HOME INNS & HOTELS MANAGEMENT INC. SHANGHAI, Nov. 11, 2014 /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 third quarter ended September 30, 2014.
Third Quarter 2014 Financial Highlights
-- Total revenues increased 7.9% year over year to RMB 1.88 billion
(US$305.7 million) for the third quarter of 2014, within the guidance
range.
-- Net income attributable to ordinary shareholders was RMB 245.5 million
(US$40.0 million) for the third quarter of 2014, compared with RMB 108.0
million in the same period a year ago. Adjusted net income attributable
to ordinary shareholders (non-GAAP) increased 24.0% year over year to
RMB 224.3 million (US$36.5 million).
-- EBITDA (non-GAAP) was RMB 536.2 million (US$87.4 million) for the third
quarter of 2014, compared with RMB 374.7 million in the same period a
year ago. Adjusted EBITDA (non-GAAP) increased 15.0% year over year to
RMB 515.0 million (US$83.9 million) for the third quarter of 2014.
Key Financial Results
(RMB in Millions except RMB per ADS) 3Q2014 3Q2013 V%
----------------------------------- ------ ------ ---
Total Revenues 1,876.4 1,739.2 7.9%
Income from Operations 284.5 226.9 25.4%
Adj. Income from Operations* 304.3 251.1 21.2%
Net Income 245.5 108.0 127.3%
Adj. Net Income* 224.3 180.9 24.0%
EBITDA* 536.2 374.7 43.1%
Adj. EBITDA* 515.0 447.6 15.0%
Diluted Earnings per ADS 4.29 2.31 85.7%
Adj. Diluted Earnings per ADS* 4.47 3.7 20.6%
"V%" represents year-over-year percentage change in amounts
* Indicates a non-GAAP financial measure (see commentary at the end of this earnings release for full details).
Third Quarter 2014 Operational Highlights
-- Home Inns Group added a net of 122 hotels in the third quarter of 2014,
including the opening of 135 new hotels and the closure of 13 hotels. As
of September 30, 2014, Home Inns Group operated 2,496 hotels across 315
cities in China under four brands. There were a total of 435 hotel
projects in the development pipeline as of September 30, 2014, including
208 hotels contracted or under construction (181 of which were
franchised-and-managed hotels) and 227 hotels under due diligence (all
of which were franchised-and-managed hotels), demonstrating continued
strong interest from franchise partners in all of the Company's hotel
brands within Home Inns Group.
Hotels in Operations Openings Closures
-------------------- -------- --------
Group Homeinn Motel Fairyland Yitel 3Q14 3Q14
----- ------- ----- --------- ----- ---- ----
Total Number of Hotels 2,496 2,042 392 31 31 135 13
Leased-and-Operated 910 703 167 24 16 15 2
Franchised-and-Managed 1,586 1,339 225 7 15 120 11
Contracted or under Construction 208 153 28 5 22
Leased-and-Operated 27 11 3 2 11
Franchised-and-Managed 181 142 25 3 11
Under Due Diligence 227 193 30 0 4
Note: "Homeinn" refers to "Home Inn" brand. "Motel" refers to "Motel 168" brand which was acquired in October 2011, and "Fairyland" refers to "Yunshang Siji" brand which was acquired in May 2014. The Company recently changed the English names of all
three of these brands.
-- As of September 30, 2014, Home Inns Group had a total of 21.2 million
unique active non-corporate members under its frequent guests program.
Operating Metrics
3Q2014 2Q2014 3Q2013
------ ------ ------
Occupancy Rate 86.7% 86.7% 89.4%
Average Daily Rate (ADR, RMB) 174 164 173
Revenue per Available Room (RevPAR, RMB) 151 142 154
-- For the third quarter of 2014, occupancy rate decreased by 2.7
percentage points while ADR increased by 0.6%, resulting in a
year-over-year decrease of 1.9% in RevPAR. The decrease in occupancy
rate was mainly due to relatively soft macroeconomic conditions in the
third quarter of 2014, as well as a dilutive impact from newly opened
hotels. Sequentially, RevPAR increased by 6.3%, which was due to
seasonality.
"During the third quarter, we achieved total revenues within our expectations, as well as year-over-year margin expansion for the seventh consecutive quarter, despite the fact that we are navigating through a soft market environment," said Mr. David Sun, the Company's chief executive officer. "The continued margin expansion was mainly driven by the increased mix of higher-margin revenue contribution from our franchised-and-managed hotels, highlighting continued strong franchise demand in the market as well as the positive impact this part of our business is having on results. The successful execution of our franchise-focused strategy along with our commitment to effective cost control initiatives is clearly helping us deliver stable performance and consistent incremental improvements."
"Looking ahead to the remainder of 2014," Mr. Sun continued, "we currently are not expecting a significant market rebound but do continue to remain confident about the long-term prospects of the travel and lodging market in China. We believe we have a proven and solid underlying business which is resilient under current market conditions and will allow us to capture the long-term opportunities in the industry. Our brands, products, scale, and proven execution track record form a solid business foundation on which we can build. To this end, in the near future, we plan to accelerate the development of Yitel hotels, roll out a new brand, 'Homeinn Plus,' to complement to our existing brand portfolio, and continue to invest in innovative marketing and customer communication initiatives and technology, including growing our mobile and social media platforms. We believe that these important growth initiatives, coupled with our franchise and multi-brand strategies as well as our proven ability to effectively control costs, will allow us to achieve continued profitable growth and solidify our leadership in the industry."
Detailed Overview of Financial Results for Third Quarter 2014
Total Revenues
(RMB/USD in Millions) Third Quarter 2014
--------------------- ------------------
RMB USD V%
--- --- ---
Leased-and-Operated Hotels 1,612.0 262.6 5.0%
Franchised-and-Managed
Hotels 264.4 43.1 29.5%
----------
Total Revenues 1,876.4 305.7 7.9%
Less: Business Taxes -111.9 -18.2 5.5%
------ ----- ---
Net Revenues 1,764.4 287.5 8.0%
======= ===== ===
Note: "V%" represents year-over-year percentage change in amounts
-- The year-over-year increases in total revenues from both
leased-and-operated and franchised-and-managed hotels in the third
quarter 2014 were mainly driven by an increase in the number of hotels
and hotel rooms in operation, partially offset by a decrease in RevPAR.
Total Operating Costs and Expenses / Total Operating Income
(RMB/USD in Millions) Third Quarter 2014
------------------
Adjusted
GAAP Results Reconciliation Non-GAAP Results
RMB USD Vpts RMB USD RMB USD Vpts
--- --- ---- --- --- --- --- ----
Leased-and-Operated Hotel Costs 1,296.1 211.2 -2.3pts 3.0 0.5 1,293.2 210.7 -2.3pts
Franchised-and-Managed Hotel Personnel Costs 71.1 11.6 0.7pts 2.7 0.4 68.5 11.2 0.7pts
Sales and Marketing Expenses 31.4 5.1 0.3pts 0.2 0.0 31.1 5.1 0.3pts
General and Administrative Expenses 81.5 13.3 -0.7pts 14.0 2.3 67.5 11.0 -0.4pts
---- ---- ------- ---- --- ---- ---- -------
Total Operating Costs and Expenses 1,480.1 241.1 -2.0pts 19.9 3.2 1,460.2 237.9 -1.7pts
Total Operating Income 284.5 46.3 2.2pts 19.9 3.2 304.3 49.6 1.8pts
===== ==== ====== ==== === ===== ==== ======
Note: "Vpts" represents year-over-year change in percentage points of total revenues
Total operating costs and expenses were RMB 1.48 billion (US$241.1 million) for the third quarter of 2014, representing 78.9% of total revenues for the quarter. Total operating costs and expenses excluding any share-based compensation expenses and integration costs (non-GAAP) for the third quarter of 2014 were 77.8% of total revenues, compared to 79.5% in the same period a year ago.
-- Total leased-and-operated hotel costs were RMB 1.30 billion (US$211.2
million) for the third quarter of 2014, representing 80.4% of the
leased-and-operated hotel revenues for the quarter compared to 80.9% 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 80.2% of the leased-and-operated hotel revenues in the
third quarter of 2014 compared to 80.6% in the same period a year ago.
Pre-opening cost was RMB 13.3 million (US$2.2 million) for the third
quarter of 2014 compared to RMB 18.1 million in the third quarter of
2013.
-- Franchised-and-managed hotels personnel costs were RMB 71.1 million
(US$11.6 million) for the third quarter of 2014, representing 26.9% of
the franchised-and-managed hotel revenues for the quarter, compared to
26.5% in the same period a year ago. Franchised-and-managed hotels
personnel costs excluding share-based compensation expenses (non-GAAP)
were 25.9% of franchised-and-managed hotel revenues in the third quarter
of 2014, compared to 25.2% in the same period of 2013.
-- Sales and marketing expenses were RMB 31.4 million (US$5.1 million) for
the third quarter of 2014, representing 1.7% of total revenues for the
quarter compared to 1.4% in the same period a year ago. The increase was
mainly due to the increased cost associated with the Company's member
rewards program. Sales and marketing expenses excluding share-based
compensation expenses (non-GAAP) were 1.7% of total revenues for the
third of quarter 2014 compared to 1.4% in the same period of 2013.
-- General and administrative expenses were RMB 81.5 million (US$13.3
million) for the third quarter of 2014, representing 4.3% of total
revenues compared to 5.0% in the same period a year ago. General and
administrative expenses excluding share-based compensation expenses and
integration costs (non-GAAP) were 3.6% of total revenues for the quarter
compared to 4.0% in the same period of 2013. The year-over-year decrease
in general and administrative expenses as a percentage of total revenues
was driven by effective cost control at headquarters and continued
leverage from economies of scale.
Income from Operations was RMB 284.5 million (US$46.3 million) for the third quarter of 2014. Income from operations excluding share-based compensation expenses and integration costs (non-GAAP) for the third quarter of 2014 was RMB 304.3 million (US$49.6 million), or 16.2% of total revenues, compared to RMB 251.1 million, or 14.4% of total revenues, in the same period of 2013. The year-over-year increase in income from operations margin rate for the quarter was mainly driven by the increased mix of higher-margin revenue contribution from franchised-and-managed operations, lower pre-opening costs and continual cost control initiatives.
EBITDA (non-GAAP)
(RMB/USD in Millions) Third Quarter 2014 Third Quarter 2013
------------------ ------------------
RMB USD %Rev V% RMB USD %Rev
--- --- ---- --- --- --- ----
EBITDA (Non-GAAP) 536.2 87.4 28.6% 43.1% 374.7 61.0 21.5%
Net Foreign Exchange Loss / (Gain) 0.8 0.1 0.0% -8.6 -1.4 -0.5%
Share-Based Compensation Expenses 18.1 3 1.0% 21.1 3.4 1.2%
Integration Cost 1.7 0.3 0.1% 3.2 0.5 0.2%
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% - - -
(Gain) /Loss on Fair Value Change in Convertible Notes -29.3 -4.8 -1.6% 57.3 9.3 3.3%
-----
Adjusted EBITDA (Non-GAAP) 515.0 83.9 27.4% 15.0% 447.6 72.9 25.7%
===== ==== ==== ==== ===== ==== ====
Note: "%Rev" represents amount as a percentage of total revenues
"V%" represents year-over-year percentage change in amounts
Consolidated Net Income Attributable to Home Inns Group's Shareholders
(RMB/USD in Millions) Third Quarter 2014 Third Quarter 2013
------------------ ------------------
RMB USD %Rev V% RMB USD %Rev
--- --- ---- --- --- --- ----
Net Income (GAAP) 245.5 40.0 13.1% 127.3% 108.0 17.6 6.2%
Net Foreign Exchange Loss / (Gain) 0.8 0.1 0.0% -8.6 -1.4 -0.5%
Share-Based Compensation Expenses 18.1 3.0 1.0% 21.1 3.4 1.2%
Integration Cost 1.7 0.3 0.1% 3.2 0.5 0.2%
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% - - -
(Gain)/ Loss on Fair Value Change in Convertible Notes -29.3 -4.8 -1.6% 57.3 9.3 3.3%
-----
Adjusted Net Income (Non-GAAP) 224.3 36.5 12.0% 24.0% 180.9 29.5 10.4%
===== ==== ==== ==== ===== ==== ====
Note: "%Rev" represents amount as a percentage of total revenues
"V%" represents year-over-year percentage change in amounts
Basic and Diluted Earnings Per Ordinary Share and Per ADS
Third Quarter 2014
------------------
Ordinary Share ADS Share
RMB USD RMB USD
--- --- --- ---
Basic 2.57 0.42 5.14 0.84
Diluted 2.15 0.35 4.29 0.7
Adjusted Basic (Non-GAAP) 2.35 0.38 4.7 0.76
Adjusted Diluted (Non-GAAP) 2.23 0.36 4.47 0.73
Cash Flow
Net operating cash flow for the third quarter of 2014 was RMB 476.4 million (US$77.6 million), compared to RMB 456.9 million in the same period of 2013. Capitalized expenditures for the third quarter of 2014 were RMB 121.2 million (US$19.7 million), while related cash paid for capital expenditures during the quarter was RMB 171.8 million (US$28.0 million).
Balance Sheet
As of September 30, 2014, Home Inns Group had cash and cash equivalents of RMB 774.7 million (US$126.2 million). The outstanding balance of convertible notes issued in December 2010 (measured at fair value) was RMB 1.03 billion (US$167.4 million). During the third quarter of 2014, Home Inns Group repurchased and retired its convertible notes of US$ 10.0 million notional amount by cash payment of RMB 60.0 million (US$9.8 million). In addition, during the third quarter of 2014 Home Inns Group repaid the outstanding balance of the U.S. dollar-denominated three-year term loan of RMB 719.4 million (US$117.0 million) and the outstanding balance of the short term loan of RMB 73.0 million (US$11.9 million) assumed from the Fairyland (formerly known as Yunshang Siji) acquisition.
Recent Developments
-- Online Retail Platform: In the third quarter, the Company launched an
online retail platform, "youxuan.homeinns.com," which is embedded in
Home Inns Group's website. This platform provides the Company's members
and customers online purchase access to selected travel and lodging
centric products. This is designed to be a business extension and
revenue building initiative and the Company has already started to
generate revenue from this platform. This initiative will also allow the
Company to add value for its extensive loyalty members and customers.
Furthermore, the Company will be working with Yihaodian, one of the
leading Chinese B2C online "supermarket" players, through a strategic
alliance to ensure top quality execution.
-- Home Alliance: Home Inns Group plans to launch "Home Alliance" (or "Jia
Meng"), a B2B service fee-based platform, starting in the fourth
quarter. The Home Alliance program is a hotel membership based marketing
alliance and corporate service program targeting small to medium sized
regional economy or midscale hotels. A proprietary screening standard is
in place to determine the eligibility of member hotels. This new
platform will allow member hotels to take advantage of Home Inns Group's
industry expertise and resources. The Company will, in return, benefit
from the increasing variety of offerings on its platform, create a new
revenue source, and attract new and more diversified customers to
further strengthen its leadership position in the market.
Outlook for Fourth Quarter and Full Year 2014
Home Inns Group reiterates its target to open no fewer than 450 new hotels in 2014. This total is expected to reflect approximately 50 new leased-and-operated hotels, including the acquired Fairyland hotels (formerly known as Yunshang Siji). The balance is expected to consist of no fewer than 400 new franchised-and-managed hotels, highlighting continued strong franchise demand that is contributing a positive return to the business.
Given the continued soft market environment, fewer new leased-and-operated hotels planned for the year, and a lower than expected RevPAR in the Company's mature hotels' performance, Home Inns Group expects total revenues for the Group in the fourth quarter of 2014 to be in the range of RMB 1,625 million to RMB 1,675 million. Therefore, Home Inns Group expects total revenues for the Group for 2014 to be in the range of RMB 6,675 million to RMB 6,725 million, slightly lower than the initial full year expectations the Company provided at the beginning of the year. Nevertheless, the Company expects to deliver year-over-year profitability improvement in the fourth quarter of 2014.
These forecasts reflect the Company's current and preliminary views and 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 6.1380 to US$1.00, the noon buying rate for September 30, 2014 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 Tuesday, November 11, 2014 (9 AM Beijing/Hong Kong Time on Wednesday, November 12, 2014).
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
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 November 18, 2014 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: 1800 008 585 or +61 2 9641 7900
International: +61 2 9641 7900
Replay Passcord: 7018298
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 Homeinn as one of the best-known economy hotel brands in China. In October of 2011, the Company acquired Motel, 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 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 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
acquisition 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
acquisition and integration costs
(f) income from operations excluding
share-based compensation
expenses and acquisition and
integration costs
(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
(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
(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
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, and took control of Motel effective on October 1, 2011. Home Inns Group has consolidated Motel's operating and financial results since October 1, 2011. Home Inns Group has presented certain separated financial data of Motel in this earning release for the purpose of providing more information to investors. Home Inns Group had substantially completed Motel's integration as of the third quarter of 2013 and ceased to present separate operating metrics and revenues for Motel.
For investor and media inquiries, please contact:
Ethan Ruan
Home Inns & Hotels Management Inc.
Tel: +86-21-3337-3333*3872
Email: zjruan@homeinns.com
Cara O'Brien
FTI Consulting
Tel: +852-3768-4537
Email: cara.obrien@fticonsulting.com
Home Inns & Hotels Management Inc.
Unaudited Condensed Consolidated Balance Sheet
December 31, 2013 September 30, 2014
----------------- ------------------
RMB '000 RMB '000 US$ '000
ASSETS
Current assets:
Cash and cash equivalents 1,156,743 774,721 126,217
Restricted cash 173,276 16,487 2,686
Accounts receivable, net 99,964 121,875 19,856
Receivables from related parties 5,509 2,741 447
Consumables 41,231 36,264 5,908
Prepayments and other current assets 181,232 195,211 31,804
Deferred tax assets 78,839 83,456 13,597
------ ------ ------
Total current assets 1,736,794 1,230,755 200,515
--------- --------- -------
Investment in a jointly controlled entity 5,833 5,701 929
Property and equipment, net 4,049,337 4,019,392 654,837
Goodwill 2,254,631 2,323,241 378,501
Intangible assets, net 1,112,499 1,138,883 185,546
Other assets 86,027 91,426 14,895
Non-current deferred tax assets 407,564 451,435 73,548
------- ------- ------
Total assets 9,652,685 9,260,833 1,508,771
========= ========= =========
LIABILITIES
Current liabilities:
Accounts payable 89,170 95,237 15,516
Payables to related parties 3,029 6,386 1,040
Finance lease liabilities 1,376 - -
Salaries and welfare payable 222,865 241,895 39,409
Income tax payable 88,551 85,672 13,958
Other taxes payable 31,344 35,346 5,759
Deferred revenues 202,949 227,006 36,984
Other unpaid and accruals 228,881 261,412 42,589
Other payables 911,642 737,298 120,123
Deferred tax liability 52,155 60,764 9,900
------ ------ -----
Total current liabilities 1,831,962 1,751,016 285,278
--------- --------- -------
Long term loans 713,337 - -
Deferred rental 691,456 677,524 110,382
Deferred revenues 54,075 53,292 8,682
Deposits due to franchisees 115,351 139,820 22,779
Other long term payables 20,537 14,947 2,435
Unfavorable lease liabilities 337,627 340,366 55,452
Financial liabilities(2) 1,157,295 1,027,320 167,370
Deferred tax liabilities 283,522 293,238 47,774
------- ------- ------
Total liabilities 5,205,162 4,297,523 700,152
--------- --------- -------
Commitments and contingencies
Shareholders' equity
Ordinary shares (US$0.005 par value; 200,000,000 shares authorized, 94,814,866 and 95,626,458 shares issued
and outstanding as of December 31, 2013 and September 30 2014, respectively) 3,671 3,696 602
Additional paid-in capital 3,080,596 3,168,739 516,249
Statutory reserves 206,892 206,892 33,707
Retained earnings 1,140,252 1,568,795 255,587
--------- --------- -------
Total Home Inns shareholders' equity 4,431,411 4,948,122 806,145
--------- --------- -------
Noncontrolling interests 16,112 15,188 2,474
------ ------ -----
Total shareholders' equity 4,447,523 4,963,310 808,619
--------- --------- -------
Total liabilities and shareholders' equity 9,652,685 9,260,833 1,508,771
========= ========= =========
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.1380
on September 30, 2014, representing the certificated exchange rate published by the Federal Reserve Board.
Note 2: Financial liabilities represent convertible notes measured at fair value.
Home Inns & Hotels Management Inc.
Unaudited Condensed Consolidated Statement of Operations
Quarter Ended
-------------
September 30, 2013 June 30, 2014 September 30, 2014
------------------ ------------- ------------------
RMB '000 RMB '000 RMB '000 US$ '000
Revenues:
Leased-and-operated hotels 1,535,082 1,459,489 1,612,027 262,631
Franchised-and-managed hotels 204,078 239,113 264,358 43,069
------- ------- ------- ------
Total revenues 1,739,160 1,698,602 1,876,385 305,700
Less: Business tax and related surcharges (106,150) (104,588) (111,943) (18,238)
-------- -------- -------- -------
Net revenues 1,633,010 1,594,014 1,764,442 287,462
--------- --------- --------- -------
Operating costs and expenses:
Leased-and-operated hotel costs -
Rents and utilities (533,571) (509,722) (539,156) (87,839)
Personnel costs (273,501) (269,365) (279,158) (45,480)
Depreciation and amortization (172,918) (186,823) (188,102) (30,645)
Consumables, food and beverage (89,792) (85,765) (108,793) (17,725)
Others (172,590) (165,071) (180,919) (29,475)
-------- -------- -------- -------
Total leased-and-operated hotel costs (1,242,372) (1,216,746) (1,296,128) (211,164)
Personnel costs of Franchised-and-managed hotels (54,120) (57,284) (71,131) (11,589)
Sales and marketing expenses (24,193) (30,703) (31,375) (5,112)
General and administrative expenses (86,745) (81,968) (81,457) (13,271)
------- ------- ------- -------
Total operating costs and expenses (1,407,430) (1,386,701) (1,480,091) (241,136)
---------- ---------- ---------- --------
Other income 1,272 3,967 139 23
Income from operations 226,852 211,280 284,490 46,349
------- ------- ------- ------
Interest income 2,151 1,677 2,864 467
Interest expenses (12,687) (13,064) (11,040) (1,799)
Gain/(loss) from equity investment 84 189 (10) (2)
(Loss)/gain on change in fair value of convertible notes (57,275) (35,016) 29,304 4,774
Gain on buy-back of convertible notes - - 650 106
Non-operating income 19,019 13,266 27,073 4,411
Non-operating expenses (1,000) - - -
Foreign exchange gain/(loss), net 8,576 (109) (841) (137)
----- ---- ---- ----
Income before income tax expenses and noncontrolling interests 185,720 178,223 332,490 54,169
------- ------- ------- ------
Income tax expense (78,157) (68,410) (84,384) (13,748)
Net income 107,563 109,813 248,106 40,421
------- ------- ------- ------
Less:Net loss/(income) attributable to noncontrolling interests 440 (1,647) (2,594) (423)
--- ------ ------ ----
Net income attributable to ordinary shareholders 108,003 108,166 245,512 39,998
======= ======= ======= ======
Earnings per share
- Basic 1.16 1.14 2.57 0.42
==== ==== ==== ====
- Diluted 1.16 1.13 2.15 0.35
==== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 92,790 95,285 95,556 95,556
====== ====== ====== ======
- Diluted 93,398 95,407 103,025 103,025
====== ====== ======= =======
Share-based compensation expense was included in the statement of operations as follows:
Leased-and-operated hotel costs - Personnel costs 1,887 1,889 1,525 248
Personnel costs of Franchised-and-managed hotels 2,700 3,156 2,679 436
Sales and marketing expenses 343 154 246 40
General and administrative expenses 16,153 17,583 13,663 2,226
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.1380
on September 30, 2014, representing the certificated exchange rate published by the Federal Reserve Board.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results
Quarter Ended September 30, 2014
--------------------------------
GAAP % of Total Share-based Acquisition Integration % of Total Non-GAAP Result % of Total
Result Revenue Compensation expenses cost Revenue Revenue
------ ------- ------------ -------- ---- ------- -------
RMB '000 RMB '000 RMB '000 RMB '000 RMB '000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (1,296,128) 69.1% 1,525 - 1,427 0.2% (1,293,176) 68.9%
Personnel costs of Franchised-and-managed hotels (71,131) 3.8% 2,679 - - 0.1% (68,452) 3.6%
Sales and marketing expenses (31,375) 1.7% 246 - - 0.0% (31,129) 1.7%
General and administrative expenses (81,457) 4.3% 13,663 - 317 0.7% (67,477) 3.6%
------- ------ --- --- -------
Total operating costs and expenses (1,480,091) 78.9% 18,113 - 1,744 1.1% (1,460,234) 77.8%
========== ====== === ===== ==========
Income from operations 284,490 15.2% 18,113 - 1,744 1.1% 304,347 16.2%
======= ====== === ===== =======
Quarter Ended September 30, 2014
--------------------------------
GAAP %of Total Share-based Acquisition Integration % of Total Non-GAAP Result % of Total
Result Revenue Compensation expenses cost Revenue Revenue
------ ------- ------------ -------- ---- ------- -------
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (211,164) 69.1% 248 - 232 0.2% (210,684) 68.9%
Personnel costs of Franchised-and-managed hotels (11,589) 3.8% 436 - - 0.1% (11,153) 3.6%
Sales and marketing expenses (5,112) 1.7% 40 - - 0.0% (5,072) 1.7%
General and administrative expenses (13,271) 4.3% 2,226 - 52 0.7% (10,993) 3.6%
------- ----- --- --- -------
Total operating costs and expenses (241,136) 78.9% 2,951 - 284 1.1% (237,901) 77.8%
======== ===== === === ========
Income from operations 46,349 15.2% 2,951 - 284 1.1% 49,584 16.2%
====== ===== === === ======
Quarter Ended June 30, 2014
---------------------------
GAAP % of Total Share-based Acquisition Integration % of Total Non-GAAP Result % of Total
Result Revenue Compensation expenses cost Revenue Revenue
------ ------- ------------ -------- ---- ------- -------
RMB '000 RMB '000 RMB '000 RMB '000 RMB '000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (1,216,746) 71.6% 1,889 - 1,328 0.2% (1,213,529) 71.4%
Personnel costs of Franchised-and-managed hotels (57,284) 3.4% 3,156 - - 0.2% (54,128) 3.2%
Sales and marketing expenses (30,703) 1.8% 154 - - 0.0% (30,549) 1.8%
General and administrative expenses (81,968) 4.8% 17,583 691 317 1.1% (63,377) 3.7%
------- ------ --- --- -------
Total operating costs and expenses (1,386,701) 81.6% 22,782 691 1,645 1.5% (1,361,583) 80.2%
========== ====== === ===== ==========
Income from operations 211,280 12.4% 22,782 691 1,645 1.5% 236,398 13.9%
======= ====== === ===== =======
Quarter Ended September 30, 2013
--------------------------------
GAAP % of Total Share-based Acquisition Integration % of Total Non-GAAP Result % of Total
Result Revenue Compensation expenses cost Revenue Revenue
------ ------- ------------ -------- ---- ------- -------
RMB '000 RMB '000 RMB '000 RMB '000 RMB '000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (1,242,372) 71.4% 1,887 - 2,818 0.3% (1,237,667) 71.2%
Personnel costs of Franchised-and-managed hotels (54,120) 3.1% 2,700 - - 0.2% (51,420) 3.0%
Sales and marketing expenses (24,193) 1.4% 343 - - 0.0% (23,850) 1.4%
General and administrative expenses (86,745) 5.0% 16,153 - 335 0.9% (70,257) 4.0%
------- ------ --- --- -------
Total operating costs and expenses (1,407,430) 80.9% 21,083 - 3,153 1.4% (1,383,194) 79.5%
========== ====== === ===== ==========
Income from operations 226,852 13.0% 21,083 - 3,153 1.4% 251,088 14.4%
======= ====== === ===== =======
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.1380
on September 30, 2014, representing the certificated exchange rate published by the Federal Reserve Board.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
-------------
September 30, 2013 June 30, 2014 September 30, 2014
------------------ ------------- ------------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Net income attributable to ordinary shareholders (GAAP) 108,003 108,166 245,512 39,998
Foreign exchange (gain)/loss, net (8,576) 109 841 137
Share-based compensation 21,083 22,782 18,113 2,951
Acquisition expenses - 691 - -
Integration cost 3,153 1,645 1,744 284
Gain on waived liability related with Motel acquisition - - (11,919) (1,942)
Gain on buy-back of convertible notes - - (650) (106)
Loss/(gain) on change in fair value of convertible notes 57,275 35,016 (29,304) (4,774)
------ ------ ------- ------
Adjusted net income attributable to ordinary shareholders (Non-GAAP) 180,938 168,409 224,337 36,548
======= ======= ======= ======
Quarter Ended
-------------
September 30, 2013 June 30, 2014 September 30, 2014
------------------ ------------- ------------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Earnings per share (GAAP)
- Basic 1.16 1.14 2.57 0.42
==== ==== ==== ====
- Diluted 1.16 1.13 2.15 0.35
==== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 92,790 95,285 95,556 95,556
====== ====== ====== ======
- Diluted 93,398 95,407 103,025 103,025
====== ====== ======= =======
Adjusted earnings per share (Non-GAAP)
- Basic 1.95 1.77 2.35 0.38
==== ==== ==== ====
- Diluted 1.85 1.69 2.23 0.36
==== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 92,790 95,285 95,556 95,556
====== ====== ====== ======
- Diluted 100,852 102,862 103,025 103,025
======= ======= ======= =======
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.1380
on September 30, 2014, representing the certificated exchange rate published by the Federal Reserve Board.
Note 2: The non-GAAP adjustment items do not include the tax impact.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
-------------
September 30, 2013 June 30, 2014 September 30, 2014
------------------ ------------- ------------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Net income attributable to ordinary shareholders 108,003 108,166 245,512 39,998
Interest income (2,151) (1,677) (2,864) (467)
Interest expenses 12,687 13,064 11,040 1,799
Income tax expense 78,157 68,410 84,384 13,748
Depreciation and amortization 178,001 192,455 198,086 32,272
------- ------- ------- ------
EBITDA (Non-GAAP) 374,697 380,418 536,158 87,350
------- ------- ------- ------
Foreign exchange (gain)/loss, net (8,576) 109 841 137
Share-based compensation 21,083 22,782 18,113 2,951
Acquisition expenses - 691 - -
Integration cost 3,153 1,645 1,744 284
Gain on waived liability related with Motel acquisition - - (11,919) (1,942)
Gain on buy-back of convertible notes - - (650) (106)
Loss/(gain) on change in fair value of convertible notes 57,275 35,016 (29,304) (4,774)
------ ------ ------- ------
Adjusted EBITDA (Non-GAAP) 447,632 440,661 514,983 83,900
======= ======= ======= ======
%of total revenue 25.7% 25.9% 27.4% 27.4%
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, 2013 June 30, 2014 September 30, 2014
------------------ ------------- ------------------
Group Motel excluding Motel Group Motel excluding Motel Group Motel excluding Motel
Total Hotels in operation: 2,051 355 1,696 2,374 383 1,991 2,496 392 2,104
Leased-and-operated hotels 852 156 696 897 164 733 910 167 743
Franchised-and-managed hotels 1,199 199 1,000 1,477 219 1,258 1,586 225 1,361
Total rooms 243,459 50,874 192,585 275,050 52,914 222,136 286,012 52,942 233,070
Occupancy rate (as a percentage) 89.4% 85.1% 90.5% 86.7% 83.6% 87.7% 86.7% 83.9% 87.6%
Average daily rate (in RMB) 173 163 175 164 162 165 174 168 176
RevPAR (in RMB) 154 139 159 142 135 145 151 141 154
Like-for-like performance for hotels opened for at least 18 months during the current quarter
As of and for the quarter ended
-------------------------------
September 30, 2013 September 30, 2014
------------------ ------------------
Group Motel excluding Motel Group Motel excluding Motel
Total Hotels in operation: 1,813 330 1,483 1,813 330 1,483
Leased-and-operated hotels 830 175 655 828 175 653
Franchised-and-managed hotels 983 155 828 985 155 830
Total rooms 213,945 44,208 169,737 213,122 43,101 170,021
Occupancy rate (as a percentage) 91.2% 86.9% 92.7% 89.1% 85.9% 90.1%
Average daily rate (in RMB) 174 163 177 175 167 177
RevPAR (in RMB) 159 142 165 156 144 160
Two homeinn Leased-and-operated hotels were legally converted into Franchised-and-managed hotels in 2014.
"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.
The operating data of multi-brand conversion hotels were included in "Motel".
SOURCE Home Inns & Hotels Management Inc.
