Home Inns Group Reports First Quarter 2013 Financial Results

Total Revenues Increased 12% Year over Year to RMB 1.40 billion

Adjusted Net Income Improved to RMB 10.3 million

May 13, 2013, 17:00 ET from Home Inns & Hotels Management Inc.

SHANGHAI, May 13, 2013 /PRNewswire/ -- Home Inns & Hotels Management Inc. (NASDAQ: HMIN) ("Home Inns Group" or "the Company"), a leading economy hotel chain in China, today announced its unaudited financial results for the first quarter ended March 31, 2013. 

Home Inns Group acquired Motel 168 and has consolidated Motel 168's operating and financial results since October 1, 2011.  Consolidated group numbers are presented in this earnings release unless specifically noted.  For the purpose of providing more context and comprehensive information to investors regarding Motel 168's integration, Home Inns Group has separately presented key financial data for Motel 168 hotels through the end of 2012.  The Company will continue to provide Motel 168's operating metrics and revenues through the remaining integration period in 2013.

First Quarter 2013 Financial Highlights

  • Total revenues increased 11.7% to RMB 1.402 billion (US$225.8 million) for the first quarter of 2013, which was within the guidance range of RMB 1.385 billion to RMB 1.415 billion.
  • Adjusted net income (non-GAAP) was RMB 10.3 million (US$1.7million) compared to a loss of RMB 24.6 million in the first quarter of 2012.
  • Adjusted EBITDA (non-GAAP) increased 30.3% to RMB 216.1 million (US$34.8 million) or 15.4% of total revenues compared to 13.2% in the first quarter of 2012.

 

Key Financial Results

(RMB in Millions except RMB per ADS)

    1Q2013

   1Q2012

       V%

Total Revenues

1,402.2

1,255.7

11.7%

Income/Loss from Operations

12.1

-36.9

F

Adj. Income from Operations*

39.2

9.7

302.2%

Net Loss

-19.4

-103.2

F

Adj. Net Income/Loss*

10.3

-24.6

F

EBITDA*

187.4

93.1

101.3%

Adj. EBITDA*

216.1

165.9

30.3%

Diluted Loss per ADS

-0.42

-2.28

F

Adj. Diluted Earnings/Loss per ADS*

0.22

-0.54

F

 

Note: Consolidation of Motel 168 financial results started in October 1, 2011 "V%" represents year-over-year change in percentage  "F" or "UF" denote favourable or unfavourable change when prior year amount is negative *  Indicates a non-GAAP financial measure which excludes share-based compensation expenses, integration expenses, amortization on up-front fees of acquisition term loans or gain or loss on change in fair value of convertible notes, gain on change in fair value of interest swap transaction and net foreign exchange gain (see commentary at the end of this earnings release for full details).

First Quarter 2013 Operational Highlights

  • Home Inns Group opened 91 new hotels in the first quarter of 2013. As of March 31, 2013, the Group operated 1,859 hotels across 266 cities in China under its three brands.  There were a total of 216 hotels contracted or under construction, including 152 franchised-and-managed hotels as a result of strong interest and increasing demand for this business model from existing and new potential franchisee partners.  A franchised-and-managed hotel is a high-margin business model which requires minimal capital investments by the Company. 

Hotels in Operations 

Openings 

  Closures

Group

Home Inns

Motel 168

Yitel

Group

Group

Total Number of Hotels

1,859

1,517

335

7

91

4

Leased-and-Operated

818

662

150

6

16

1

Franchised-and-Managed

1,041

855

185

1

75

3

Contracted or under Construction

216

178

29

9

Leased-and-Operated

64

42

15

7

Franchised-and-Managed

152

136

14

2

  • As of March 31, 2013, Home Inns Group had a total of 13.2 million unique active non-corporate members under its frequent guests programs.

Operating Metrics

1Q2013

4Q2012

1Q2012

Occupancy Rate

83.6%

83.8%

80.7%

Average Daily Rate (ADR, RMB)

156

165

163

Revenue per Available Room (RevPAR, RMB)

131

138

132

  • The year-over-year increase in occupancy rate was driven by the Company's organized promotions to maximize hotel utilization during the off-peak season where pricing was already depressed by an overall soft market environment.  The resulting year-over-year decrease in RevPAR in the first quarter of 2013 was kept at a controlled minimum level.
  • For the first quarter of 2013, RevPAR for Motel 168 improved 4.5% year over year to RMB 116 from RMB 111 as a net result of substantial year-over-year improvements in occupancy rate to 76.7% from 70.4% offsetting a decrease in ADR to RMB 151 from RMB 158, a decline which was consistent with the Company's short-term pricing approach in the quarter in response to the macro-economic conditions. The improvement trend at Motel 168 continues as the Company proceeds into the final stages of integration of Motel 168.

"Facing a continued weak market environment, the Company delivered reasonably sound performances in the first quarter of 2013," said Mr. David Sun, the Company's chief executive officer.  "We achieved our revenue targets, maintained stable performance at mature hotels relative to the overall market, generated further integration results at Motel 168, and improved profitability across the business through solid execution of productivity initiatives and cost control measures."

"Market uncertainties remain as we look into the rest of 2013.  On the other hand, it was evident that we are able to navigate through challenging environmental conditions and successfully manage internally controllable aspects of our business. The Company is evolving into a more efficient and effectively-managed enterprise to deliver growth with increasing profitability," Mr. Sun continued. "We will keep our focus on the franchise-growth strategy, multi-brand development and integration, capital structure optimization and cash generation. We strongly believe Home Inns Group will continue to leverage the opportunities in China's growing travel and lodging sector and deliver sustainable profitable growth to our shareholders over the long term."

Detailed Overview of Financial Results for First Quarter 2013

Total Revenues

(RMB/USD in Millions)

First Quarter 2013 

RMB

USD

V%

     Leased-and-Operated Hotels

1,238.1

199.3

9.8%

     Franchised-and-Managed Hotels

164.1

26.4

28.3%

Total Revenues

1,402.2

225.8

11.7%

Less: Business Taxes

-87.9

-14.2

14.2%

Net Revenues

1,314.3

211.6

11.5%

 

Note: "V%" represents year-over-year change in percentage

  • The year-over-year increases in total revenues from both leased-and-operated and franchised-and-managed hotels in the first quarter of 2013 were mainly driven by an increase in the number of hotels   in operation.  
  • Revenues from Motel 168 included in total revenues were RMB 333.5 million (US$53.7 million) for the first quarter of 2013, which was within the guidance range of RMB 330 million to RMB 340 million.  

Total Operating Costs and Expenses / Total Operating Income 

(RMB/USD in Millions)

First Quarter 2013 

Share-Based

Integration

Adjusted

GAAP Results

Compensation

Costs

Non-GAAP Results

RMB

USD

Vpts

RMB

USD

RMB

USD

RMB

USD

Vpts

Leased-and-Operated Hotel Costs

1,191.1

191.8

-2.4pts

2.3

0.4

3.8

0.6

1,185.0

190.8

-1.5pts

Franchised-and-Managed Hotel Personnel Costs

29.0

4.7

0.3pts

2.9

0.5

-

-

26.1

4.2

0.2pts

Sales and Marketing Expenses

21.4

3.4

0.1pts

0.4

0.1

-

-

21.0

3.4

0.1pts

General and Administrative Expenses

68.7

11.1

-1.5pts

17.3

2.8

0.3

0.1

51.0

8.2

-0.5pts

Total Operating Costs and Expenses

1,310.1

210.9

-3.5pts

22.9

3.7

4.1

0.7

1,283.1

206.6

-1.7pts

Total Operating Income

12.1

1.9

3.8pts

22.9

3.7

4.1

0.7

39.2

6.3

2.0pts

 

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

Total operating costs and expenses were RMB 1.31 billion (US$210.9 million) for the first quarter of 2013, representing 93.4% of total revenues.  Total operating costs and expenses excluding any share-based compensation expenses and integration costs (non-GAAP) for the first quarter of 2013 were 91.5% of total revenues, compared to 93.2% in the same period a year ago.

  • Total leased-and-operated hotel costs were RMB 1.19 billion (US$191.8 million) for the first quarter of 2013.  Total leased-and-operated hotel costs excluding any share-based compensation expenses and integration costs (non-GAAP) were 95.7% of leased-and-operated hotel revenues in the first quarter of 2013, compared to 95.8% in the same period a year ago.  The year-over-year decrease in this expense ratio was mainly due to continued cost control initiatives at the hotel operational level. Pre-opening cost was RMB 27.2 million (US$4.4 million) for the first quarter of 2013.
  • Personnel costs of franchised-and-managed hotels were RMB 29.0 million (US$4.7 million) for the first quarter of 2013.  Personnel costs of franchised-and-managed hotels excluding share-based compensation expenses (non-GAAP) were 15.9% of franchised-and-managed hotel revenues in the first quarter of 2013, compared to 16.0% in the same period of 2012. 
  • Sales and marketing expenses were RMB 21.4 million (US$3.4 million) for the first quarter of 2013. Sales and marketing expenses excluding share-based compensation expenses (non-GAAP) were 1.5% of total revenues for the first of quarter 2013, compared to 1.4% in the same period of 2012. 
  • General and administrative expenses were RMB 68.7 million (US$11.1 million) for the first quarter of 2013.  General and administrative expenses excluding any share-based compensation expenses and integration costs (non-GAAP) were 3.6% of total revenues in the first quarter of 2013, compared to 4.2% in the same period of 2012.  This year-over-year decrease in general and administrative expenses as a percentage of total revenues was mainly due to continued cost control measures to maximize scale leverage.

Income from Operations was RMB 12.1 million (US$1.9 million) for the first quarter of 2013.  Income from operations excluding any share-based compensation expenses and integration cost (non-GAAP) for the first quarter of 2013 was RMB 39.2 million (US$6.3 million), or 2.8% of total revenues, compared to RMB 9.7 million, or 0.8% of total revenues, in the same period of 2012.  This year-over-year increase in the income from operations margin rate resulted from effective cost controls, productivity gains and efficiency in headquarter functions. 

 

EBITDA (non-GAAP) 

(RMB/USD in Millions)

          First Quarter 2013

         First Quarter 2012

RMB

USD

%Rev

RMB

USD

%Rev

EBITDA (Non-GAAP)

187.4

30.2

13.4%

93.1

14.8

7.4%

Net Foreign Exchange Gain

-2.6

-0.4

-0.2%

-2.3

-0.4

-0.2%

Share-Based Compensation Expenses

22.9

3.7

1.6%

22.1

3.7

1.8%

Integration Cost

4.1

0.7

0.3%

24.6

0.7

2.0%

Non-Operating Income

-1.4

-0.2

-0.1%

3.6

-0.2

0.3%

Loss on Fair Value Change in Convertible Notes

5.7

0.9

0.4%

24.8

0.9

2.0%

Adjusted EBITDA (Non-GAAP)

216.1

34.8

15.4%

165.9

34.8

13.2%

 

Note: "%Rev" represents amount as a percentage of total revenues

Consolidated Net Income Attributable to Home Inns Group's Shareholders

(RMB/USD in Millions)

          First Quarter 2013

         First Quarter 2012

RMB

USD

%Rev

RMB

USD

%Rev

Net Loss (GAAP)

-19.4

-3.1

-1.4%

-103.2

-3.1

-8.2%

Net Foreign Exchange Gain

-2.6

-0.4

-0.2%

-2.3

-0.4

-0.2%

Share-Based Compensation Expenses

22.9

3.7

1.6%

22.1

3.7

1.8%

Integration Cost

4.1

0.7

0.3%

24.6

0.7

2.0%

Amortization of Upfront Fees on Term Loan

1.0

0.2

0.1%

5.8

0.2

0.5%

Non-Operating Income

-1.4

-0.2

-0.1%

3.6

-0.2

0.3%

Loss on Fair Value Change in Convertible Notes

5.7

0.9

0.4%

24.8

0.9

2.0%

Adjusted Net Income (Non-GAAP)

10.3

1.7

0.7%

-24.6

1.7

-2.0%

 

Note: "%Rev" represents amount as a percentage of total revenues

Basic and Diluted Earnings Per Ordinary Share and Per ADS

First Quarter 2013

Ordinary Share

ADS Share

RMB

USD

RMB

USD

Basic

-0.21

-0.03

-0.42

-0.07

Diluted

-0.21

-0.03

-0.42

-0.07

Adjusted Basic (Non-GAAP)

0.11

0.02

0.23

0.04

Adjusted Diluted (Non-GAAP)

0.11

0.02

0.22

0.04

 

 

Cash Flow

Net operating cash flow for the first quarter of 2013 increased 104.5% year over year to RMB 63.0 million (US$10.1 million) from RMB 30.8 million.  Cash paid for capital expenditures during the quarter was RMB 231.1 million (US$37.2 million).

Capitalized expenditures for the first quarter of 2013 were RMB 192.0 million (US$30.9 million).  

Balance Sheet

As of March 31, 2013, Home Inns Group had cash and cash equivalents of RMB 481.8 million (US$77.6 million).  The outstanding balance of convertible notes issued in December 2010 plus interest swap contracts (both measured at fair value) totalled RMB 1.07 billion (US$172.0 million).  The outstanding balance of the U.S. dollar-denominated four-year term loan was RMB 733.5 million (US$118.1 million). 

Outlook for Second Quarter 2013

Home Inns Group maintains its target to open 360 to 380 new hotels in 2013, including approximately 80 to 90 leased-and-operated hotels and 270 to 300 franchised-and-managed hotels.

The Company also maintains its total revenues expectation for the group for 2013 to be in the range of RMB 6,600 million to RMB 6,800 million, representing growth of 14.4% to 17.9% over 2012.

Total revenues for Home Inns Group in the second quarter of 2013 are expected to be in the range of RMB 1,580 million to RMB 1,610 million.

Total revenues for Motel 168 brand in the second quarter of 2013 are expected to be in the range of RMB 380 million to RMB 390 million

These forecasts reflect the Company's current and preliminary view, which are 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 6.2108 to US$1.00, the noon buying rate for March 31, 2013 set forth in the H.10 statistical release of the Federal Reserve Board.

Conference Call Information

Management will hold an earnings conference call at 9 PM U.S. Eastern Daylight Time on Monday, May 13, 2013 (9 AM Beijing/Hong Kong Time on Tuesday, May 14, 2013).

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

U.S. (toll free):

1.866.519.4004

U.S.:                                 

1.718.354.1231

China Mainland:              

800.819.0121 or 400.620.8038

Hong Kong (toll free):     

800.930.346

Hong Kong:                      

852.2475.0994 

U.K. (toll free):                

080.8234.6646

U.K.:                               

44.2030.598.139

Australia (toll free):         

1.800.457.076

Taiwan (toll free):           

008.0112.6920

International:                           

65.6723.9381

Pass code for all regions:        

Home Inns

A replay of the conference call may be accessed by phone at the following numbers until the end of Monday, May 20, 2013 U.S. Eastern Daylight Time.

U.S. toll free:                

1.855.452.5696

China toll free:             

400.120.0932 or 800.870.0205

Hong Kong toll free:    

800.963.117

International:                          

61.2.8199.0299

Conference ID number:          

35503363

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

About Home Inns Group

Home Inns 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 Home Inns 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. Home Inns 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. Home Inns 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 Home Inns 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 brand; trends and competition in the lodging industry; the expected growth of the lodging market in China; our expected successful consolidation and integration of Motel 168 with our existing operations; 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 Home Inns Group's unaudited consolidated financial results presented in accordance with U.S. GAAP, Home Inns Group uses the following non-GAAP measures:

(a)    total operating costs and expenses excluding share-based compensation expenses and integration costs (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 integration costs (f)     income from operations excluding share-based compensation expenses and integration costs (g)    adjusted net income attributable to shareholders excluding any share-based compensation expenses, foreign exchange gain or loss, integration cost, upfront fee amortization of term loan, and gain or loss from fair value change of convertible notes and interest swap derivatives (h)    adjusted basic and diluted earnings per ADS and per share excluding foreign exchange gain or loss, share-based compensation expenses, gain or loss from fair value change of convertible notes, integration cost, gain or loss on change in fair value of interest swap transaction and upfront fee amortization of term loan, and (i)     adjusted EBITDA excluding foreign exchange gain or loss, share-based compensation expenses, gain or loss from fair value change of convertible notes, integration costs, and gain or loss on change in fair value of interest swap transaction

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.

Home Inns Group believes that, used in conjunction with GAAP financial measures, these non-GAAP financial measures provide meaningful supplemental information regarding the Group's performance, and both management and investors benefit from referring to these non-GAAP financial measures in assessing the Group'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 Home Inns 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 Home Inns 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 Home Inns 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 Home Inns Group's business. In addition, Home Inns 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 Home Inns Group does.  Management compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure.  Home Inns 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 Home Inns Group's future results will be unaffected by other charges and gains Home Inns Group considers to be outside the ordinary course of its business.

Home Inns Group completed its acquisition of 100% equity interest in Motel 168, and took control of Motel 168 effective on October 1, 2011.  Home Inns Group has consolidated Motel 168's operating and financial results since October 1, 2011.  Home Inns Group has presented certain separated financial data of Motel 168 in this earning release for the purpose of providing more information to investors.  Home Inns Group will provide separate financial data for Motel 168 through the first half of 2013.

For investor and media inquiries, please contact:

Johnny Wang Home Inns & Hotels Management Inc. Tel: +86-21-3337-3333*3870 Email: johnnywang@homeinns.com

Cara O'Brien FTI Consulting Tel: +852-3768-4537 Email: cara.obrien@fticonsulting.com

Appendix 1:

Motel 168 operations have been integrated into the Group for management and measurement purposes since its acquisition on October 1, 2011.  For the purpose of providing more context and comprehensive information to investors regarding Motel 168's integration, Home Inns Group has separately presented key financial data for Motel 168 hotels through the end of 2012.  The Company will continue to provide Motel 168's operating metrics and revenues through the remaining integration period in 2013.

First Quarter 2013 Operational and Revenues for Motel 168 Hotels

Operating Metrics

1Q2013

4Q2012

1Q2012

Occupancy Rate

76.7%

77.4%

70.4%

Average Daily rate (ADR, RMB)

151

160

158

Revenue per Available Room (RevPAR, RMB)

116

124

111

 

Total Revenues

(RMB in Millions)

1Q2013

1Q2012

V%

Total Revenues

333.5

327.3

1.9%

Leased-and-Operated Hotels

314.9

311.8

1.0%

Franchised-and-Managed Hotels

18.6

15.5

19.8%

 

Note: "V%" represents year-over-year change in percentage

 

 

Home Inns & Hotels Management Inc.

Unaudited Condensed Consolidated Balance Sheet

December 31, 2012

March 31, 2013

RMB '000

RMB '000

US$ '000

ASSETS

Current assets:

Cash and cash equivalents

663,156

481,782

77,572

Restricted cash

205,739

200,944

32,354

Accounts receivable, net

98,176

130,692

21,043

Receivables from related parties

6,818

6,389

1,029

Consumables

41,600

40,403

6,505

Prepayments and other current assets

172,534

154,600

24,892

Deferred tax assets

80,369

68,975

11,106

Total current assets

1,268,392

1,083,785

174,501

Investment in a jointly controlled entity

6,625

6,352

1,023

Property and equipment, net

3,846,835

3,865,501

622,384

Goodwill

2,254,631

2,254,631

363,018

Intangible assets, net

1,149,419

1,138,915

183,377

Other assets

117,350

116,617

18,776

Non-current deferred tax assets

310,762

357,053

57,489

Total assets

8,954,014

8,822,854

1,420,568

LIABILITIES

Current liabilities:

Accounts payable

76,825

66,626

10,727

Payables to related parties

3,798

4,898

789

Short term loans

12,571

-

-

Finance lease liabilities

6,660

5,554

894

Salaries and welfare payable

215,569

111,823

18,005

Income tax payable

76,382

70,961

11,425

Other taxes payable

27,761

33,053

5,322

Deferred revenues

202,874

198,347

31,936

Other unpaid and accruals

165,886

187,169

30,136

Other payables

925,134

850,864

136,998

Deferred tax liability

29,439

29,756

4,791

Total current liabilities

1,742,899

1,559,051

251,023

Long term loans

735,404

733,461

118,094

Deferred rental

631,618

678,518

109,248

Deferred revenues

45,089

51,681

8,321

Finance lease liabilities

1,620

1,041

168

Deposits due to franchisees

91,462

94,871

15,275

Other long term payables

10,620

8,444

1,360

Unfavorable lease liabilities

370,548

362,318

58,337

Financial liabilities*

1,066,771

1,068,262

172,001

Deferred tax liabilities

288,321

285,963

46,043

Total liabilities

4,984,352

4,843,610

779,870

Commitments and contingencies

Shareholders' equity

Ordinary shares (US$0.005 par value; 200,000,000 shares authorized, 91,672,320 and 92,167,262  shares issued and outstanding as of December 31, 2012 and March 31 2013, respectively)

3,574

3,589

578

Additional paid-in capital

2,802,905

2,833,270

456,184

Statutory reserves

158,417

158,417

25,507

Retained earnings

992,505

973,119

156,682

Total Home Inns shareholders' equity

3,957,401

3,968,395

638,951

Noncontrolling interests

12,261

10,849

1,747

Total  shareholders' equity

3,969,662

3,979,244

640,698

Total liabilities and shareholders' equity

8,954,014

8,822,854

1,420,568

-

-

-

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2108 on March 31, 2013, representing the certificated exchange rate published by the Federal Reserve Board.

Note 2:Financial liabilities represent convertible notes and interest swap contracts, both measured at fair value.

 

Home Inns & Hotels Management Inc.

Unaudited Condensed Consolidated Statement of Operations

Quarter Ended

March 31, 2012

December 31, 2012

March 31, 2013

RMB '000

RMB '000

RMB '000

US$ '000

Revenues:

 Leased-and-operated hotels 

1,127,837

1,304,958

1,238,105

199,347

 Franchised-and-managed hotels 

127,864

160,724

164,113

26,424

 Total revenues 

1,255,701

1,465,682

1,402,218

225,771

 Less: Business tax and related surcharges 

(76,976)

(90,149)

(87,943)

(14,160)

 Net revenues 

1,178,725

1,375,533

1,314,275

211,611

 Operating costs and expenses: 

    Leased-and-operated hotel costs – 

 Rents and utilities 

(492,314)

(514,213)

(551,068)

(88,727)

 Personnel costs 

(254,558)

(245,909)

(275,184)

(44,307)

 Depreciation and amortization 

(149,893)

(158,078)

(169,500)

(27,291)

 Consumables, food and beverage 

(67,743)

(99,834)

(72,005)

(11,594)

 Others 

(132,354)

(190,804)

(123,339)

(19,859)

    Total leased-and-operated hotel costs 

(1,096,862)

(1,208,838)

(1,191,096)

(191,778)

    Personnel costs of Franchised-and-managed hotels 

(22,593)

(24,581)

(28,992)

(4,668)

    Sales and marketing expenses 

(18,175)

(24,793)

(21,380)

(3,442)

    General and administrative expenses 

(79,972)

(83,408)

(68,676)

(11,058)

 Total operating costs and expenses 

(1,217,602)

(1,341,620)

(1,310,144)

(210,946)

 Other income 

1,947

2,341

7,956

1,281

 Income/(loss) from operations 

(36,930)

36,254

12,087

1,946

 Interest income 

7,062

861

340

55

 Interest expenses 

(30,922)

(17,393)

(15,787)

(2,542)

 Loss from equity investment 

(502)

(493)

(273)

(44)

 Loss on change in fair value of convertible notes 

(24,800)

(45,356)

(5,661)

(911)

 Non-operating income 

3,439

19,683

4,431

714

 Non-operating expenses 

(3,585)

-

-

-

 Foreign exchange gain, net 

2,254

14,974

2,579

415

 (Loss)/income before income tax expenses and noncontrolling interests 

(83,984)

8,530

(2,284)

(367)

 Income tax expense 

(18,917)

(964)

(16,365)

(2,635)

 Net (loss)/income 

(102,901)

7,566

(18,649)

(3,002)

 Less:Net income attributable to noncontrolling interests 

(273)

(1,286)

(736)

(119)

 Net (loss)/income attributable to Home Inns Group's shareholders 

(103,174)

6,280

(19,385)

(3,121)

(Loss)/earnings per share

- Basic

(1.14)

0.07

(0.21)

(0.03)

- Diluted

(1.14)

0.07

(0.21)

(0.03)

Weighted average ordinary shares outstanding

- Basic

90,666

91,027

91,794

91,794

- Diluted

90,666

92,445

91,794

91,794

Share-based compensation expense was included in the statement of operations as follows:

Leased-and-operated hotel costs – Personnel costs

1,955

2,038

2,279

367

Personnel costs of Franchised-and-managed hotels

2,164

2,476

2,914

469

Sales and marketing expenses

374

354

386

62

General and administrative expenses

17,619

17,620

17,349

2,793

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2108 on March 31, 2013, representing the certificated exchange rate published by the Federal Reserve Board.

 

Home Inns & Hotels Management Inc.

Reconciliation of GAAP and Non-GAAP Results

Quarter Ended March 31, 2013

GAAP Result

% of Total Revenue

Share-based Compensation

 Integration  cost

% of Total Revenue

Non-GAAP Result

% of Total Revenue

RMB '000

RMB '000

RMB '000

RMB '000

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Leased-and-operated hotel costs

(1,191,096)

84.9%

2,279

3,823

0.4%

(1,184,994)

84.5%

Personnel costs of Franchised-and-managed hotels

(28,992)

2.1%

2,914

-

0.2%

(26,078)

1.9%

Sales and marketing expenses

(21,380)

1.5%

386

-

0.0%

(20,994)

1.5%

General and administrative expenses

(68,676)

4.9%

17,349

317

1.3%

(51,010)

3.6%

Total operating costs and expenses

(1,310,144)

93.4%

22,928

4,140

1.9%

(1,283,076)

91.5%

Income from operations

12,087

0.9%

22,928

4,140

1.9%

39,155

2.8%

Quarter Ended March 31, 2013

GAAP Result

% of Total Revenue

Share-based Compensation

 Integration  cost

% of Total Revenue

Non-GAAP Result

% of Total Revenue

US$ '000

US$ '000

US$ '000

US$ '000

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Leased-and-operated hotel costs

(191,778)

84.9%

367

616

0.4%

(190,795)

84.5%

Personnel costs of Franchised-and-managed hotels

(4,668)

2.1%

469

-

0.2%

(4,199)

1.9%

Sales and marketing expenses

(3,442)

1.5%

62

-

0.0%

(3,380)

1.5%

General and administrative expenses

(11,058)

4.9%

2,793

51

1.3%

(8,214)

3.6%

Total operating costs and expenses

(210,946)

93.4%

3,692

667

1.9%

(206,587)

91.5%

Income from operations

1,946

0.9%

3,692

667

1.9%

6,305

2.8%

Quarter Ended December 31, 2012

GAAP Result

% of Total Revenue

Share-based Compensation

 Integration  cost

% of Total Revenue

Non-GAAP Result

% of Total Revenue

RMB '000

RMB '000

RMB '000

RMB '000

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Leased-and-operated hotel costs

(1,208,838)

82.5%

2,038

19,933

1.5%

(1,186,867)

81.0%

Personnel costs of Franchised-and-managed hotels

(24,581)

1.7%

2,476

-

0.2%

(22,105)

1.5%

Sales and marketing expenses

(24,793)

1.7%

354

-

0.0%

(24,439)

1.7%

General and administrative expenses

(83,408)

5.7%

17,620

558

1.2%

(65,230)

4.5%

Total operating costs and expenses

(1,341,620)

91.5%

22,488

20,491

2.9%

(1,298,641)

88.6%

Income from operations

36,254

2.5%

22,488

20,491

2.9%

79,233

5.4%

Quarter Ended March 31, 2012

GAAP Result

%of Total Revenue

Share-based Compensation

 Integration  cost

%of Total Revenue

Non-GAAP Result

%of Total Revenue

RMB '000

RMB '000

RMB '000

RMB '000

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Leased-and-operated hotel costs

(1,096,862)

87.4%

1,955

14,463

1.3%

(1,080,444)

86.0%

Personnel costs of Franchised-and-managed hotels

(22,593)

1.8%

2,164

-

0.2%

(20,429)

1.6%

Sales and marketing expenses

(18,175)

1.4%

374

-

0.0%

(17,801)

1.4%

General and administrative expenses

(79,972)

6.4%

17,619

10,090

2.2%

(52,263)

4.2%

Total operating costs and expenses

(1,217,602)

97.0%

22,112

24,553

3.7%

(1,170,937)

93.2%

(Loss)/income from operations

(36,930)

2.9%

22,112

24,553

3.7%

9,735

0.8%

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2108 on March 31, 2013, representing the certificated exchange rate published by the Federal Reserve Board.

 

Home Inns & Hotels Management Inc.

Reconciliation of GAAP and Non-GAAP Results (continued)

Quarter Ended

March 31, 2012

December 31, 2012

March 31, 2013

RMB '000

RMB '000

RMB '000

US$ '000

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Net (loss)/income attributable to Home Inns Group's shareholders (GAAP)

(103,174)

6,280

(19,385)

(3,121)

Foreign exchange gain, net

(2,254)

(14,974)

(2,579)

(415)

Share-based compensation

22,112

22,488

22,928

3,692

Integration cost

24,553

20,491

4,140

667

Interest expenses -- Upfront fee amortization of term loans

5,821

2,013

959

154

Non-operating expenses/(income) -- Loss/(gain) on change in fair value of interest swap transaction

3,585

(1,049)

(1,380)

(222)

Loss on change in fair value of convertible notes

24,800

45,356

5,661

911

Adjusted net (loss)/income attributable to Home Inns Group's shareholders (Non-GAAP)

(24,557)

80,605

10,344

1,666

Quarter Ended

March 31, 2012

December 31, 2012

March 31, 2013

RMB '000

RMB '000

RMB '000

US$ '000

(unaudited)

(unaudited)

(unaudited)

(unaudited)

(Loss)/earnings per share (GAAP)

- Basic

(1.14)

0.07

(0.21)

(0.03)

- Diluted

(1.14)

0.07

(0.21)

(0.03)

Weighted average ordinary shares outstanding

- Basic

90,666

91,027

91,794

91,794

- Diluted

90,666

92,445

91,794

91,794

Adjusted (loss)/earnings per share (Non-GAAP)

- Basic

(0.27)

0.89

0.11

0.02

- Diluted

(0.27)

0.87

0.11

0.02

Weighted average ordinary shares outstanding

- Basic

90,666

91,027

91,794

91,794

- Diluted

90,666

92,445

92,804

92,804

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2108 on March 31, 2013, representing the certificated exchange rate published by the Federal Reserve Board.

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

 

 

 

Home Inns & Hotels Management Inc.

Reconciliation of GAAP and Non-GAAP Results (continued)

Quarter Ended

March 31, 2012

December 31, 2012

March 31, 2013

RMB '000

RMB '000

RMB '000

US$ '000

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Net (loss)/income attributable to Home Inns Group's shareholders

(103,174)

6,280

(19,385)

(3,121)

Interest income

(7,062)

(861)

(340)

(55)

Interest expenses

30,922

17,393

15,787

2,542

Income tax expense

18,917

964

16,365

2,635

Depreciation and amortization

153,463

164,376