EX-99.1 2 v424249_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Homeinns Hotel Group Reports Third Quarter 2015 Financial Results

2,787 Hotels in Operation in 346 Cities across China

 

Shanghai, November 9, 2015 – Homeinns Hotel Group (NASDAQ: HMIN) (“Homeinns” or “the Company”), a leading economy hotel chain in China, today announced its unaudited financial results for the third quarter ended September 30, 2015.

 

Third Quarter 2015 Highlights

 

·Total revenues decreased 1.1% year over year to RMB 1,855.9 million (US$292.0 million) for the third quarter of 2015, within the previously provided guidance range of RMB 1,830 million to RMB 1,860 million.
·Net income attributable to ordinary shareholders was RMB 145.6 million (US$22.9 million) for the third quarter of 2015, compared with RMB 245.5 million for the third quarter of 2014. Adjusted net income attributable to ordinary shareholders (non-GAAP) decreased 8.4% year over year to RMB 205.5 million (US$32.3 million) for the third quarter of 2015.
·EBITDA (non-GAAP) decreased 20.4% year over year to RMB 429.0 million (US$67.5 million) for the third quarter of 2015. Adjusted EBITDA (non-GAAP) decreased 5.5% year over year to RMB 488.9 million (US$76.9 million) for the third quarter of 2015.
·Net operating cash inflow increased 15.4% year over year to RMB 549.7 million (US$86.5 million) for the third quarter of 2015.
·As of September 30, 2015, Homeinns operated 2,787 hotels across 346 cities in China, with a net addition of 37 hotels during the third quarter of 2015.

 

Mr. David Sun, the Company’s chief executive officer, stated, “During the third quarter we experienced an encouraging continued sequential improvement in our business performance with a narrowed like-for-like RevPAR decline, despite sustained macroeconomic challenges. Our revenue growth and RevPAR remained under pressure given the generally soft external conditions. However, we are not seeing any signs of worsening in the domestic travel industry and expect the situation to remain stable for the rest of the year. It is important to note that our focus on developing mid-scale offerings is bearing fruit as Homeinn Plus and Yitel continue to receive very positive market feedback and both are delivering strong results. Further, we are making solid progress with membership expansion and enhancement of our digital capabilities, with both our member count and mobile user levels reaching record highs.”

 

Mr. Sun continued, “Looking to the balance of the year, while we do expect the external market conditions to stay difficult, we remain a strong believer in China’s travel industry and leisure market, which have demonstrated great resilience despite the economic slowdown in China. With accelerated development of our mid-scale hotels and stringent cost control, we are confident that we will be able to continue weathering a choppy economic environment, further solidifying our leading position in the market, seizing new growth opportunities, and creating value for our shareholders.”

 

Hotel Development

   Hotels in Operations and Pipeline   Openings   Closures* 
   Group   Homeinn   Motel   Fairyland   Yitel   Homeinn Plus   3Q15   3Q15 
Total Number of Hotels   2,787    2,273    409    30    56    19    65    28 
Leased-and-Operated   917    693    161    22    26    15    12    10 
Franchised-and-Managed   1,870    1,580    248    8    30    4    53    18 
                                         
Contracted or under Construction   235    141    35    2    22    35           
Leased-and-Operated   36    6    6    0    7    17           
Franchised-and-Managed   199    135    29    2    15    18           
Under Due Diligence   134    116    12    0    3    3           

* In the third quarter of 2015, seven hotels were closed to convert to our other brands.

 

 

 

 

Operating Metrics

   Total Hotels   Hotels Opened for
at least 18 Months		 
   3Q2015   2Q2015   3Q2014   3Q2015   3Q2014 
Occupancy Rate   86.6%   83.3%   86.7%   87.5%   88.2%
Average Daily Rate (ADR, RMB)   171    163    174    170    174 
Revenue per Available Room (RevPAR, RMB)   148    136    151    149    154 

 

 

For the third quarter of 2015, occupancy rate decreased by 0.1 percentage points while ADR decreased by 1.7%, resulting in a year-over-year decrease of 1.9% in RevPAR. The decrease in RevPAR was mainly due to continued difficult market conditions in the third quarter. Sequentially, RevPAR increased by 9.1% mainly due to seasonality.

 

As of September 30, 2015, a total of 2,131 hotels had been in operation for at least 18 months. The occupancy rate of these hotels declined year over year from 88.2% to 87.5%, and ADR decreased year over year from RMB 174 to RMB 170, resulting in a decrease in RevPAR by 3.2% from RMB 154 to RMB 149 during the third quarter of 2015.

 

Homeinns Hotel Group had a total of 47.0 million unique non-corporate members under its frequent guests program as of September 30, 2015.

 

Financial Results for Third Quarter 2015

 

Revenues        
(RMB/USD in Millions)  Third Quarter 2015   Third Quarter 2014 
   RMB   USD   RMB   V% 
Leased-and-Operated Hotels   1,573.7    247.6    1,612.0    -2.4%
Franchised-and-Managed Hotels   282.3    44.4    264.4    6.8%
Total Revenues   1,855.9    292.0    1,876.4    -1.1%
Less: Business Taxes   -108.9    -17.1    -111.9    -2.7%
Net Revenues   1,747.0    274.9    1,764.4    -1.0%

 

Note: “V%” represents year-over-year percentage change in amounts

Revenues from leased-and-operated hotels decreased 2.4% year over year to RMB 1.57 billion (US$247.6 million) for the third quarter of 2015. The year-over-year decrease in revenues from leased-and-operated hotels was mainly due to a decrease in RevPAR.

 

Revenues from franchised-and-managed hotels increased 6.8% year over year to RMB 282.3 million (US$44.4 million) for the third quarter of 2015. The year-over-year increase in revenues from franchised-and-managed hotels was mainly driven by an increase in the number of hotels and hotel rooms in operation, although partially offset by a decrease in RevPAR.

 

Total Operating Costs and Expenses / Income from Operations            
(RMB/USD in Millions)  Third Quarter 2015 
               Adjusted 
   GAAP Results   Non-GAAP Results* 
   RMB   USD   Vpts   RMB   USD   Vpts 
Leased-and-Operated Hotel Costs   1,338.2    210.5    3.0pts   1,335.5    210.1    3.0pts
Personnel Costs of Franchised-and-Managed Hotels   82.6    13.0    0.7pts   79.8    12.6    0.7pts
Sales and Marketing Expenses   25.6    4.0    -0.3pts   25.5    4.0    -0.3pts
General and Administrative Expenses   82.7    13.0    0.1pts   63.9    10.1    -0.2pts
Total Operating Costs and Expenses   1,529.1    240.6    3.5pts   1,504.8    236.8    3.3pts
Income from Operations   213.8    33.6    -3.6pts   238.0    37.5    -3.4pts

*Adjusted Non-GAAP results exclude share-based compensation expenses, integration costs and expenses related to going-private activities.

Note: “Vpts” represents year-over-year change in percentage points of total revenues

 

Total operating costs and expenses were RMB 1.53 billion (US$240.6 million) for the third quarter of 2015, representing 82.4% of total revenues for the quarter. Total operating costs and expenses excluding any share-based compensation expenses, integration costs and expenses related to going-private activities (non-GAAP) for the third quarter of 2015 were 81.1% of total revenues, compared to 77.8% in the same period a year ago.

 

 

 

 

·Total leased-and-operated hotel costs were RMB 1.34 billion (US$210.5 million) for the third quarter of 2015, representing 85.0% of the leased-and-operated hotel revenues for the quarter, compared to 80.4% in the same period a year ago. Total leased-and-operated hotel costs excluding any share-based compensation expenses and integration costs (non-GAAP) were 84.9% of the leased-and-operated hotel revenues in the third quarter of 2015, compared to 80.2% in the same period a year ago.

 

Pre-opening cost was RMB 14.1 million (US$2.2 million) for the third quarter of 2015, compared to RMB 13.3 million in the third quarter of 2014.

 

The year-over-year increase in total leased-and-operated hotel costs as a percentage of leased-and-operated hotel revenues for the third quarter of 2015 was mainly due to a decrease in RevPAR which resulted in a lower revenue base per hotel while a significant portion of the hotel costs was fixed.

 

·Personnel costs of franchised-and-managed hotels were RMB 82.6 million (US$13.0 million) for the third quarter of 2015, representing 29.3% of the franchised-and-managed hotel revenues for the third quarter of 2015, compared to 26.9% in the same period a year ago. Franchised-and-managed hotels personnel costs excluding share-based compensation expenses (non-GAAP) were 28.3% of franchised-and-managed hotel revenues in the third quarter of 2015, compared to 25.9% in the same period of 2014. The year-over-year increase in personnel costs of franchised-and-managed hotels as a percentage of franchised-and-managed hotel revenues for the third quarter of 2015 was mainly due to a decrease in RevPAR, which resulted in a lower revenue base per hotel.

 

·Sales and marketing expenses were RMB 25.6 million (US$4.0 million) for the third quarter of 2015, representing 1.4% of total revenues for the quarter, compared to 1.7% in the same period a year ago. Sales and marketing expenses excluding share-based compensation expenses (non-GAAP) were 1.4% of total revenues for the third quarter of 2015, compared to 1.7% in the same period of 2014. The year-over-year decrease in sales and marketing expenses as a percentage of total revenues for the third quarter of 2015 was mainly due to the timing of certain marketing activities and improved marketing efficiency.

 

·General and administrative expenses were RMB 82.7 million (US$13.0 million) for the third quarter of 2015, representing 4.5% of total revenues, compared to 4.3% in the same period a year ago. General and administrative expenses excluding share-based compensation expenses, integration costs and expenses related to going-private activities (non-GAAP) were 3.4% of total revenues for the third quarter of 2015, compared to 3.6% in the same period of 2014. The year-over-year decrease in general and administrative expenses as a percentage of total revenue was driven by continued effective cost control.

 

Income from Operations was RMB 213.8 million (US$33.6 million) for the third quarter of 2015, compared to income from operations of RMB 284.5 million in the same period a year ago. Income from operations excluding share-based compensation expenses, integration costs and expenses related to going-private activities (non-GAAP) for the third quarter of 2015 was RMB 238.0 million (US$37.5 million), or 12.8% of total revenues, compared to RMB 304.3 million, or 16.2% of total revenues, in the same period of 2014. The year-over-year decrease in income from operations margin for the quarter was mainly due to lower revenue base per hotel.

 

EBITDA (non-GAAP)                        
(RMB/USD in Millions)  Third Quarter 2015   Third Quarter 2014 
   RMB   USD   %Rev   V%   RMB   USD   %Rev 
EBITDA (Non-GAAP)   429.0    67.5    23.1%   -20.4%   538.8    84.8    28.7%
Foreign Exchange Loss, Net   35.0    5.5    1.9%        0.8    0.1    0.0%
Share-Based Compensation   17.9    2.8    1.0%        18.1    2.8    1.0%
Expenses Related to Going-Private Activities   4.8    0.8    0.3%        -    -    - 
Integration Costs   1.6    0.3    0.1%        1.7    0.3    0.1%
Gain on Waived Liability Related with Motel Acquisition   -    -    -         -11.9    -1.9    -0.6%
Gain on Buy-Back of Convertible Notes   -    -    -         -0.7    -0.1    0.0%
Loss/(Gain) on Change in Fair Value of Convertible Notes   0.6    0.1    0.0%        -29.3    -4.6    -1.6%
Adjusted EBITDA (Non-GAAP)   488.9    76.9    26.3%   -5.5%   517.6    81.4    27.6%
Note:“%Rev” represents amount as a percentage of total revenues
“V%” represents year-over-year percentage change in amounts

 

 

 

 

Net Income Attributable to Ordinary Shareholders                
(RMB/USD in Millions)  Third Quarter 2015   Third Quarter 2014 
   RMB   USD   %Rev   V%   RMB   USD   %Rev 
Net Income Attributable to Ordinary Shareholders (GAAP)   145.6    22.9    7.8%   -40.7%   245.5    38.6    13.1%
Foreign Exchange Loss, Net   35.0    5.5    1.9%        0.8    0.1    0.0%
Share-Based Compensation   17.9    2.8    1.0%        18.1    2.8    1.0%
Expenses Related to Going-Private Activities   4.8    0.8    0.3%        -    -    - 
Integration Costs   1.6    0.3    0.1%        1.7    0.3    0.1%
Gain on Waived Liability Related with Motel Acquisition   -    -    -         -11.9    -1.9    -0.6%
Gain on Buy-Back of Convertible Notes   -    -    -         -0.7    -0.1    0.0%
Loss/(Gain) on Change in Fair Value of Convertible Notes   0.6    0.1    0.0%        -29.3    -4.6    -1.6%
Adjusted net income attributable to ordinary shareholders (Non-GAAP)   205.5    32.3    11.1%   -8.4%   224.3    35.3    12.0%
Note:“%Rev” represents amount as a percentage of total revenues
“V%” represents year-over-year percentage change in amounts

 

Adjusted Net Income Attributable to Ordinary Shareholders (Non–GAAP) decreased year over year by 8.4% to RMB 205.5 million (US$32.3 million) for the third quarter of 2015, representing 11.1% of total revenues compared to 12.0% in the same period a year ago. The year-over-year decrease in adjusted net margin (non-GAAP)1 was mainly due to a decrease in adjusted income from operations margin (non-GAAP)2, while partially offset by higher interest income and lower interest expense.

 

Basic and Diluted Earnings Per Share / Earnings Per ADS

   Third Quarter 2015 
   Ordinary Share   ADS Share 
   RMB   USD   RMB   USD 
Basic   1.51    0.24    3.02    0.48 
Diluted   1.51    0.24    3.02    0.48 
                     
Adjusted Basic (Non-GAAP)   2.13    0.34    4.26    0.67 
Adjusted Diluted (Non-GAAP)   2.05    0.32    4.10    0.65 

 

Cash Flow

 

Net operating cash inflow for the third quarter of 2015 was RMB 549.7 million (US$86.5 million), compared to RMB 476.4 million in the same period of 2014, due to better working capital management. Capitalized expenditures for the third quarter of 2015 were RMB 125.5 million (US$19.8 million), while related cash paid for capital expenditures during the quarter was RMB 129.2 million (US$20.3 million).

 

Balance Sheet

 

As of September 30, 2015, Homeinns Hotel Group had cash and cash equivalents of RMB 1,312.3 million (US$206.5 million). The outstanding balance of convertible notes issued in December 2010 (measured at fair value) was RMB 997.2 million (US$156.9 million).

 

Outlook for Fourth Quarter 2015

 

Homeinns Hotel Group remains committed to its target of opening no fewer than 400 new hotels in the course of 2015, with approximately 25% as mid-scale hotels.

 

 

1“Adjusted net margin rate (non-GAAP)” is defined as adjusted net income (non-GAAP) as a percentage of total revenues.

 

2 “Adjusted income from operations margin rate (non-GAAP)” is defined as income from operations excluding share-based compensation expenses, integration costs and expenses related to going-private activities (non-GAAP) as a percentage of total revenues.

 

 

 

 

The company expects the total revenues in the fourth quarter of 2015 to be in the range of RMB 1,635 million and RMB 1,655 million.

 

This forecast reflects the Company’s current and preliminary views, and remains subject to change.

 

This announcement contains translations of certain RMB amounts into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB 6.3556 to US$1.00, the noon buying rate for September 30, 2015 set forth in the H.10 statistical release of the Federal Reserve Board.

 

Conference Call Information

 

Management will hold an earnings conference call at 8 PM U.S. Eastern Time on Monday, November 9, 2015 (9 AM Beijing/Hong Kong Time on Tuesday, November 10, 2015).

 

Dial-in details for the earnings conference call are as follows:

 

  U.S.:   1855 298 3404 or +1 631 5142 526
  China mainland: 4001 200 539
  Hong Kong: 800 905 927 or +852 5808 3202
  U.K.: 0800 015 9725 or +44 (0) 20 3078 7622
  Australia: 1800 801 825 or +61 2 8524 5042
  Taiwan:   0080 161 5189 or +886 2 7708 3282
  International: +852 5808 3202
     
  Passcode for all regions:   Homeinns

 

A replay of the conference call may be accessed by phone at the following numbers until the end of November 16, 2015 U.S. Eastern Time.

 

  U.S.: 1866 846 0868
  China mainland: 4001 842 240  
  Hong Kong: 800 966 697
  U.K.: 0800 169 7301
  Australia: +61 2 9641 7900
  International: 1800 008 585
     
  Replay Passcode: 7551909

 

Live and archived webcasts of this conference call will be available at http://english.homeinns.com.

 

About Homeinns Hotel Group

 

Homeinns Hotel Group is a leading economy hotel chain in China based on number of hotels and hotel rooms as well as geographic coverage of the hotel chain. Since the Company commenced operations in 2002, it has built Homeinn as one of the best-known economy hotel brands in China. In October of 2011, the Company acquired Motel 168, another well-known hotel chain in China, as its second economy hotel brand. Homeinns Hotel Group aims to offer a consistent product and high-quality services to primarily serve the fast growing population of value-conscious individual business and leisure travelers who demand clean, comfortable and convenient lodging. Homeinns Hotel Group's ADSs, each of which represents two ordinary shares, are currently trading on the NASDAQ Global Select Market under the symbol "HMIN." For more information about Homeinns Hotel Group, please visit http://english.homeinns.com.

 

Safe Harbor

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995.These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Any statements in this press release that are not historical facts are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include our anticipated growth strategies; our future results of operations and financial condition; the economic conditions of China; the regulatory environment in China; our ability to attract customers and leverage our brands; trends and competition in the lodging industry; the expected growth of the lodging market in China; and other factors and risks detailed in our filings with the Securities and Exchange Commission. This press release also contains statements or projections that are based upon information available to the public, as well as other information from sources which management believes to be reliable, but it is not guaranteed by us to be accurate, nor does it purport to be complete. We undertake no obligation to update or revise to the public any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

 

 

 

 

Non-GAAP Financial Measures

 

To supplement Homeinns Hotel Group’s unaudited consolidated financial results presented in accordance with U.S. GAAP, Homeinns Hotel Group uses the following non-GAAP measures:

 

(a)total operating costs and expenses excluding share-based compensation expenses and acquisition and integration costs and expenses related to going-private activities

 

(b)total leased-and-operated hotel costs excluding share-based compensation expenses and integration costs

 

(c)personnel costs of franchised-and-managed hotels excluding share-based compensation expenses

 

(d)sales and marketing expenses excluding share-based compensation expenses

 

(e)general and administrative expenses excluding share-based compensation expenses and acquisition and integration costs and expenses related to going-private activities

 

(f)income from operations excluding share-based compensation expenses and acquisition and integration costs and expenses related to going-private activities

 

(g)adjusted net income attributable to shareholders excluding any share-based compensation expenses, foreign exchange gain or loss, acquisition and integration cost, upfront fee amortization of term loan, gain or loss from fair value change of convertible notes and interest swap derivatives and other non-operating expenses and expenses related to going-private activities

 

(h)adjusted basic and diluted earnings per ADS and per share excluding foreign exchange gain or loss, share-based compensation expenses, gain on buy-back of convertible bonds, issuance costs for convertible notes, gain or loss from fair value change of convertible notes, acquisition and integration cost, non-operating expenses and upfront fee amortization of term loan, and expenses related to going-private activities

 

(i)adjusted EBITDA excluding foreign exchange gain or loss, share-based compensation expenses, gain on buy-back of convertible bonds, issuance costs for convertible notes, gain or loss from fair value change of convertible notes, acquisition and integration costs, non-operating expenses and upfront fee amortization of term loan and expenses related to going-private activities

 

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this press release.

 

Homeinns Hotel Group believes that, used in conjunction with GAAP financial measures, these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance, and both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance and when planning and forecasting future periods. Management believes that EBITDA, defined as earnings before interest, income tax expense, depreciation and amortization, is a useful financial metric to assess Homeinns Hotel Group’s operating and financial performance before the impact of investing and financing transactions and income taxes. In addition, management believes that EBITDA is widely used by other companies in the lodging industry and may be used as an analysis tool by both management and investors to measure and compare Homeinns Hotel Group’s operational and financial performance with industry peers.

 

 

 

 

One of the limitations of using non-GAAP income from operations, EBITDA, adjusted EBITDA and non-GAAP net income attributable to shareholders is that they do not include all items that impact Homeinns Hotel Group’s net income (loss) for the period. These non-GAAP measures exclude share-based compensation expenses, foreign exchange gain or loss and gain or loss from fair value change of convertible notes, which have been and will continue to be a significant recurring expense in Homeinns Hotel Group’s business. In addition, Homeinns Hotel Group’s EBITDA and adjusted EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as Homeinns Hotel Group does. Management compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. Homeinns Hotel Group computes the non-GAAP financial measures using the same consistent method from quarter to quarter. Reconciliations of GAAP and non-GAAP results are included at the end of this press release. The non-GAAP adjustment items do not include the tax impact.

 

The presentation of EBITDA and adjusted EBITDA should not be construed as an indication that Homeinns Hotel Group’s future results will be unaffected by other charges and gains Homeinns Hotel Group considers to be outside the ordinary course of its business.

 

Homeinns Hotel Group completed its acquisition of 100% equity interest in Motel 168, or Motel, and took control of Motel effective on October 1, 2011. Homeinns Hotel Group had consolidated Motel’s operating and financial results since October 1, 2011. By the third quarter of 2013, Homeinns Hotel Group had substantially completed Motel’s integration and ceased to present separate operating metrics and revenues for Motel.

 

For investor and media inquiries, please contact:

 

Mingjia Ding

Homeinns Hotel Group

Tel: +86-21-3337-3333*3870

Email: mjding@homeinns.com

 

Cara O’Brien

FTI Consulting

Tel: +852-3768-4537

Email: cara.obrien@fticonsulting.com

 

 

 

 

Homeinns Hotel Group

Unaudited Condensed Consolidated Balance Sheet        

 

   December 31, 2014   September 30, 2015 
   RMB '000   RMB '000   US$ '000 
             
ASSETS               
Current assets:               
Cash and cash equivalents   949,690    1,312,278    206,476 
Restricted cash   12,726    9,663    1,520 
Accounts receivable, net   95,501    135,429    21,309 
Receivables from related parties   3,476    4,030    634 
Consumables   44,446    32,868    5,172 
Prepayments and other current assets   171,703    196,327    30,890 
Deferred tax assets   129,685    128,630    20,239 
                
Total current assets   1,407,227    1,819,225    286,240 
                
Investment   11,709    14,778    2,325 
Property and equipment, net   4,000,041    3,797,253    597,466 
Goodwill   2,323,241    2,323,241    365,542 
Intangible assets, net   1,126,636    1,089,135    171,366 
Other assets   90,995    107,658    16,939 
Non-current deferred tax assets   434,847    466,591    73,414 
                
Total assets   9,394,696    9,617,881    1,513,292 
                
LIABILITIES               
Current liabilities:               
Accounts payable   86,949    103,909    16,349 
Payables to related parties   4,166    18,128    2,852 
Financial liability, current portion2   1,029,577    997,229    156,906 
Salaries and welfare payable   228,127    235,480    37,051 
Income tax payable   117,830    86,131    13,552 
Other taxes payable   34,074    41,020    6,454 
Deferred revenues   225,417    240,357    37,818 
Other unpaid and accruals   255,460    269,111    42,342 
Other payables   742,853    776,592    122,192 
Deferred tax liability   60,764    55,711    8,766 
                
Total current liabilities   2,785,217    2,823,668    444,282 
                
Deferred rental   705,284    686,435    108,005 
Deferred revenues   51,289    49,931    7,856 
Deposits due to franchisees   144,892    152,423    23,982 
Other long term payables   13,018    8,653    1,361 
Unfavorable lease liabilities   331,282    304,028    47,836 
Deferred tax liabilities   292,575    278,057    43,750 
                
Total liabilities   4,323,557    4,303,195    677,072 
                
Commitments and contingencies               
                
Shareholders’ equity               
Ordinary shares (US$0.005 par value; 200,000,000 shares authorized, 95,703,960 and 96,358,650 shares issued and outstanding as of December 31, 2014 and September 30, 2015, respectively)   3,698    3,719    585 
                
Additional paid-in capital   3,191,076    3,259,755    512,895 
Statutory reserves   256,013    256,013    40,281 
                
Retained earnings   1,604,246    1,784,336    280,750 
                
Less: Treasury stock (0 and 37,696 shares as of December 31, 2014
and September 30 2015, respectively)		   -    (2,759)   (434)
                
Total Home Inns shareholders' equity   5,055,033    5,301,064    834,077 
                
Noncontrolling interests   16,106    13,622    2,143 
                
Total  shareholders’ equity   5,071,139    5,314,686    836,220 
                
Total liabilities and shareholders’ equity   9,394,696    9,617,881    1,513,292 

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.3556 on September 30, 2015, representing the certificated exchange rate published by the Federal Reserve Board.

Note 2: Financial liabilities represent convertible notes  measured at fair value.
     

 

 

 

Homeinns Hotel Group

Unaudited Condensed Consolidated Statement of Operations        

 

   Quarter Ended 
   September 30, 2014   June 30, 2015   September 30, 2015 
   RMB '000   RMB '000   RMB '000   US$ '000 
                 
Revenues:                    
Leased-and-operated hotels   1,612,027    1,410,555    1,573,685    247,606 
Franchised-and-managed hotels   264,358    256,728    282,257    44,411 
                     
Total revenues   1,876,385    1,667,283    1,855,942    292,017 
Less: Business tax and related surcharges   (111,943)   (98,390)   (108,934)   (17,140)
                     
Net revenues   1,764,442    1,568,893    1,747,008    274,877 
                     
Operating costs and expenses:                    
Leased-and-operated hotel costs –                    
Rents and utilities   (539,156)   (522,581)   (554,722)   (87,281)
Personnel costs   (279,158)   (274,804)   (293,685)   (46,209)
Depreciation and amortization   (188,102)   (194,646)   (200,365)   (31,526)
Consumables, food and beverage   (108,793)   (97,175)   (120,355)   (18,937)
Others   (180,919)   (167,466)   (169,037)   (26,597)
                     
Total leased-and-operated hotel costs   (1,296,128)   (1,256,672)   (1,338,164)   (210,550)
                     
Personnel costs of Franchised-and-managed hotels   (71,131)   (65,966)   (82,570)   (12,992)
Sales and marketing expenses   (31,375)   (25,863)   (25,626)   (4,032)
General and administrative expenses   (81,457)   (82,735)   (82,733)   (13,017)
                     
Total operating costs and expenses   (1,480,091)   (1,431,236)   (1,529,093)   (240,591)
                     
Other income/(loss)   139    (9,826)   (4,165)   (655)
                     
Income/(loss) from operations   284,490    127,831    213,750    33,631 
                     
Interest income   2,864    4,055    6,610    1,040 
Interest expenses   (11,040)   (5,456)   (5,303)   (834)
                     
Loss from equity investment   (10)   (920)   (163)   (26)
Gain/(loss) on change in fair value of convertible notes   29,304    (17,016)   (570)   (90)
Gain/(loss) on buy-back of convertible notes   650    (1,591)   -    - 
Non-operating income   27,073    10,575    44,146    6,946 
Foreign exchange (loss)/gain, net   (841)   3,914    (35,012)   (5,509)
                     
Income before income tax expenses and noncontrolling interests   332,490    121,392    223,458    35,158 
                     
Income tax expense   (84,384)   (48,802)   (74,270)   (11,686)
                     
Net income   248,106    72,590    149,188    23,472 
                     
Less: Net income attributable to noncontrolling interests   (2,594)   (528)   (3,590)   (565)
                     
Net income attributable to ordinary shareholders   245,512    72,062    145,598    22,907 
                     
Earnings per share                    
— Basic   2.57    0.75    1.51    0.24 
                     
— Diluted   2.15    0.75    1.51    0.24 
                     
Weighted average ordinary shares outstanding                    
— Basic   95,556    96,215    96,347    96,347 
                     
— Diluted   103,025    96,215    96,347    96,347 
                     
Share-based compensation expense was included in the statement of operations as follows:                    
Leased-and-operated hotel costs – Personnel costs   1,525    1,511    1,349    212 
Personnel costs of Franchised-and-managed hotels   2,679    3,057    2,727    429 
Sales and marketing expenses   246    151    129    20 
General and administrative expenses   13,663    11,877    13,684    2,153 

                 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.3556 on September 30, 2015, representing the certificated exchange rate published by the Federal Reserve Board.

 

 

 

 

Homeinns Hotel Group

Reconciliation of GAAP and Non-GAAP Results    

 

   Quarter Ended September 30, 2015 
   GAAP
Result		   %of Total
Revenue		   Share-based
Compensation		   Expenses related to
going private activities		   Integration
 cost		   %of Total
Revenue		   Non-GAAP Result   %of Total
Revenue		 
   RMB '000       RMB '000   RMB '000   RMB '000       RMB '000     
   (unaudited)       (unaudited)   (unaudited)   (unaudited)       (unaudited)     
                                 
Leased-and-operated hotel costs   (1,338,164)   72.1%   1,349    -    1,295    0.1%   (1,335,520)   72.0%
Personnel costs of Franchised-and-managed hotels   (82,570)   4.4%   2,727    -    -    0.1%   (79,843)   4.3%
Sales and marketing expenses   (25,626)   1.4%   129    -    -    0.0%   (25,497)   1.4%
General and administrative expenses   (82,733)   4.5%   13,684    4,797    317    1.0%   (63,935)   3.4%
                                         
Total operating costs and expenses   (1,529,093)   82.4%   17,889    -    1,612    1.3%   (1,504,795)   81.1%
                                         
Income from operations   213,750    11.5%   17,889    -    1,612    1.3%   238,048    12.8%

 

   Quarter Ended September 30, 2015 
   GAAP
Result		   %of Total
Revenue		   Share-based
Compensation		   Expenses related to
going private activities		   Integration
 cost		   %of Total
Revenue		   Non-GAAP Result   %of Total
Revenue		 
   US$ '000       US$ '000   US$ '000   US$ '000       US$ '000     
   (unaudited)       (unaudited)   (unaudited)   (unaudited)       (unaudited)     
                                 
Leased-and-operated hotel costs   (210,550)   72.1%   212    -    204    0.1%   (210,134)   72.0%
Personnel costs of Franchised-and-managed hotels   (12,992)   4.4%   429    -    -    0.1%   (12,563)   4.3%
Sales and marketing expenses   (4,032)   1.4%   20    -    -    0.0%   (4,012)   1.4%
General and administrative expenses   (13,017)   4.5%   2,153    755    50    1.0%   (10,059)   3.4%
                                         
Total operating costs and expenses   (240,591)   82.4%   2,814    -    254    1.3%   (236,768)   81.1%
                                         
Income from operations   33,631    11.5%   2,814    -    254    1.3%   37,454    12.8%

 

   Quarter Ended June 30, 2015 
   GAAP
Result		   %of Total
Revenue		   Share-based
Compensation		   Expenses related to
going private activities		   Integration
 cost		   %of Total
Revenue		   Non-GAAP Result   %of Total
Revenue		 
   RMB '000       RMB '000   RMB '000   RMB '000       RMB '000     
   (unaudited)       (unaudited)   (unaudited)   (unaudited)       (unaudited)     
                                 
Leased-and-operated hotel costs   (1,256,672)   75.4%   1,511    -    1,322    0.2%   (1,253,839)   75.2%
Personnel costs of Franchised-and-managed hotels   (65,966)   4.0%   3,057    -    -    0.2%   (62,909)   3.8%
Sales and marketing expenses   (25,863)   1.6%   151    -    -    0.0%   (25,712)   1.5%
General and administrative expenses   (82,735)   5.0%   11,877    -    317    0.7%   (70,541)   4.2%
                                         
Total operating costs and expenses   (1,431,236)   85.8%   16,596    -    1,639    1.1%   (1,413,001)   84.7%
                                         
Income from operations   127,831    7.7%   16,596    -    1,639    1.1%   146,066    8.8%

 

   Quarter Ended September, 2014 
   GAAP
Result		   %of Total
Revenue		   Share-based
Compensation		   Expenses related to
going private activities		   Integration
 cost		   %of Total
Revenue		   Non-GAAP Result   %of Total
Revenue		 
   RMB '000       RMB '000   RMB '000   RMB '000       RMB '000     
   (unaudited)       (unaudited)   (unaudited)   (unaudited)       (unaudited)     
                                 
Leased-and-operated hotel costs   (1,296,128)   69.1%   1,525    -    1,427    0.2%   (1,293,176)   68.9%
Personnel costs of Franchised-and-managed hotels   (71,131)   3.8%   2,679    -    -    0.1%   (68,452)   3.6%
Sales and marketing expenses   (31,375)   1.7%   246    -    -    0.0%   (31,129)   1.7%
General and administrative expenses   (81,457)   4.3%   13,663    -    317    0.7%   (67,477)   3.6%
                                         
Total operating costs and expenses   (1,480,091)   78.9%   18,113    -    1,744    1.1%   (1,460,234)   77.8%
                                         
Income from operations   284,490    15.2%   18,113    -    1,744    1.1%   304,347    16.2%

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.3556 on September 30, 2015, representing the certificated exchange rate published by the Federal Reserve Board.

 

 

 

 

Homeinns Hotel Group    
Reconciliation of GAAP and Non-GAAP Results (continued)    

 

   Quarter Ended 
   September 30, 2014   June 30, 2015   September, 2015 
   RMB '000   RMB '000   RMB '000   US$ '000 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
Net income attributable to ordinary shareholders (GAAP)   245,512    72,062    145,598    22,907 
Foreign exchange loss/(gain), net   841    (3,914)   35,012    5,509 
Share-based compensation   18,113    16,596    17,889    2,814 
Expenses related to going private activities   -    -    4,797    755 
Integration cost   1,744    1,639    1,612    254 
(Gain)/loss on buy-back of convertible notes   (650)   1,591    -    - 
Gain on waived liability related with Motel acquisition   (11,919)   -    -    - 
(Gain)/loss on change in fair value of convertible notes   (29,304)   17,016    570    90 
                     
Adjusted net income attributable to ordinary shareholders (Non-GAAP)   224,337    104,990    205,478    32,329 

 

   Quarter Ended 
   September 30, 2014   June 30, 2015   September, 2015 
   RMB '000   RMB '000   RMB '000   US$ '000 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
Earnings per share (GAAP)                    
— Basic   2.57    0.75    1.51    0.24 
                     
— Diluted   2.15    0.75    1.51    0.24 
                     
Weighted average ordinary shares outstanding                    
— Basic   95,556    96,215    96,347    96,347 
                     
— Diluted   103,025    96,215    96,347    96,347 
Adjusted earnings per share (Non-GAAP)                    
— Basic   2.35    1.09    2.13    0.34 
                     
— Diluted   2.23    1.07    2.05    0.32 
                     
Weighted average ordinary shares outstanding                    
— Basic   95,556    96,215    96,347    96,347 
                     
— Diluted   103,025    102,917    102,702    102,702 

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.3556 on September 30, 2015, representing the certificated exchange rate published by the Federal Reserve Board.

Note 2: The non-GAAP adjustment items do not include the tax impact.

 

 

 

 

Homeinns Hotel Group

Reconciliation of GAAP and Non-GAAP Results (continued)        

 

   Quarter Ended 
   September 30, 2014   June 30, 2015   September 30, 2015 
   RMB '000   RMB '000   RMB '000   US$ '000 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
Net income   248,106    72,590    149,188    23,472 
Interest income   (2,864)   (4,055)   (6,610)   (1,040)
Interest expenses   11,040    5,456    5,303    834 
Income tax expense   84,384    48,802    74,270    11,686 
Depreciation and amortization   198,086    200,383    206,823    32,542 
                     
EBITDA (Non-GAAP)   538,752    323,176    428,974    67,494 
                     
Foreign exchange loss/(gain), net   841    (3,914)   35,012    5,509 
Share-based compensation   18,113    16,596    17,889    2,814 
Expenses related to going private activities   -    -    4,797    755 
Integration cost   1,744    1,639    1,612    254 
Gain on waived liability related with Motel acquisition   (11,919)   -    -    - 
(Gain)/loss on buy-back of convertible notes   (650)   1,591    -    - 
(Gain)/loss on change in fair value of convertible notes   (29,304)   17,016    570    90 
                     
Adjusted EBITDA (Non-GAAP)   517,577    356,104    488,854    76,916 
                     
% of total revenue   27.6%   21.4%   26.3%   26.3%

                 

Note 1: The "Depreciation and amortization expense" includes the depreciation and amortization expenses of the Group.             

The depreciation and amortization expenses of all leased-and-operated hotels are included in "Operating costs and expenses".             

The depreciation and amortization expenses of administrative long-term assets are included in "General and administrative expenses".    

 

 

 

 

Home Inns & Hotels Management Inc.

Operating Data        

 

   As of and for the quarter ended 
   September 30, 2014   June 30, 2015   September 30, 2015 
   Group   Group   Group 
Total Hotels in operation:   2,496    2,750    2,787 
Leased-and-operated hotels   910    915    917 
Franchised-and-managed hotels   1,586    1,835    1,870 
                
Total rooms   286,012    309,414    311,608 
                
Occupancy rate (as a percentage)   86.7%   83.3%   86.6%
                
Average daily rate (in RMB)   174    163    171 
                
RevPAR (in RMB)   151    136    148 
                
Like-for-like performance for hotels opened for at least 18 months at the end of the period               
                
   As of and for the quarter ended     
   September 30, 2014   September 30, 2015     
   Group   Group     
Total Hotels in operation:   2,131    2,131      
Leased-and-operated hotels   866    866      
Franchised-and-managed hotels   1,265    1,265      
                
Total rooms   243,858    243,858      
                
Occupancy rate (as a percentage)   88.2%   87.5%     
                
Average daily rate (in RMB)   174    170      
                
RevPAR (in RMB)   154    149      

 

“Occupancy rate” refers to the total number of occupied rooms divided by the total number of available rooms in a given period.

“Average daily rate” refers to total hotel room revenues divided by the total number of occupied rooms in a given period.

“RevPAR” represents revenue per available room, which is calculated by dividing total hotel room revenues by the total number of available rooms in a given period, or by multiplying average daily rates and occupancy rates in a given period.