Homeinns Hotel Group Reports Third Quarter 2015 Financial Results

2,787 Hotels in Operation in 346 Cities across China

09 Nov, 2015, 17:00 ET from Homeinns

SHANGHAI, Nov. 9, 2015 /PRNewswire/ -- 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.

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

[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.

 

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.

 

SOURCE Homeinns



RELATED LINKS

http://english.homeinns.com