HOME INNS & HOTELS MANAGEMENT INC. 
By SHANGHAI, May 12, 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 first quarter ended March 31, 2014.
First Quarter 2014 Financial Highlights
-- Total revenues increased 5.0% year over year to RMB 1.47 billion
(US$236.9 million) for the first quarter of 2014, within the guidance
range.
-- Net income attributable to ordinary shareholders was RMB 74.9 million
(US$12.0 million) for the first quarter of 2014, compared with a net
loss of RMB 19.4 million in the same period a year ago. Adjusted net
income attributable to ordinary shareholders (non-GAAP) increased 210%
year over year to RMB 32.1 million (US$5.2 million).
-- EBITDA (non-GAAP) was RMB 296.8 million (US$47.8 million) for the first
quarter of 2014, compared with RMB 187.4 million in the same period a
year ago.. Adjusted EBITDA (non-GAAP) increased 17.6% year over year to
RMB 254.1 million (US$40.9 million) for the first quarter of 2014.
Key Financial Results
(RMB in Millions except RMB per ADS) 1Q2014 1Q2013 V%
----------------------------------- ------ ------ ---
Total Revenues 1,472.5 1,402.2 5.0%
Income from Operations 42.4 12.1 250.7%
Adj. Income from Operations* 70.0 39.2 78.7%
Net Income 74.9 -19.4 F
Adj. Net Income* 32.1 10.3 210.3%
EBITDA* 296.8 187.4 58.4%
Adj. EBITDA* 254.1 216.1 17.6%
Diluted Earnings per ADS 0.11 -0.42 F
Adj. Diluted Earnings per ADS* 0.67 0.22 204.5%
"V%" represents year-over-year percentage change in amounts
"F" denotes a favourable change when the prior period amount was negative
* Indicates a non-GAAP financial measure (see commentary at the end of this earnings release for full details).
First Quarter 2014 Operational Highlights
-- Home Inns Group opened 69 new hotels in the first quarter 2014 and
operated 2,241 hotels across 297 cities in China under its three brands
as of March 31, 2014. There were a total of 448 hotel projects in the
development pipeline as of March 31, 2014, including 185 hotels
contracted or under construction (165 of which were
franchised-and-managed hotels) and 263 hotels under due diligence (all
of which were franchised-and-managed hotels), demonstrating continued
strong interest from franchise partners in the three hotel brands within
Home Inns Group.
Hotels Count Openings Closures
------------ --------
Group Home Inn Motel 168 Yitel 1Q14 1Q14
----- -------- --------- ----- ---- ----
Total Number of Hotels 2,241 1,841 381 19 69 8
Leased-and-Operated 876 * 698 164 14 6 1
Franchised-and-Managed 1,365 * 1,143 217 5 63 7
Contracted or under Construction 185 152 22 11
Leased-and-Operated 20 13 6 1
Franchised-and-Managed 165 139 16 10
Under Due Diligence 263 237 23 3
Leased-and-Operated 0 0 0 0
Franchised-and-Managed 263 237 23 3
* There was one transfer of leased-and-operated hotel to franchised-and-managed hotel under Home Inn brand during the first quarter of 2014.
-- As of March 31, 2014, Home Inns Group had a total of 18.2 million unique
active non-corporate members under its frequent guests program.
Operating Metrics
1Q2014 4Q2013 1Q2013
------ ------ ------
Occupancy Rate 81.3% 84.0% 83.6%
Average Daily Rate (ADR, RMB) 156 163 156
Revenue per Available Room (RevPAR, RMB) 127 137 131
-- For the first quarter of 2014, occupancy rate decreased by 2.3% while
ADR was flat year over year, resulting in a year-over-year decrease of
3.1% in RevPAR. The decrease in occupancy rate was mainly due to soft
market conditions in the first quarter of 2014. Sequentially, RevPAR
decreased by 7.3%, which was due to seasonality.
"Despite continued softness in macroeconomic conditions in the first quarter, we achieved revenues within our target range and are pleased to deliver the fifth consecutive quarter of year over year margin expansion," said Mr. David Sun, the Company's chief executive officer. "While coping with the absence of a full market-wide recovery, we maintained relatively stable performance in our core mature hotels, further increased contributions from our franchised-and-managed operations, implemented further operational enhancements for Motel168, and continued effective cost control initiatives."
Mr. Sun continued, "Looking ahead to the remainder of 2014, we are seeing some early signs of market stabilization but we remain cautious on the outlook for the overall travel market, especially in the business travel segment. Nevertheless, we have proven that our business model and operational structure are resilient under current market conditions. We are also confident that we are well positioned to benefit from any market improvements by executing our franchise and multi-brand development plans and maintaining a sensible expansion pace that will deliver modest but steady revenue growth, sustained margin expansion, and long-term value for our shareholders."
Detailed Overview of Financial Results for First Quarter 2014
Total Revenues
(RMB/USD in Millions) First Quarter 2014
------------------
RMB USD V%
--- --- ---
Leased-and-Operated Hotels 1,279.2 205.8 3.3%
Franchised-and-Managed
Hotels 193.3 31.1 17.8%
-------------- ----- ----
Total Revenues 1,472.5 236.9 5.0%
Less: Business Taxes -94.3 -15.2 7.2%
----- ----- ---
Net Revenues 1,378.2 221.7 4.9%
======= ===== ===
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 first
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.
Fewer new franchised-and-managed hotel openings in the first quarter of
2014 (63 opened) compared with same period a year ago (75 opened) also
resulted in lower upfront franchise-and-management fee revenue
recognition.
Total Operating Costs and Expenses / Total Operating Income
(RMB/USD in Millions) First Quarter 2014
------------------
Adjusted
GAAP Results Reconciliation Non-GAAP Results
RMB USD Vpts RMB USD RMB USD Vpts
--- --- ---- --- --- --- --- ----
Leased-and-Operated Hotel Costs 1,211.7 194.9 -2.7pts 4.2 0.7 1,207.5 194.2 -2.5pts
Franchised-and-Managed Hotel Personnel Costs 38.5 6.2 0.6pts 3.8 0.6 34.7 5.6 0.5pts
Sales and Marketing Expenses 25.0 4.0 0.2pts 0.3 0.0 24.8 4.0 0.2pts
General and Administrative Expenses 71.2 11.4 -0.1pts 19.3 3.1 51.9 8.3 -0.1pts
---- ---- ------- ---- --- ---- --- -------
Total Operating Costs and Expenses 1,346.4 216.6 -2.0pts 27.6 4.4 1,318.9 212.2 -1.9pts
Total Operating Income 42.4 6.8 2.0pts 27.6 4.4 70.0 11.3 2.0pts
==== === ====== ==== === ==== ==== ======
Note: "Vpts" represents year-over-year change in percentage points of total revenues
Total operating costs and expenses were RMB 1.35 billion (US$216.6 million) for the first quarter of 2014, representing 91.4% of total revenues for the quarter. Total operating costs and expenses excluding any share-based compensation expenses and acquisition and integration costs (non-GAAP) for the first quarter of 2014 were 89.6% of total revenues, compared to 91.5% in the same period a year ago.
-- Total leased-and-operated hotel costs were RMB 1.21 billion (US$194.9
million) for the first quarter of 2014, representing 94.7% of the
leased-and-operated hotel revenues for the quarter compared to 96.2% in
the same period a year ago. Total leased-and-operated hotel costs
excluding any share-based compensation expenses and acquisition and
integration costs (non-GAAP) were 94.4% of the leased-and-operated hotel
revenues in the first quarter of 2014 compared to 95.7% in the same
period a year ago. The year-over-year decreases in total
leased-and-operated hotel costs as a percentage of leased-and-operated
hotel revenues were mainly due to lower pre-opening cost due to fewer
new leased-and-operated hotels opened and under construction in the
first quarter of 2014. Pre-opening cost was RMB 5.9 million (US$1.0
million) for the first quarter of 2014.
-- Franchised-and-managed hotels personnel costs were RMB 38.5 million
(US$6.2 million) for the first quarter of 2014, representing 19.9% of
the franchised-and-managed hotel revenues for the quarter, compared to
17.7% in the same period a year ago. The increase in
franchised-and-managed hotels personnel costs as a percentage of
franchised-and-managed hotel revenues was mainly due to the lower mix of
upfront franchise-and-management fees included in the
franchised-and-managed hotel revenues in the first quarter of 2014 as a
result of fewer new franchised-and-managed hotel openings compared with
the same period a year ago. Franchised-and-managed hotels personnel
costs excluding share-based compensation expenses (non-GAAP) were 18.0%
of franchised-and-managed hotel revenues in the first quarter of 2014,
compared to 15.9% in the same period of 2013.
-- Sales and marketing expenses were RMB 25.0 million (US$4.0 million) for
the first quarter of 2014, representing 1.7% of total revenues for the
quarter compared to 1.5% in the same period a year ago. The increase was
mainly due to spending on certain planned corporate branding initiatives
during the quarter. Sales and marketing expenses excluding share-based
compensation expenses (non-GAAP) were 1.7% of total revenues for the
first of quarter 2014 compared to 1.5% in the same period of 2013.
-- General and administrative expenses were RMB 71.2 million (US$11.4
million) for the first quarter of 2014, representing 4.8% of total
revenues compared to 4.9% in the same period a year ago. General and
administrative expenses excluding any share-based compensation expenses,
and acquisition and integration costs (non-GAAP) were 3.5% of total
revenues for the quarter compared to 3.6% in the same period of 2013.
Income from Operations was RMB 42.4 million (US$6.8 million) for the first quarter of 2014. Income from operations excluding share-based compensation expenses and integration costs (non-GAAP) for the first quarter of 2014 was RMB 70.0 million (US$11.3 million), or 4.8% of total revenues, compared to RMB 39.2 million, or 2.8% of total revenues, in the same period of 2013. While the hotel level cost reduction and efficiency gains continued, their impact in the quarter was mitigated by the modest RevPAR decline. The year-over-year increases in the income from operations margin rate for the quarter were thus mainly driven by the increased mix of higher-margin revenue contribution from franchised-and-managed operations and reduced pre-opening costs due to fewer new leased-and-operated hotels opened and under construction in the first quarter of 2014.
EBITDA (non-GAAP)
(RMB/USD in Millions) First Quarter 2014 First Quarter 2013
------------------
RMB USD %Rev V% RMB USD %Rev
--- --- ---- --- --- --- ----
EBITDA (Non-GAAP) 296.8 47.8 20.2% 58.4% 187.4 30.1 13.4%
Net Foreign Exchange Loss / (Gain) 15.2 2.4 1.0% -2.6 -0.4 -0.2%
Share-Based Compensation Expenses 25.5 4.1 1.7% 22.9 3.7 1.6%
Integration Cost 2.1 0.3 0.1% 4.1 0.7 0.3%
Gain on Change in Fair Value of Interest Swap Transaction - - - -1.4 -0.2 -0.1%
(Gain) / Loss on Fair Value Change in Convertible Notes -85.5 -13.8 -5.8% 5.7 0.9 0.4%
----- ----- ----- --- ---
Adjusted EBITDA (Non-GAAP) 254.1 40.9 17.3% 17.6% 216.1 34.8 15.4%
===== ==== ==== ==== ===== ==== ====
Note: "%Rev" represents amount as a percentage of total revenues
"V%" represents year-over-year percentage change in amounts
Adjusted EBITDA for the first quarter of 2014 was negatively impacted by subtracting a gain of RMB 85.5 million
on fair value change in convertible notes. The fair value of the Notes decreased primarily due to decreased
share price, offset partially by decrease of market interest rate for corporate bonds with similar credit
features and the increase in volatility of the share price during the quarter
Consolidated Net Income Attributable to Home Inns Group's Shareholders
(RMB/USD in Millions) First Quarter 2014 First Quarter 2013
RMB USD %Rev V% RMB USD %Rev
--- --- ---- --- --- --- ----
Net Income (GAAP) 74.9 12.0 5.1% F -19.4 -3.1 -1.4%
Net Foreign Exchange Loss / (Gain) 15.2 2.4 1.0% -2.6 -0.4 -0.2%
Share-Based Compensation Expenses 25.5 4.1 1.7% 22.9 3.7 1.6%
Integration Cost 2.1 0.3 0.1% 4.1 0.7 0.3%
Upfront fee amortization of term loans - - - 1.0 0.2 0.1%
Gain on change in fair value of interest swap transaction - - - -1.4 -0.2 -0.1%
Loss on Fair Value Change in Convertible Notes -85.5 -13.8 -5.8% 5.7 0.9 0.4%
-------- ----- ----- --- ---
Adjusted Net Income (Non-GAAP) 32.1 5.2 2.2% 210.3% 10.3 1.7 0.7%
==== === === ===== ==== === ===
Note: "%Rev" represents amount as a percentage of total revenues
"V%" represents year-over-year percentage change in amounts
"F" denotes favourable changes when the prior period amount was negative
Basic and Diluted Earnings Per Ordinary Share and Per ADS
First Quarter 2014
------------------
Ordinary Share ADS Share
RMB USD RMB USD
--- --- --- ---
Basic 0.79 0.13 1.58 0.25
Diluted 0.05 0.01 0.11 0.02
Adjusted Basic (Non-GAAP) 0.34 0.05 0.68 0.11
Adjusted Diluted (Non-GAAP) 0.34 0.05 0.67 0.11
Cash Flow
Net operating cash flow for the first quarter of 2014 was RMB 154.9 million (US$24.9 million), compared to RMB 63.0 million in the same period of 2013. Capitalized expenditures for the first quarter of 2014 were RMB 103.2 million (US$16.6 million), while related cash paid for capital expenditures during the quarter was RMB 174.8 million (US$28.1 million).
Balance Sheet
As of March 31, 2014, Home Inns Group had cash and cash equivalents of RMB 1.16 billion (US$187.0 million). The outstanding balance of convertible notes issued in December 2010 (measured at fair value) was RMB 1.08 billion (US$174.1 million). The outstanding balance of the U.S. dollar-denominated three-year term loan was RMB 719.8 million (US$115.8 million).
Recent Developments
On March 10, 2014, Home Inns Group announced that it had signed a legally binding memorandum of understanding to acquire 100% ownership of Yunshang Siji Hotel Management Company ("Yunshang Siji") from Kunming Department Store (Group) Co., Ltd., a publicly listed company in the domestic A-share market, for a cash purchase price of RMB 230 million, subject to satisfactory due diligence and customary purchase price adjustments.
On May 1, 2014, Home Inns Group completed the acquisition of Yunshang Siji for RMB 230 million cash purchase price, subject to customary adjustments. Yunshang Siji operates an economy hotel chain consisting of 27 leased-and-operated hotels and eight franchised-and-managed hotels (with approximately 3,500 rooms in total) principally located in Yunnan Province.
The transaction is consistent with the Company's investment and growth strategy to further penetrate key markets of China. Importantly, it enhances the value and geographic diversity of the Home Inns Group portfolio with the addition of a high-quality group of hotels in the Southwest region of China.
Outlook for Second Quarter 2014
Home Inns Group expects total revenues for the group in the second quarter of 2014 to be in the range of RMB 1,690 million to RMB 1,710 million.
These forecasts reflect our 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 6.2164 to US$1.00, the noon buying rate for March 31, 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 9 PM U.S. Eastern Time on Monday, May 12, 2014 (9 AM Beijing/Hong Kong Time on Tuesday, May 13, 2014).
Dial-in details for the earnings conference call are as follows:
U.S. (toll free): 1.866.519.4004
U.S.: 1.845.675.0437
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 10 AM on Tuesday, May 20, 2014 U.S. Eastern Time.
U.S. (toll free): 1.855.452.5696
China (toll free): 800.870.0205 or 400.602.2065
Hong Kong (toll free): 800.963.117
International: 61.2.8199.0299
Conference ID number: 30980372
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 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 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 had substantially completed Motel 168's integration as of the third quarter of 2013 and ceased to present separate operating metrics and revenues for Motel 168.
For investor and media inquiries, please contact:
Johnny Wang
Home Inns & Hotels Management Inc.
Tel: +86-21-3337-3333*3870
Email: johnnywang@homeinns.com
Or
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 March 31, 2014
----------------- --------------
RMB '000 RMB '000 US$ '000
ASSETS
Current assets:
Cash and cash equivalents 1,156,743 1,162,660 187,031
Restricted cash 173,276 163,632 26,323
Accounts receivable, net 99,964 116,927 18,809
Receivables from related parties 5,509 5,509 886
Consumables 41,231 33,835 5,443
Prepayments and other current
assets 181,232 144,751 23,285
Deferred tax assets 78,839 82,322 13,243
------ ------ ------
Total current assets 1,736,794 1,709,636 275,020
--------- --------- -------
Investment in a jointly
controlled entity 5,833 5,522 888
Property and equipment, net 4,049,337 3,949,897 635,399
Goodwill 2,254,631 2,254,631 362,691
Intangible assets, net 1,112,499 1,101,811 177,243
Other assets 86,027 86,081 13,847
Non-current deferred tax assets 407,564 437,642 70,401
------- ------- ------
Total assets 9,652,685 9,545,220 1,535,489
========= ========= =========
LIABILITIES
Current liabilities:
Accounts payable 89,170 64,661 10,402
Payables to related parties 3,029 4,180 672
Finance lease liabilities 1,376 710 114
Salaries and welfare payable 222,865 115,121 18,519
Income tax payable 88,551 93,707 15,074
Other taxes payable 31,344 38,575 6,205
Deferred revenues 202,949 217,780 35,033
Other unpaid and accruals 228,881 251,730 40,494
Other payables 911,642 825,791 132,840
Deferred tax liability 52,155 54,009 8,688
------ ------ -----
Total current liabilities 1,831,962 1,666,264 268,041
--------- --------- -------
Long term loans 713,337 719,796 115,790
Deferred rental 691,456 717,551 115,429
Deferred revenues 54,075 52,589 8,460
Deposits due to franchisees 115,351 122,962 19,780
Other long term payables 20,537 20,808 3,347
Unfavorable lease liabilities 337,627 329,397 52,988
Financial liabilities(2) 1,157,295 1,082,265 174,098
Deferred tax liabilities 283,522 281,086 45,217
------- ------- ------
Total liabilities 5,205,162 4,992,718 803,150
--------- --------- -------
Commitments and contingencies
Shareholders' equity
Ordinary shares (US$0.005 par
value; 200,000,000 shares
authorized, 94,814,866 and
95,092,920 shares issued and
outstanding as of December 31,
2013 and March 31 2014,
respectively) 3,671 3,679 592
Additional paid-in capital 3,080,596 3,109,609 500,227
Statutory reserves 206,892 206,892 33,282
Retained earnings 1,140,252 1,215,117 195,470
--------- --------- -------
Total Home Inns shareholders'
equity 4,431,411 4,535,297 729,571
--------- --------- -------
Noncontrolling interests 16,112 17,205 2,768
------ ------ -----
Total shareholders' equity 4,447,523 4,552,502 732,339
--------- --------- -------
Total liabilities and
shareholders' equity 9,652,685 9,545,220 1,535,489
========= ========= =========
- - -
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2164 on March 31, 2014, representing
the certificated exchange rate published by the Federal Reserve Board.
Note 2?Financial liabilities represent convertible notes measured at fair value.
Home Inns & Hotels Management Inc.
Unaudited Condensed Consolidated Statement of Operations
Quarter Ended
-------------
March 31, 2013 December 31, 2013 March 31, 2014
-------------- ----------------- --------------
RMB '000 RMB '000 RMB '000 US$ '000
Revenues:
Leased-and-operated hotels 1,238,105 1,401,635 1,279,204 205,779
Franchised-and-managed hotels 164,113 208,048 193,254 31,088
------- ------- ------- ------
Total revenues 1,402,218 1,609,683 1,472,458 236,867
Less: Business tax and related surcharges (87,943) (98,490) (94,264) (15,164)
------- ------- ------- -------
Net revenues 1,314,275 1,511,193 1,378,194 221,703
--------- --------- --------- -------
Operating costs and expenses:
Leased-and-operated hotel costs -
Rents and utilities (551,068) (533,188) (559,579) (90,017)
Personnel costs (275,184) (256,064) (270,666) (43,541)
Depreciation and amortization (169,500) (180,503) (180,145) (28,979)
Consumables, food and beverage (72,005) (92,034) (70,338) (11,315)
Others (123,339) (184,221) (130,978) (21,070)
-------- -------- -------- -------
Total leased-and-operated hotel costs (1,191,096) (1,246,010) (1,211,706) (194,922)
Personnel costs of Franchised-and-managed (28,992) (31,855) (38,549) (6,201)
hotels
Sales and marketing expenses (21,380) (47,040) (25,035) (4,027)
General and administrative expenses (68,676) (81,406) (71,157) (11,447)
------- ------- ------- -------
Total operating costs and expenses (1,310,144) (1,406,311) (1,346,447) (216,597)
---------- ---------- ---------- --------
Other income 7,956 637 10,639 1,711
Income from operations 12,087 105,519 42,386 6,817
------ ------- ------ -----
Interest income 340 2,331 977 157
Interest expenses (15,787) (11,958) (11,981) (1,927)
Loss from equity investment (273) (466) (310) (50)
(Loss)/gain on change in fair value of convertible notes (5,661) (70,870) 85,508 13,755
Non-operating income 4,431 20,879 - -
Foreign exchange gain/(loss), net 2,579 13,551 (15,156) (2,438)
----- ------ ------- ------
Income before income tax expenses and noncontrolling interests (2,284) 58,986 101,424 16,314
------ ------ ------- ------
Income tax expense (16,365) (46,374) (25,465) (4,096)
Net (loss)/income (18,649) 12,612 75,959 12,218
------- ------ ------ ------
Less:Net (income)/loss attributable to noncontrolling interests (736) 241 (1,094) (176)
---- --- ------ ----
Net (loss)/income attributable to ordinary shareholders (19,385) 12,853 74,865 12,042
======= ====== ====== ======
Earnings per share
- Basic (0.21) 0.14 0.79 0.13
===== ==== ==== ====
- Diluted (0.21) 0.14 0.05 0.01
===== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 91,794 93,880 94,873 94,873
====== ====== ====== ======
- Diluted 91,794 94,440 102,647 102,647
====== ====== ======= =======
Share-based compensation expense was included in the statement of operations as follows:
Leased-and-operated hotel costs - Personnel costs 2,279 1,789 2,432 391
Personnel costs of Franchised-and-managed hotels 2,914 2,743 3,838 617
Sales and marketing expenses 386 431 253 41
General and administrative expenses 17,349 14,656 18,964 3,051
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2164 on March 31, 2014, representing the certificated exchange rate published by the Federal Reserve Board.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results
Quarter Ended March 31, 2014
----------------------------
GAAP %of Total Share-based Integration %of Total Non-GAAP Result %of Total
Result Revenue Compensation cost Revenue Revenue
------ ------- ------------ ---- ------- -------
RMB '000 RMB '000 RMB '000 RMB '000
(unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (1,211,706) 82.3% 2,432 1,784 0.3% (1,207,490) 82.0%
Personnel costs of Franchised-and-managed hotels (38,549) 2.6% 3,838 - 0.3% (34,711) 2.4%
Sales and marketing expenses (25,035) 1.7% 253 - 0.0% (24,782) 1.7%
General and administrative expenses (71,157) 4.8% 18,964 317 1.3% (51,876) 3.5%
------- ------ --- -------
Total operating costs and expenses (1,346,447) 91.4% 25,487 2,101 1.9% (1,318,859) 89.6%
========== ====== ===== ==========
Income from operations 42,386 2.9% 25,487 2,101 1.9% 69,974 4.8%
====== ====== ===== ======
Quarter Ended March 31, 2014
----------------------------
GAAP %of Total Share-based Integration %of Total Non-GAAP Result %of Total
Result Revenue Compensation cost Revenue Revenue
------ ------- ------------ ---- ------- -------
US$ '000 US$ '000 US$ '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (194,922) 82.3% 391 287 0.3% (194,244) 82.0%
Personnel costs of Franchised-and-managed hotels (6,201) 2.6% 617 - 0.3% (5,584) 2.4%
Sales and marketing expenses (4,027) 1.7% 41 - 0.0% (3,986) 1.7%
General and administrative expenses (11,447) 4.8% 3,051 51 1.3% (8,345) 3.5%
------- ----- --- ------
Total operating costs and expenses (216,597) 91.4% 4,100 338 1.9% (212,159) 89.6%
======== ===== === ========
Income from operations 6,817 2.9% 4,100 338 1.9% 11,255 4.8%
===== ===== === ======
Quarter Ended December 31, 2013
-------------------------------
GAAP %of Total Share-based Integration %of Total Non-GAAP Result %of Total
Result Revenue Compensation cost Revenue Revenue
------ ------- ------------ ---- ------- -------
RMB '000 RMB '000 RMB '000 RMB '000
(unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (1,246,010) 77.4% 1,789 1,704 0.2% (1,242,517) 77.2%
Personnel costs of Franchised-and-managed hotels (31,855) 2.0% 2,743 - 0.2% (29,112) 1.8%
Sales and marketing expenses (47,040) 2.9% 431 - 0.0% (46,609) 2.9%
General and administrative expenses (81,406) 5.1% 14,656 317 0.9% (66,433) 4.1%
------- ------ --- -------
Total operating costs and expenses (1,406,311) 87.4% 19,619 2,021 1.3% (1,384,671) 86.0%
========== ====== ===== ==========
Income from operations 105,519 6.6% 19,619 2,021 1.3% 127,159 7.9%
======= ====== ===== =======
Quarter Ended March 31, 2013
----------------------------
GAAP %of Total Share-based Integration %of Total Non-GAAP Result %of Total
Result Revenue Compensation cost Revenue 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%
====== ====== ===== ======
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2164 on March 31, 2014, representing the certificated exchange rate published by the Federal Reserve Board.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
-------------
March 31, 2013 December 31, 2013 March 31, 2014
-------------- ----------------- --------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Net (loss)/income attributable to ordinary shareholders (GAAP) (19,385) 12,853 74,865 12,042
Foreign exchange (gain)/loss, net (2,579) (13,551) 15,156 2,438
Share-based compensation 22,928 19,619 25,487 4,100
Integration cost 4,140 2,021 2,101 338
Interest expenses -- Upfront fee amortization of term loans 959 - - -
Non-operating income-- Gain on change in fair value of interest swap transaction (1,380) - - -
Loss/(gain) on change in fair value of convertible notes 5,661 70,870 (85,508) (13,755)
----- ------ ------- -------
Adjusted net income attributable to ordinary shareholders (Non-GAAP) 10,344 91,812 32,101 5,163
====== ====== ====== =====
Quarter Ended
-------------
March 31, 2013 December 31, 2013 March 31, 2014
-------------- ----------------- --------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Earnings per share (GAAP)
- Basic (0.21) 0.14 0.79 0.13
===== ==== ==== ====
- Diluted (0.21) 0.14 0.05 0.01
===== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 91,794 93,880 94,873 94,873
====== ====== ====== ======
- Diluted 91,794 94,440 102,647 102,647
====== ====== ======= =======
Adjusted earnings per share (Non-GAAP)
- Basic 0.11 0.98 0.34 0.05
==== ==== ==== ====
- Diluted 0.11 0.96 0.34 0.05
==== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 91,794 93,880 94,873 94,873
====== ====== ====== ======
- Diluted 92,804 101,894 95,193 95,193
====== ======= ====== ======
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2164 on March 31, 2014, representing the certificated exchange rate published by the Federal Reserve Board.
Note 2: The non-GAAP adjustment items do not include the tax impact.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
-------------
March 31, 2013 December 31, 2013 March 31, 2014
-------------- ----------------- --------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Net (loss)/income attributable to ordinary shareholders (19,385) 12,853 74,865 12,042
Interest income (340) (2,331) (977) (157)
Interest expenses 15,787 11,958 11,981 1,927
Income tax expense 16,365 46,374 25,465 4,096
Depreciation and amortization 174,924 186,061 185,507 29,842
------- ------- ------- ------
EBITDA (Non-GAAP) 187,351 254,915 296,841 47,750
------- ------- ------- ------
Foreign exchange (gain)/loss, net (2,579) (13,551) 15,156 2,438
Share-based compensation 22,928 19,619 25,487 4,100
Integration cost 4,140 2,021 2,101 338
Non-operating income-- Gain on change in fair value of interest swap transaction (1,380) - - -
Loss/(gain) on change in fair value of convertible notes 5,661 70,870 (85,508) (13,755)
----- ------ ------- -------
Adjusted EBITDA (Non-GAAP) 216,121 333,874 254,077 40,871
======= ======= ======= ======
%of total revenue 15.4% 20.7% 17.3% 17.3%
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
-------------------------------
March 31, 2013 December 31, 2013 March 31, 2014
-------------- ----------------- --------------
Group Motel 168 excluding Motel 168 Group Motel 168 excluding Motel 168 Group Motel 168 excluding Motel 168
Total Hotels in operation: 1,859 335 1,524 2,180 378 1,802 2,241 381 1,860
Leased-and-operated hotels 818 150 668 872 163 709 876 164 712
Franchised-and-managed hotels 1,041 185 856 1,308 215 1,093 1,365 214 1,148
Total rooms 222,841 49,205 173,636 256,555 52,889 203,666 262,321 53,040 209,281
Occupancy rate (as a percentage) 83.6% 76.7% 85.6% 84.0% 80.8% 84.8% 81.3% 76.7% 82.4%
Average daily rate (in RMB) 156 151 158 163 161 164 156 154 157
RevPAR (in RMB) 131 116 135 137 130 139 127 118 129
Like-for-like performance for hotels opened for at least 18 months during the current quarter
As of and for the quarter ended
-------------------------------
March 31, 2013 March 31, 2014
-------------- --------------
Group Motel 168 excluding Motel 168 Group Motel 168 excluding Motel 168
Total Hotels in operation: 1,654 326 1,328 1,654 326 1,328
Leased-and-operated hotels 782 172 610 781 172 609
Franchised-and-managed hotels 872 154 718 873 154 719
Total rooms 198,688 46,739 151,949 196,589 44,004 152,585
Occupancy rate (as a percentage) 86.0% 77.9% 88.5% 83.9% 78.7% 85.5%
Average daily rate (in RMB) 157 152 158 157 154 158
RevPAR (in RMB) 135 119 140 132 122 135
One homeinn Leased-and-operated hotel was 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 168".
SOURCE Home Inns & Hotels Management Inc.
