HOME INNS & HOTELS MANAGEMENT INC. 
By SHANGHAI, Nov. 14, 2013 /PRNewswire/ -- Home Inns & Hotels Management Inc. (NASDAQ: HMIN) ("Home Inns Group" or "the Company"), a leading economy hotel chain in China, today announced its unaudited financial results for the third quarter ended September 30, 2013.
The Company acquired Motel 168 and has consolidated Motel 168's operating and financial results since October 1, 2011. Consolidated group numbers are presented in this earnings release unless specifically noted. For the purpose of providing more context and comprehensive information to investors regarding Motel 168's integration, the Company has separately presented operating metrics and key financial data for Motel 168 hotels through the end of 2012. The Company has substantially completed Motel 168's integration as of the third quarter of 2013 and will cease to present separate operating metrics and revenues for Motel 168 hotels in future reporting periods.
Third Quarter 2013 Financial Highlights
-- Total revenues increased 8.8% to RMB 1.74 billion (US$284.2 million),
which was within the guidance range.
-- Net income attributable to ordinary shareholders increased 220.4% year
over year to RMB 108.0 million (US$17.6 million). Adjusted net income
attributable to ordinary shareholders (non-GAAP) increased 33.2% year
over year to RMB 180.9 million (US$29.6 million).
-- EBITDA (non-GAAP) increased 32.2% year over year to RMB 374.7 million
(US$61.2 million). Adjusted EBITDA (non-GAAP) increased 19.2% to RMB
447.6 million (US$73.1 million) or 25.7% of total revenues compared to
23.5% in the third quarter of 2012.
Key Financial Results
(RMB in Millions except RMB per ADS) 3Q2013 3Q2012 V%
----------------------------------- ------ ------ ---
Total Revenues 1,739.2 1,598.4 8.8%
Income from Operations 226.9 154.0 47.3%
Adj. Income from Operations* 251.1 204.7 22.7%
Net Income 108.0 33.7 220.4%
Adj. Net Income* 180.9 135.8 33.2%
EBITDA* 374.7 283.5 32.2%
Adj. EBITDA* 447.6 375.5 19.2%
Diluted earnings per ADS 2.31 0.73 216.8%
Adj. Diluted Earnings per ADS* 3.70 2.93 26.4%
Note: Consolidation of Motel 168 financial results started on October 1, 2011
"V%" represents year-over-year change in percentage
* Indicates a non-GAAP financial measure which excludes share-based compensation expenses, integration expenses,
upfront fee amortization of term loans, gain or loss on change in fair value of convertible notes, gain on change in
fair value of interest swap transaction and net foreign exchange gain (see commentary at the end of this earnings
release for full details).
Third Quarter 2013 Operational Highlights
-- Home Inns Group opened 107 new hotels in the third quarter of 2013 and
operated 2,051 hotels across 278 cities in China under its three brands
as of September 30, 2013. There were a total of 186 hotels contracted
or under construction, including 144 franchised-and-managed hotels.
Franchised-and-managed hotels continue to represent the majority of the
new hotel pipeline given strong interest and demand from existing and
new potential franchisee partners.
Hotels Count _ Openings Closures
--------------------------------- -------- --------
Group Home Inn Motel 168 Yitel Group Group
----- -------- --------- ----- ----- -----
Total Number of Hotels 2,051 1,684 355 12 107 9
Leased-and-Operated 852 686 156 10 22 4
Franchised-and-Managed 1,199 998 199 2 85 5
Contracted/under Construction 186 148 30 8
Leased-and-Operated 42 27 11 4
Franchised-and-Managed 144 121 19 4
-- As of September 30, 2013, Home Inns Group had a total of 15.6 million
unique active non-corporate members under its frequent guests programs.
Operating Metrics
3Q2013 2Q2013 3Q2012
------ ------ ------
Occupancy Rate 89.4% 87.0% 90.3%
Average Daily Rate (ADR, RMB) 173 167 174
Revenue per Available Room (RevPAR, RMB) 154 145 157
-- Occupancy rate and ADR decreased by a 0.9 percentage point and a 0.6
percentage point year over year, respectively, given exposure to lower
tier markets where economic conditions remained relatively soft. The
resulting year-over-year decrease in RevPAR in the third quarter of 2013
was in-line with industry performance. The sequential improvement in
RevPAR was better than peer performances.
-- For the third quarter of 2013, Motel 168 occupancy rate increased to
85.1% from 82.7% and ADR increased to RMB 163 from RMB 162 from the same
period last year. RevPAR for Motel 168 improved 3.7% year over year to
RMB 139 from RMB 134 as Motel 168 concluded its integration since
acquisition in October 2011.
"We are pleased to report steady revenue growth and consistent margin expansion for the third quarter," said Mr. David Sun, the Company's chief executive officer. "Even though a market-wide recovery has yet to arrive, our core mature hotels maintained stable performance and Motel 168 generated further operating improvements as we completed all primary integration tasks. Meanwhile, strong development of franchised-and-managed hotels and effective cost control initiatives at the hotel operational level resulted in margin expansion for the third consecutive quarter."
Mr. Sun continued, "We are optimistic about the stable and gradually-improving market conditions in 2014 and beyond. We believe in the long-term prospects of China's travel and lodging industry and will maintain a suitable expansion pace furthering franchise-focused growth and multi-brand development in the next two to three years. The proven ability in navigating through a challenging environment and executing sound strategies are our core strength which will enable us to further our leadership scale in the industry and to deliver steady profitability enhancements and increasing cash generations for years to come."
Detailed Financial Results for Third Quarter 2013
Total Revenues
(RMB/USD in Millions) Third Quarter 2013 .
--------------------- -------------------------------
RMB USD V%
--- --- ---
Leased-and-Operated Hotels 1535.1 250.8 7.2%
Franchised-and-Managed Hotels 204.1 33.3 22.5%
----- ---- ----
Total Revenues 1739.2 284.2 8.8%
Less: Business Taxes -106.2 -17.3 9.4%
------ ----- ---
Net Revenues 1,633.0 266.8 8.8%
======= ===== ===
Note: "V%" represents year-over-year change in percentage
-- The year-over-year increase in total revenues from both
leased-and-operated and franchised-and-managed hotels in the third
quarter of 2013 was mainly driven by an increase in the number of hotels
in operation.
-- Revenues from Motel 168 included in total revenues were RMB 429.1
million (US$70.1 million) for the third quarter of 2013, in line with
expectations.
Total Operating Costs and Expenses / Total Operating Income
(RMB/USD in Millions) Third Quarter 2013
------------------
Adjusted
GAAP Results Reconciliation Non-GAAP Results
RMB USD Vpts RMB USD RMB USD Vpts
--- --- ---- --- --- --- --- ----
Leased-and-Operated Hotel Costs 1,242.4 203.0 -4.5pts 4.7 0.8 1,237.7 202.2 -3.0pts
Franchised-and-Managed Hotel Personnel Costs 54.1 8.8 0.3pts 2.7 0.4 51.4 8.4 0.3pts
Sales and Marketing Expenses 24.2 4.0 0.3pts 0.3 0.1 23.9 3.9 0.3pts
General and Administrative Expenses 86.7 14.2 0.1pts 16.5 2.7 70.3 11.5 0.4pts
---- ---- ------ ---- --- ---- ---- ------
Total Operating Costs and Expenses 1,407.4 230.0 -3.9pts 24.2 4.0 1,383.2 226.0 -2.1pts
Total Operating Income 226.9 37.1 3.4pts 24.2 4.0 251.1 41.0 1.6pts
===== ==== ====== ==== === ===== ==== ======
Note: "Vpts" represents year-over-year change in percentage points of total revenues
Total Operating Costs and Expenses were RMB 1.41 billion (US$230.0 million) for the third quarter of 2013, representing 80.9% of total revenues compared to RMB 1.36 billion or 84.8% of total revenues for the third quarter of 2012. Total operating costs and expenses excluding any share-based compensation expenses and integration costs (non-GAAP) for the third quarter of 2013 were 79.5% of total revenues, compared to 81.6% in the same period a year ago.
-- Total leased-and-operated hotel costs were RMB 1.24 billion (US$203.0
million), or 80.9% of leased-and-operated hotel revenues for the third
quarter of 2013, compared to RMB 1.21 billion, or 84.8% of
leased-and-operated hotel revenues for the third quarter of 2012. Total
leased-and-operated hotel costs excluding any share-based compensation
expenses and integration costs (non-GAAP) were 80.6% of
leased-and-operated hotel revenues in the third quarter of 2013,
compared to 82.9% in the same period a year ago. The year-over-year
decrease in this expense ratio was mainly due to continued benefit from
cost control initiatives and productivity enhancements at the hotel
operational level. Pre-opening cost was RMB 18.1 million (US$3.0
million) for the third quarter of 2013 compared to RMB 28.8 million in
the third quarter of 2012.
-- Personnel costs of franchised-and-managed hotels were RMB 54.1 million
(US$8.8 million) for the third quarter of 2013. Personnel costs of
franchised-and-managed hotels excluding share-based compensation
expenses (non-GAAP) were 25.2% of franchised-and-managed hotel revenues
in the third quarter of 2013, compared to 25.6% in the same period of
2012.
-- Sales and marketing expenses were RMB 24.2 million (US$4.0 million) for
the third quarter of 2013 compared to RMB 18.4 million for the same
period 2012. Sales and marketing expenses excluding share-based
compensation expenses (non-GAAP) were 1.4% of total revenues for the
third quarter of 2013, compared to 1.1% in the same period of 2012. The
year-over-year increase in this expense ratio was mainly due to special
project cost on corporate branding study and sponsorship for natural
disaster recovery projects in China. On-going sales and marketing
spending remained low as a percentage of the total revenue and effective
to support stable revenue growth.
-- General and administrative expenses were RMB 86.7 million (US$14.2
million) for the third quarter of 2013 compared to RMB 77.9 million for
the third quarter of 2012. General and administrative expenses
excluding any share-based compensation expenses and integration costs
(non-GAAP) were 4.0% of total revenues in the third quarter of 2013,
compared to 3.6% from the same period of 2012. Excluding catch-up bonus
accruals during the third quarter of 2013, the year-over-year increase
in general and administrative expenses was in-line with total revenue
growth, demonstrating headquarter operation efficiency and leverage.
Income from Operations was RMB 226.9 million (US$37.1 million) for the third quarter of 2013 compared to RMB 154.0 million for the third quarter of 2012. Income from operations excluding any share-based compensation expenses and integration costs (non-GAAP) for the third quarter of 2013 was RMB 251.1 million (US$41.0 million), or 14.4% of total revenues, compared to RMB 204.7 million, or 12.8% of total revenues, in the same period of 2012. This year-over-year increase in the income from operations margin rate mainly resulted from increasing revenue from high-margin franchise-and-managed operations, meaningful improvements in Motel 168 performance and continued benefits from effective cost control and productivity enhancements at the hotel operational level.
EBITDA (non-GAAP)
(RMB/USD in Millions) Third Quarter Third Quarter
2013 2012
-------------- --------------
RMB USD %Rev RMB USD %Rev
--- --- ---- --- --- ----
EBITDA (Non-GAAP) 374.7 61.2 21.5% 283.5 46.3 17.7%
Net Foreign Exchange (Gain) / Loss -8.6 -1.4 -0.5% 6.7 1.1 0.4%
Share-Based Compensation Expenses 21.1 3.4 1.2% 24.0 3.9 1.5%
Integration Costs 3.2 0.5 0.2% 26.6 4.4 1.7%
Non-Operating Expenses - Loss on Change in
Fair Value of Interest Swap Transaction - - - 7.8 1.3 0.5%
Loss on Fair Value Change in Convertible Notes 57.3 9.4 3.3% 26.8 4.4 1.7%
---- --- --- ---- --- ---
Adjusted EBITDA (Non-GAAP) 447.6 73.1 25.7% 375.5 61.4 23.5%
===== ==== ==== ===== ==== ====
Note: "%Rev" represents amount as a percentage of total revenues
Consolidated Net Income Attributable to Home Inns Group's Shareholders
(RMB/USD in Millions) Third Quarter 2013 Third Quarter
2012
------------------ --------------
RMB USD %Rev RMB USD %Rev
--- --- ---- --- --- ----
Net Income (GAAP) 108.0 17.6 6.2% 33.7 5.5 2.1%
Net Foreign Exchange (Gain) / Loss -8.6 -1.4 -0.5% 6.7 1.1 0.4%
Share-Based Compensation Expenses 21.1 3.4 1.2% 24.0 3.9 1.5%
Integration Cost 3.2 0.5 0.2% 26.6 4.4 1.7%
Amortization of Upfront Fees on Term Loan - - - 10.1 1.7 0.6%
Non-Operating Expenses - - - 7.8 1.3 0.5%
Loss on Fair Value Change in Convertible Notes 57.3 9.4 3.3% 26.8 4.4 1.7%
---- --- --- ---- --- ---
Adjusted Net Income (Non-GAAP) 180.9 29.6 10.4% 135.8 22.2 8.5%
===== ==== ==== ===== ==== ===
Note: "%Rev" represents amount as a percentage of total revenues
Basic and Diluted Earnings Per Ordinary Share and Per ADS
Third Quarter 2013
------------------
Ordinary
Share ADS Share
RMB USD RMB USD
--- --- --- ---
Basic 1.16 0.19 2.33 0.38
Diluted 1.16 0.19 2.31 0.38
Adjusted Basic (Non-GAAP) 1.95 0.32 3.90 0.64
Adjusted Diluted (Non-GAAP) 1.85 0.30 3.70 0.61
Cash Flow
Net operating cash flow for the third quarter of 2013 increased 90.4% year over year to RMB 456.9 million (US$74.7 million) from RMB 239.9 million. Cash paid for capital expenditures during the quarter was RMB 198.3 million (US$32.4 million).
Capitalized expenditures for the third quarter of 2013 were RMB 214.2 million (US$35.0 million).
Free cash flow for the third quarter of 2013 was RMB 242.7 million (US$39.7 million).
Balance Sheet
As of September 30, 2013, Home Inns Group had cash and cash equivalents of RMB 1.04 billion (US$169.7 million). The outstanding balance of convertible notes issued in December 2010 (measured at fair value) was RMB 1.10 billion (US$179.0 million). The outstanding balance of the U.S. dollar-denominated three-year term loan was RMB 719.3 million (US$117.5 million).
Outlook for Full Year 2013
The Company continues to expect to open no less than 400 new hotels in 2013, including 65 to 70 leased-and-operated hotels.
The Company is also reiterating its expected revenue for the full year 2013. Total revenues for Home Inns Group are expected to be in the range of RMB 6,350 million to RMB 6,500 million, representing a growth of 10.1% to 12.7% over 2012. Total revenues expected for the full year of 2013 includes RMB 1,550 million to RMB 1,600 million from the Motel 168 brand.
These forecasts reflect the Company's current and preliminary view, which are subject to change.
This announcement contains translations of certain RMB amounts into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB 6.1200 to US$1.00, the noon buying rate for September 30, 2013 set forth in the H.10 statistical release of the Federal Reserve Board.
Conference Call Information
Management will hold an earnings conference call at 8 PM U.S. Eastern Standard Time on Thursday, November 14, 2013 (9 AM Beijing/Hong Kong Time on Friday, November 15, 2013).
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 the end of Friday, November 22, 2013 U.S. Eastern Standard Time.
U.S. toll free: 1.855.452.5696
China toll free: 400.120.0932 or 800.870.0205
Hong Kong toll free: 800.963.117
International: 61.2.8199.0299
Conference ID number: 87166276
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. The Company's ADSs, each of which represents two ordinary shares, are currently trading on the NASDAQ Global Select Market under the symbol "HMIN." For more information about Home Inns Group, please visit http://english.homeinns.com.
Safe Harbor
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Any statements in this press release that are not historical facts are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include our anticipated growth strategies; our future results of operations and financial condition; the economic conditions of China; the regulatory environment in China; our ability to attract customers and leverage our brand; trends and competition in the lodging industry; the expected growth of the lodging market in China; our expected successful consolidation and integration of Motel 168 with our existing operations; and other factors and risks detailed in our filings with the Securities and Exchange Commission. This press release also contains statements or projections that are based upon information available to the public, as well as other information from sources which management believes to be reliable, but it is not guaranteed by us to be accurate, nor does it purport to be complete. We undertake no obligation to update or revise to the public any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.
Non-GAAP Financial Measures
To supplement Home Inns Group's unaudited consolidated financial results presented in accordance with U.S. GAAP, Home Inns Group uses the following non-GAAP measures:
(a) total operating costs and expenses excluding share-based compensation expenses and integration costs
(b) total leased-and-operated hotel costs excluding share-based compensation expenses and integration costs
(c) personnel costs of franchised-and-managed hotels excluding share-based compensation expenses
(d) sales and marketing expenses excluding share-based compensation expenses
(e) general and administrative expenses excluding share-based compensation expenses and integration costs
(f) income from operations excluding share-based compensation expenses and integration costs
(g) adjusted net income attributable to shareholders excluding any share-based compensation expenses, foreign exchange gain or loss, integration cost, upfront fee amortization of term loan, and gain or loss from fair value change of convertible notes and interest swap derivatives
(h) adjusted basic and diluted earnings per ADS and per share excluding foreign exchange gain or loss, share-based compensation expenses, gain or loss from fair value change of convertible notes, integration cost, gain or loss on change in fair value of interest swap transaction, and upfront fee amortization of term loan, and
(i) adjusted EBITDA excluding foreign exchange gain or loss, share-based compensation expenses, gain or loss from fair value change of convertible notes, integration costs, and non-operating expenses - gain or loss on change in fair value of interest swap transaction.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.
Home Inns Group believes that, used in conjunction with GAAP financial measures, these non-GAAP financial measures provide meaningful supplemental information regarding the Group's performance, and both management and investors benefit from referring to these non-GAAP financial measures in assessing the Group's performance and when planning and forecasting future periods. Management believes that EBITDA, defined as earnings before interest, income tax expense, depreciation and amortization, is a useful financial metric to assess Home Inns Group's operating and financial performance before the impact of investing and financing transactions and income taxes. In addition, management believes that EBITDA is widely used by other companies in the lodging industry and may be used as an analysis tool by both management and investors to measure and compare Home Inns Group's operational and financial performance with industry peers.
One of the limitations of using non-GAAP income from operations, EBITDA, adjusted EBITDA and non-GAAP net income attributable to shareholders is that they do not include all items that impact Home Inns Group's net income (loss) for the period. These non-GAAP measures exclude share-based compensation expenses, foreign exchange gain or loss and gain or loss from fair value change of convertible notes, which have been and will continue to be a significant recurring expense in Home Inns Group's business. In addition, Home Inns Group's EBITDA and adjusted EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as Home Inns Group does. Management compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. Home Inns Group computes the non-GAAP financial measures using the same consistent method from quarter to quarter. Reconciliations of GAAP and non-GAAP results are included at the end of this press release. The non-GAAP adjustment items do not include the tax impact.
The presentation of EBITDA and adjusted EBITDA should not be construed as an indication that Home Inns Group's future results will be unaffected by other charges and gains Home Inns Group considers to be outside the ordinary course of its business.
Home Inns Group completed its acquisition of 100% equity interest in Motel 168, and took control of Motel 168 effective on October 1, 2011. Home Inns Group has consolidated Motel 168's operating and financial results since October 1, 2011. Home Inns Group has presented certain separate operating metrics and revenue data of Motel 168 in this earning release for the purpose of providing more information to investors. The Company has substantially completed the integration of Motel 168's by the end of the third quarter of 2013 and will cease to present such separate information in future reporting periods.
For investor and media inquiries, please contact:
Johnny Wang
Home Inns & Hotels Management Inc.
Tel: +86-21-3337-3333*3870
Email: johnnywang@homeinns.com
Cara O'Brien
FTI Consulting
Tel: +852-3768-4537
Email: cara.obrien@fticonsulting.com
Appendix 1:
Motel 168 operations have been integrated into the Group for management and measurement purposes since its acquisition on October 1, 2011. For the purpose of providing more context and comprehensive information to investors regarding Motel 168's integration, Home Inns Group has separately presented operating metrics and key financial data for Motel 168 hotels through the end of 2012. The Company has substantially completed Motel 168's integration as of the third quarter of 2013 and will cease to present separate operating metrics and revenues for Motel 168 hotels in future reporting periods.
Third Quarter 2013 Operational and Revenues for Motel 168 Hotels
Operating Metrics
3Q2013 2Q2013 3Q2012
------ ------ ------
Occupancy Rate 85.1% 82.1% 82.7%
Average Daily rate (ADR, RMB) 163 161 162
Revenue per Available Room (RevPAR, RMB) 139 132 134
Total Revenues
(RMB in Millions)
----------------
3Q2013 3Q2012 V%
------ ------ ---
Total Revenues 429.1 398.9 7.6%
Leased-and-Operated Hotels 406.4 381.1 6.6%
Franchised-and-Managed Hotels 22.8 17.8 27.9%
Note: "V%" represents year-over-year change in percentage
Home Inns & Hotels Management Inc.
Unaudited Condensed Consolidated Balance Sheet
December 31, 2012 September 30, 2013
----------------- ------------------
RMB '000 RMB '000 US$ '000
ASSETS
Current assets:
Cash and cash equivalents 663,156 1,038,500 169,690
Restricted cash 205,739 197,665 32,298
Accounts receivable, net 98,176 104,962 17,151
Receivables from related parties 6,818 5,676 927
Consumables 41,600 39,344 6,429
Prepayments and other current assets 172,534 154,859 25,304
Deferred tax assets 80,369 80,976 13,231
------ ------ ------
Total current assets 1,268,392 1,621,982 265,030
--------- --------- -------
Investment in a jointly controlled entity 6,625 6,299 1,029
Property and equipment, net 3,846,835 3,923,068 641,024
Goodwill 2,254,631 2,254,631 368,404
Intangible assets, net 1,149,419 1,123,029 183,501
Other assets 117,350 75,943 12,409
Non-current deferred tax assets 310,762 372,665 60,893
------- ------- ------
Total assets 8,954,014 9,377,617 1,532,290
========= ========= =========
LIABILITIES
Current liabilities:
Accounts payable 76,825 62,026 10,135
Payables to related parties 3,798 5,449 890
Short term loans 12,571 - -
Finance lease liabilities 6,660 2,842 464
Salaries and welfare payable 215,569 233,244 38,112
Income tax payable 76,382 92,782 15,160
Other taxes payable 27,761 30,840 5,039
Deferred revenues 202,874 204,349 33,390
Other unpaid and accruals 165,886 193,508 31,619
Other payables 925,134 907,291 148,252
Deferred tax liability 29,439 44,507 7,272
------ ------ -----
Total current liabilities 1,742,899 1,776,838 290,333
--------- --------- -------
Long term loans 735,404 719,316 117,535
Deferred rental 631,618 664,283 108,543
Deferred revenues 45,089 55,987 9,148
Finance lease liabilities 1,620 302 49
Deposits due to franchisees 91,462 108,982 17,808
Other long term payables 10,620 20,556 3,359
Unfavorable lease liabilities 370,548 345,857 56,513
Financial liabilities* 1,066,771 1,095,531 179,008
Deferred tax liabilities 288,321 281,219 45,951
------- ------- ------
Total liabilities 4,984,352 5,068,871 828,247
--------- --------- -------
Commitments and contingencies
Shareholders' equity
Ordinary shares (US$0.005 par value; 200,000,000 shares authorized, 91,672,320 and 93,545,510 shares issued and outstanding as of
December 31, 2012 and September 30 2013, respectively) 3,574 3,632 593
Additional paid-in capital 2,802,905 2,951,394 482,254
Statutory reserves 158,417 158,417 25,885
Retained earnings 992,505 1,175,874 192,136
------- --------- -------
Total Home Inns shareholders' equity 3,957,401 4,289,317 700,868
--------- --------- -------
Noncontrolling interests 12,261 19,429 3,175
------ ------ -----
Total shareholders' equity 3,969,662 4,308,746 704,043
--------- --------- -------
Total liabilities and shareholders' equity 8,954,014 9,377,617 1,532,290
========= ========= =========
- - -
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.1200
on September 30, 2013, representing the certificated exchange rate published by the Federal Reserve Board.
Note 2?Financial liabilities represent convertible notes measured at fair value.
Home Inns & Hotels Management Inc.
Unaudited Condensed Consolidated Statement of Operations
Quarter Ended
-------------
September 30, 2012 June 30, 2013 September 30, 2013
RMB '000 RMB '000 RMB '000 US$ '000
Revenues:
Leased-and-operated hotels 1,431,786 1,412,658 1,535,082 250,830
Franchised-and-managed hotels 166,624 189,252 204,078 33,346
------- ------- ------- ------
Total revenues 1,598,410 1,601,910 1,739,160 284,176
Less: Business tax and related surcharges (97,003) (99,238) (106,150) (17,345)
------- ------- -------- -------
Net revenues 1,501,407 1,502,672 1,633,010 266,831
--------- --------- --------- -------
Operating costs and expenses:
Leased-and-operated hotel costs -
Rents and utilities (496,559) (491,097) (533,571) (87,185)
Personnel costs (269,260) (269,005) (273,501) (44,690)
Depreciation and amortization (156,294) (170,024) (172,918) (28,255)
Consumables, food and beverage (96,555) (89,198) (89,792) (14,672)
Others (195,247) (168,149) (172,590) (28,201)
-------- -------- -------- -------
Total leased-and-operated hotel costs (1,213,915) (1,187,473) (1,242,372) (203,003)
Personnel costs of Franchised-and-managed hotels (45,046) (42,347) (54,120) (8,843)
Sales and marketing expenses (18,351) (17,322) (24,193) (3,953)
General and administrative expenses (77,850) (76,653) (86,745) (14,174)
------- ------- ------- -------
Total operating costs and expenses (1,355,162) (1,323,795) (1,407,430) (229,973)
---------- ---------- ---------- --------
Other income 7,742 1,224 1,272 208
Income from operations 153,987 180,101 226,852 37,066
------- ------- ------- ------
Interest income 615 1,394 2,151 351
Interest expenses (27,182) (13,717) (12,687) (2,073)
Accelerated fee amortization on early extinguishment of Term Loan - (41,872) - -
(Loss)/gain from equity investment (466) (137) 84 14
(Loss)/gain on change in fair value of convertible notes (26,765) 402 (57,275) (9,359)
Non-operating income 11,044 9,334 19,019 3,109
Non-operating expenses (7,818) - (1,000) (163)
Foreign exchange (loss)/gain, net (6,748) 25,124 8,576 1,401
------ ------ ----- -----
Income before income tax expenses and noncontrolling interests 96,667 160,629 185,720 30,346
------ ------- ------- ------
Income tax expense (62,255) (66,101) (78,157) (12,771)
Net income 34,412 94,528 107,563 17,575
------ ------ ------- ------
Less:Net (income)/loss attributable to noncontrolling interests (703) 223 440 72
---- --- --- ---
Net income attributable to ordinary shareholders 33,709 94,751 108,003 17,647
====== ====== ======= ======
Earnings per share
- Basic 0.37 1.03 1.16 0.19
==== ==== ==== ====
- Diluted 0.37 0.84 1.16 0.19
==== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 90,771 92,217 92,790 92,790
====== ====== ====== ======
- Diluted 92,600 100,459 93,398 93,398
====== ======= ====== ======
Share-based compensation expense was included in the statement of operations as follows:
Leased-and-operated hotel costs - Personnel costs 2,025 1,949 1,887 308
Personnel costs of Franchised-and-managed hotels 2,410 2,656 2,700 441
Sales and marketing expenses 407 354 343 56
General and administrative expenses 19,195 17,426 16,153 2,639
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.1200
on September 30, 2013, representing the certificated exchange rate published by the Federal Reserve Board.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results
Quarter Ended September 30, 2013
--------------------------------
GAAP %of Total Share-based Integration %of Total Non-GAAP %of Total
Result Revenue Compensation cost Revenue Result Revenue
------ ------- ------------ ---- ------- ------ -------
RMB '000 RMB '000 RMB '000 RMB '000
(unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (1,242,372) 71.4% 1,887 2,818 0.3% (1,237,667) 71.2%
Personnel costs of Franchised-and-managed hotels (54,120) 3.1% 2,700 - 0.2% (51,420) 3.0%
Sales and marketing expenses (24,193) 1.4% 343 - 0.0% (23,850) 1.4%
General and administrative expenses (86,745) 5.0% 16,153 335 0.9% (70,257) 4.0%
------- ------ --- -------
Total operating costs and expenses (1,407,430) 80.9% 21,083 3,153 1.4% (1,383,194) 79.5%
========== ====== ===== ==========
Income from operations 226,852 13.0% 21,083 3,153 1.4% 251,088 14.4%
======= ====== ===== =======
Quarter Ended September 30, 2013
--------------------------------
GAAP %of Total Share-based Integration %of Total Non-GAAP Result %of Total
Result Revenue Compensation cost Revenue Revenue
------ ------- ------------ ---- ------- -------
US$ '000 US$ '000 US$ '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (203,003) 71.4% 308 460 0.3% (202,235) 71.2%
Personnel costs of Franchised-and-managed hotels (8,843) 3.1% 441 - 0.2% (8,402) 3.0%
Sales and marketing expenses (3,953) 1.4% 56 - 0.0% (3,897) 1.4%
General and administrative expenses (14,174) 5.0% 2,639 55 0.9% (11,480) 4.0%
------- ----- --- -------
Total operating costs and expenses (229,973) 80.9% 3,445 515 1.4% (226,013) 79.5%
======== ===== === ========
Income from operations 37,066 13.0% 3,445 515 1.4% 41,026 14.4%
====== ===== === ======
Quarter Ended June 30, 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 (1,187,473) 74.1% 1,949 5,416 0.5% (1,180,108) 73.7%
Personnel costs of Franchised-and-managed hotels (42,347) 2.6% 2,656 - 0.2% (39,691) 2.5%
Sales and marketing expenses (17,322) 1.1% 354 - 0.0% (16,968) 1.1%
General and administrative expenses (76,653) 4.8% 17,426 317 1.1% (58,910) 3.7%
------- ------ --- -------
Total operating costs and expenses (1,323,795) 82.6% 22,385 5,733 1.8% (1,295,677) 80.9%
========== ====== ===== ==========
Income from operations 180,101 11.2% 22,385 5,733 1.8% 208,219 13.0%
======= ====== ===== =======
Quarter Ended September 30, 2012
--------------------------------
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 (1,213,915) 75.9% 2,025 25,406 1.7% (1,186,484) 74.2%
Personnel costs of Franchised-and-managed hotels (45,046) 2.8% 2,410 - 0.2% (42,636) 2.7%
Sales and marketing expenses (18,351) 1.1% 407 - 0.0% (17,944) 1.1%
General and administrative expenses (77,850) 4.9% 19,195 1,224 1.3% (57,431) 3.6%
------- ------ ----- -------
Total operating costs and expenses (1,355,162) 84.8% 24,037 26,630 3.2% (1,304,495) 81.6%
========== ====== ====== ==========
Income from operations 153,987 9.6% 24,037 26,630 3.2% 204,654 12.8%
======= ====== ====== =======
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.1200
on September 30, 2013, representing the certificated exchange rate published by the Federal Reserve Board.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
-------------
September 30, 2012 June 30, 2013 September 30, 2013
------------------ ------------- ------------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Net income attributable to ordinary shareholders (GAAP) 33,709 94,751 108,003 17,647
Foreign exchange loss/(gain), net 6,748 (25,124) (8,576) (1,401)
Share-based compensation 24,037 22,385 21,083 3,445
Integration cost 26,630 5,733 3,153 515
Interest expenses -- Upfront fee amortization of term loans 10,126 - - -
Accelerated fee amortization on early extinguishment of Term Loan - 41,872 - -
Non-operating expenses-- loss on change in fair value of interest swap transaction 7,818 468 - -
Loss/(gain) on change in fair value of convertible notes 26,765 (402) 57,275 9,359
------ ---- ------ -----
Adjusted net income attributable to ordinary shareholders (Non-GAAP) 135,833 139,683 180,938 29,565
======= ======= ======= ======
Quarter Ended
-------------
September 30, 2012 June 30, 2013 September 30, 2013
------------------ ------------- ------------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Earnings per share (GAAP)
- Basic 0.37 1.03 1.16 0.19
==== ==== ==== ====
- Diluted 0.37 0.84 1.16 0.19
==== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 90,771 92,217 92,790 92,790
====== ====== ====== ======
- Diluted 92,600 100,459 93,398 93,398
====== ======= ====== ======
Adjusted earnings per share (Non-GAAP)
- Basic 1.50 1.51 1.95 0.32
==== ==== ==== ====
- Diluted 1.47 1.45 1.85 0.30
==== ==== ==== ====
Weighted average ordinary shares outstanding
- Basic 90,771 92,217 92,790 92,790
====== ====== ====== ======
- Diluted 92,600 100,459 100,852 100,852
====== ======= ======= =======
Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.1200
on September 30, 2013, representing the certificated exchange rate published by the Federal Reserve Board.
Note 2: The non-GAAP adjustment items do not include the tax impact.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
-------------
September 30, 2012 June 30, 2013 September 30, 2013
------------------ ------------- ------------------
RMB '000 RMB '000 RMB '000 US$ '000
(unaudited) (unaudited) (unaudited) (unaudited)
Net income attributable to ordinary shareholders 33,709 94,751 108,003 17,647
Interest income (615) (1,394) (2,151) (351)
Interest expenses 27,182 13,717 12,687 2,073
Income tax expense 62,255 66,101 78,157 12,771
Depreciation and amortization 161,006 175,496 178,001 29,085
------- ------- ------- ------
EBITDA (Non-GAAP) 283,537 348,671 374,697 61,225
------- ------- ------- ------
Foreign exchange loss/(gain), net 6,748 (25,124) (8,576) (1,401)
Share-based compensation 24,037 22,385 21,083 3,445
Accelerated fee amortization on early extinguishment of Term Loan - 41,872 - -
Integration cost 26,630 5,733 3,153 515
Non-operating expenses-- loss on change in fair value of interest swap transaction 7,818 468 - -
Loss/(gain) on change in fair value of convertible notes 26,765 (402) 57,275 9,359
------ ---- ------ -----
Adjusted EBITDA (Non-GAAP) 375,535 393,603 447,632 73,143
======= ======= ======= ======
%of total revenue 23.5% 24.6% 25.7% 25.7%
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, 2012 June 30, 2013 September 30, 2013
------------------ ------------- ------------------
Group Motel 168 excluding Motel 168 Group Motel 168 excluding Motel 168 Group Motel 168 excluding Motel 168
Total Hotels in operation: 1,682 321 1,361 1,953 341 1,612 2,051 355 1,696
Leased-and-operated hotels 770 146 624 834 154 680 852 156 696
Franchised-and-managed hotels 912 175 737 1,119 187 932 1,199 199 1,000
Total rooms 204,678 48,619 156,059 232,905 49,637 183,268 243,459 50,874 192,585
Occupancy rate (as a percentage) 90.3% 82.7% 92.7% 87.0% 82.1% 88.3% 89.4% 85.1% 90.5%
Average daily rate (in RMB) 174 162 177 167 161 168 173 163 175
RevPAR (in RMB) 157 134 164 145 132 149 154 139 159
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, 2012 September 30, 2013
------------------ ------------------
Group Motel 168 excluding Motel 168 Group Motel 168 excluding Motel 168
Total Hotels in operation: 1,465 322 1,143 1,465 322 1,143
Leased-and-operated hotels 718 170 548 719 171 548
Franchised-and-managed hotels 747 152 595 746 151 595
Total rooms 176,534 45,295 131,239 175,778 44,077 131,701
Occupancy rate (as a percentage) 92.7% 83.9% 95.8% 92.1% 86.5% 94.0%
Average daily rate (in RMB) 175 165 179 175 164 179
RevPAR (in RMB) 162 138 171 161 142 168
One Motel 168 Franchised-and-managed hotel was legally converted into Leased-and-operated hotels in 2012.
* "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 Home Inns & Hotels Management Inc.
