to negative $0.67 million last year. Resort operations expenses totaled $0.24 million for the quarter ended September 30, 2019 compared to $1.05 million in 2018. Operation expense within the resorts are mainly attributable to grooming, staffing, fuel and utilities, which also include the G&A expenses relating to these resort’s senior management, marketing and sales, information technology, insurance and accounting. The Company did not carry out 2019 summer operations due to the unsatisfactory summer operations results in 2018.
Other income totaled $0.10 million (2018: 0.10 million) recognized from the deposit paid by Club Med.
Corporate general and administrative expenses (“G&A Expenses”) totaled $0.26 million for the quarter ended September 30, 2019 compared to $0.23 million in 2018. This amount mainly comprised executive employee costs, public company costs, and corporate information technology costs.
Depreciation and amortization expense totaled $0.44 million for the quarter ended September 30, 2019 compared to $0.79 million in 2018. The decrease was mainly caused by certain parts of hotel building projects being fully depreciated in the first quarter of 2019.
The Group incurred interest expenses of $0.32 million for the quarter ended September 30, 2019 compared to $0.32 million in 2018. Financing costs mainly related to the loan interests, accretion expenses of convertible bonds, and also included bank administrative fee, and service charge.
Cash totaled $0.93 million (December 31, 2018: 1.13 million) and working capital was negative $68.49 million as at September 30, 2019 (December 31, 2018: 69.13 million).
Operations Sun Mountain Yabuli
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 2018-2019 MCR’s Sun Mountain Yabuli Resort winter season operations commenced on November 1st, 2018 and closed on April 7th, 2019 (160 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, most of the Ski operations 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.
For the nine months ended September 30, 2019, the company generated total revenue of $3.88 million (2018 - $5.96 million), which represents a decline of 35% as compared with 2018. Major reasons for the decrease in revenue was that since the second half of 2018, the Ski industry has been adversely affected 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. 2018-2019 winter operations were under negative influence of those macroeconomic environment. As winter operations finished in the first quarter, there was no operations revenue or expense in the second quarter. The Company did not carry out 2019 summer operations due to the unsatisfactory summer operations results in 2018.
Financial Highlights
Summary Financial Results
| (in thousands of Canadian dollars except for per share data) | For the quarter ended September 30, 2019 | For the quarter ended September 30, 2018 | ||
| Revenue | - | 512 | ||
| Operating expenses | (238) | (1,049) | ||
| Other income | 91 | 90 | ||
| General and administrative expenses | (263) | (227) | ||
| Depreciation and amortization | (440) | (791) | ||
| Operating loss from continuing operations | (850) | (1,465) | ||
| Total non-operating income and expenses | 523 | (70) | ||
| Deferred income tax recovery | - | - | ||
| Profit/(Loss) from continuing operations | (327) | (1,535) | ||
| Profit/(Loss) from discontinued operations | - | - | ||
| Net Profit/(loss) | (327) | (1,535) | ||
| Earnings (loss) per share from continuing operations (Basic and Diluted) | (0.00) | (0.00) | ||
| Weighted average number of shares outstanding(Basic and Diluted) | 308,859,103 | 308,859,103 |
Balance Sheet Key Indicators
| (in thousands of Canadian dollars except for ratios) | September 30, 2019 | December 31, 2018 |
| Current Ratio | 0.02 | 0.05 |
| Free Cash | 926 | 1,133 |
| Working Capital | (68,492) | (69,134) |
| Total Assets | 53,208 | 62,292 |
| Total non-current liabilities | 450 | 771 |
| Total Debt | 70,489 | 73,519 |
| Total Equity | (17,280) | (11,227) |
| Total Debt to Total Equity Ratio | (4) | (6.55) |
Note:
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 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.
| September 30, | December 31, | |
| 2019 | 2018 | |
| (in thousands of Canadian dollars) | ||
| Accumulated deficit | $ 343,470 | $ 341,863 |
| Working capital (deficiency) | $ 68,492 | $ 69,134 |
SUBSEQUENT EVENTS
There has been no substantial subsequent event up to the reporting date.
2019 THIRD QUARTER MAJOR CORPORATE DEVELOPMENTS
MCR reported a 35% decrease in revenue for the nine months ended September 30, 2019
As the Company did not carry out 2019 summer operations due to the unsatisfactory summer operations results in 2018. During the third quarter of 2019, total revenue was $nil million (2018 - $0.51 million). For the nine months ended September 30, 2019, the company generated total revenue of $3.88 million (2018 - $5.96 million), which represents a decline of 35% as compared with 2018. Major reasons for the decrease in revenue was that since the second half of 2018, the Ski industry has been adversely affected 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. The cooperation contract with Club Med will expire after 2019-2020 winter operations, management had started negotiation with Club Med on the renewal of the contract.
Board member change
Mr. Chen Dongsheng has resigned from the board for personal issues and his directorship has terminated since September 1st, 2019.
