Home Inns Reports First Quarter 2012 Financial Results
Home Inns Reports First Quarter 2012 Financial Results
Revenue Increased 66% Year over Year to RMB 1.26 billion
Integration of Motel 168 Continued with Operational Improvements
SHANGHAI, May 10, 2012 - Home Inns & Hotels Management Inc. (NASDAQ: HMIN), a leading economy hotel chain in China,today announced its unaudited financial results for the first quarter ended March 31, 2012.
First Quarter of 2012 Financial Highlights
— Total revenues increased 66.0% year over year to RMB 1,255.7 million
(US$199.4 million). Excluding Motel 168 (acquired and fully consolidated
starting October 1, 2011) total revenue increased 22.7% year over year
to RMB 928.4 million.
— Loss from operations was RMB 36.9 million (US$5.9 million). Adjusted
income from operations was RMB 9.7 million (US$1.5 million), compared to
RMB 60.0 million in the same period of 2011.
— Net loss attributable to Home Inns’ shareholders was RMB 103.2 million
(US$16.4 million) which includes a net loss of RMB 53.2 million (US$8.4
million) from Motel 168, compared to a net income of RMB 32.5 million in
the first quarter of 2011.
— EBITDA (non-GAAP) was RMB 93.1 million (US$14.8 million), compared to
RMB 137.5 million in the same period of 2011. Excluding non-operating
items and one-time charges, adjusted EBITDA (non-GAAP) increased to RMB
165.9 million (US$26.3 million) from RMB 152.5 million in the first
quarter of 2011.
— Diluted losses per ADS for the first quarter of 2012 were RMB 2.28
(US$0.36); adjusted diluted losses per ADS (non-GAAP) for the first
quarter were RMB 0.54 (US$0.09).
“Despite seasonality and relatively lethargic market environment, our core mature hotels maintained stable performance during the past quarter,” said Mr. David Sun, Home Inns’ Chief Executive Officer. “Due to margin impact by new hotels opened in the late fourth quarter of 2011, higher pre-opening costs, near-term profitability dilution by Motel 168 and non-recurring acquisition-related charges, we experienced an overall net loss in the first quarter. This was, however, within our expectations and there were no surprises.”
“Based on what we are experiencing in current operations and the integration results we achieved so far, we remain optimistic about the full year’s outlook. As new hotels ramp up, Motel 168 further improves its operations and our control mechanisms continue to address rising costs, we are confident of the Company’s ability to generate profitable growth and sustained return for our shareholders.”
Home Inns completed its acquisition of 100% equity interest in Motel 168, and took control of Motel 168 effective on October 1, 2011. The Company has consolidated Motel 168’s operating and financial results since October 1, 2011. Home Inns presents certain separated financial data of Motel 168 in this earning release, for the purpose of providing more information to investors, and will continue to provide separated financial data of Motel 168 through the 2012 fiscal year.
Operational Highlights
— During the first quarter of 2012, Home Inns opened 59 new hotels,
including five new leased-and-operated hotels and 54 new
franchised-and-managed hotels (including six Motel 168 hotels).
Meanwhile Home Inns closed six hotels including one leased-and-operated
hotel and five franchised-and-managed hotels (including two Motel 168
hotels), mainly due to city rezoning, expiration and termination of
franchise agreements.
— As of March 31, 2012, Home Inns operated across 219 cities in China with
a total of 1,479 hotels, of which 702 were leased-and-operated hotels
(including three Yitel Hotels and 144 Motel 168 hotels) and 777 were
franchised-and-managed hotels (including one Yitel hotel and 167 Motel
168 hotels). The average number of guest rooms per hotel was 123.
— In addition, Home Inns had another 218 hotels contracted or under
construction as of March 31, 2012, of which, 72 were leased-and-operated
hotels (including five hotels under Motel 168 brand) and 146 were
franchised-and-managed hotels (including 21 hotels under Motel 168
brand).
— As of March 31, 2012, combining 2.7 million active non-corporate members
from Motel 168 brand, Home Inns had total of 7.9 million unique active
non-corporate members.
— The occupancy rate for all hotels in operation was 80.7% in the first
quarter of 2012. Excluding Motel 168, the occupancy rate was 84.4%,
compared with 85.1% in the same period in 2011 and 88.4% in the fourth
quarter of 2011. The decrease in occupancy rate both year over year and
sequentially was mainly due to relatively soft market conditions and, to
a lesser extent, seasonality. The occupancy rate for Motel 168 in the
first quarter of 2012 was 70.4%, decreased from 73.5% in the fourth
quarter of 2011 mainly due to seasonality.
— RevPAR, defined as revenue per available room, was RMB 132 in the first
quarter of 2012. Excluding Motel 168, RevPAR was RMB 139, compared with
RMB 140 in the same period of 2011 and RMB 141 in the fourth quarter of
2011. The slight year-over-year RevPAR decrease was attributed to a
lower occupancy rate described above while average daily rate were flat
year over year. The sequential decrease in RevPAR was primarily due to
seasonality. RevPAR for Motel 168 was RMB 111, decreased from RMB 113
in the fourth quarter of 2011 mainly driven by increased averaged daily
rate from RMB 154 to RMB 158 yet offset by decrease in occupancy rate
described above.
— Excluding Motel 168, RevPAR for Home Inns’ mature hotels that had been
in operation for at least 18 months was RMB 151 for the first quarter of
2012, increased slightly from RMB 149 for the same group of hotels in
the first quarter of 2011. The RevPAR growth at mature hotels was
attributed to a higher average daily rate.
First Quarter 2012 Financial Results
Home Inns’ total revenues for the first quarter of 2012 increased 66.0% year over year to RMB 1.26 billion (US$199.4 million), including revenues from Motel 168 of RMB 327.3 million (US$52.0 million). Excluding Motel 168, total revenues for the first quarter of 2012 were RMB 928.4 million (US$147.4 million), representing an increase of 22.7% year over year.
— Total revenues from leased-and-operated hotels for the first quarter of
2012 were RMB 1.13 billion (US$179.1 million), representing a 64.1%
increase year over year and a 4.5% decrease sequentially. Excluding
Motel 168, total revenues from leased-and-operated hotels for the first
quarter of 2012 were RMB 816.1 million (US$129.6 million), an increase
of 18.7% year over year and a decrease of 1.7% sequentially. Excluding
Motel 168, the year-over-year increases were mainly driven by a greater
number of hotels in operation and better RevPAR at mature hotels even
with a number of new hotels not yet making full revenue contribution.
The sequential decrease was mainly due to seasonality.
— Total revenues from franchised-and-managed hotels for the first quarter
of 2012 were RMB 127.9 million (US$20.3 million), representing an 84.6%
increase year over year and a 0.7% decrease sequentially. Excluding
Motel 168, total revenues from franchised-and-managed hotels for the
first quarter of 2012 were RMB 112.3 million (US$17.8 million), an
increase of 62.2% year over year and a decrease of 0.1% sequentially.
Excluding Motel 168, the year-over-year increases in revenues from
franchised-and-managed hotels for the current quarter were mainly driven
by a larger number of such hotels in operation, while the sequential
decrease was mainly due to seasonality.
Total operating costs and expenses for the first quarter of 2012 were RMB 1..22 billion (US$193.3 million). Excluding Motel 168, total operating costs and expenses for the first quarter of 2012 were RMB 850.8 million (US$135.1 million). Excluding Motel 168, operating costs and expenses excluding any share-based compensation expenses and acquisition expenses (non-GAAP) for the current quarter was RMB 828.7 million (US$131.6 million), representing 89.3% of total revenues, compared with 85.7% for the same quarter a year ago and 84.2% for the fourth quarter of 2011.
— Total leased-and-operated hotel costs for the first quarter of 2012 were
RMB 1.10 billion (US$174.2 million), including share-based compensation
expenses of RMB 2.0 million (US$0.3 million) and integration costs of
RMB 14.5 million (US$2.3 million), representing 97.3% of the
leased-and-operated hotel revenues. Excluding Motel 168, total
leased-and-operated hotel costs excluding any share-based compensation
expenses and acquisition expenses for the first quarter of 2012 were RMB
755.6 million (US$120.0 million), representing 92.6% of the
leased-and-operated hotel revenues compared to 86.2% for the same
quarter in 2011 and 85.3% for the fourth quarter of 2011. This
year-over-year increase was mainly driven by higher dilutive impact by
hotels in their ramp-up stage incurring full operating costs without
generating full revenue, increase in personnel costs and higher
pre-opening costs of RMB 19.5 million (US$3.1 million) this quarter than
RMB 14.3 million in the first quarter of 2011. The sequential increase
was mainly driven by seasonality.
— Personnel costs of franchised-and-managed hotels for the first quarter
of 2012 were RMB 22.6 million (US$3.6 million), including share-based
compensation expenses of RMB 2.2 million (US$0.3 million), representing
17.7% of franchised-and-managed hotel revenues. This compared to 14.8%
for the same quarter in 2011 and 15.6% for the fourth quarter of 2011.
Excluding Motel 168, personnel costs of franchised-and-managed hotels
excluding share-based compensation expenses for the first quarter of
2012 were RMB 16.8 million (US$2.7 million), representing 14.9% of
franchised-and-managed hotel revenues compared to that of 14.8% for the
first quarter of 2011.
— Sales and marketing expenses for the first quarter of 2012 were RMB 18.2
million (US$2.9 million), including share-based compensation expenses of
RMB 0.4 million (US$0.1 million), representing 1.4% of total revenues,
compared to RMB 10.0 million or 1.3% of total revenues in the same
period of 2011. Excluding Motel 168, sales and marketing expenses
excluding shared-based compensation expenses for the first quarter of
2012 were RMB 14.5 million (US$2.3 million), representing 1.6% of total
revenues. This year-over-year increase in sales and marketing expenses
resulted from higher spending on marketing programs.
— General and administrative expenses for the first quarter of 2012 were
RMB 80.0 million (US$12.7 million), including share-based compensation
expenses of RMB 17.6 million (US$2.8 million) and integration costs of
RMB 10.1 million (US$1.6 million). General and administrative expenses
excluding share-based compensation expenses and integration cost
(non-GAAP) were RMB 52.3 million (US$8.3 million), or 4.2% of the total
revenues, compared with 4.7% of the total revenues in the same period of
2011 and 4.7% in the fourth quarter of 2011. Excluding Motel 168,
general and administrative expenses excluding share-based compensation
expenses for the quarter were RMB 41.9 million (US$6.7 million), or 4.5%
of total revenues compared to 4.7% same period a year ago and 5.6% in
the previous quarter. The Company continues to benefit from economies
of scale.
The above resulted in a loss from operations for the first quarter of 2012 of RMB 36.9 million (US$5.9 million). Income from operations excluding share-based compensation expenses and integration cost (non-GAAP) for the first quarter of 2012 was RMB 9.7 million (US$1.5 million), or 0.8% of total revenues. Excluding Motel 168, income from operations for the first quarter of 2012 was RMB 21.1 million (US$3.4 million). Excluding Motel 168, income from operations excluding share-based compensation expenses (non-GAAP) for the first quarter of 2012 was RMB 43.2 million (US$6.9 million), or 4.7% of total revenues, compared to RMB 60.0 million or 7.9% of total revenues in the same period of 2011 and RMB 89.3 million or 9.5% of total revenues in the fourth quarter of 2011. The year-over-year decrease in income from operations was caused by market conditions not suitable for selling price increase which would offset cost inflations. It was also driven by less revenue contribution by hotels in ramp-up stage yet incurring full costs, and a higher level of pre-opening expenses. The sequential decrease in income from operations was mainly due to seasonality.
EBITDA (non-GAAP) for the first quarter of 2012 was RMB 93.1 million (US$14..8 million). Excluding any share-based compensation expenses, foreign exchange gain, loss from fair value change of convertible notes, integration cost and non-operating expenses, adjusted EBITDA (non-GAAP) was RMB 165.9 million (US$26.3 million), or 13.2% of total revenues. Integration costs refer to costs incurred by Motel 168 during its integration into the Company’s business. Excluding Motel 168, EBITDA (non-GAAP) for the first quarter of 2012 was RMB 105.7 million (US$16.8 million). Excluding Motel 168, adjusted EBITDA (non-GAAP) excluding any share-based compensation expenses, foreign exchange gain, loss from fair value change of convertible notes and non-operating expenses, was RMB 153.4 million (US$24.4 million), or 16.5% of total revenues, compared to RMB 152.5 million or 20.2% of total revenue in the same period in 2011.
Net loss attributable to Home Inns’ shareholders for the first quarter of 2012 was RMB 103.2 million (US$16.4 million). Adjusted net loss attributable to Home Inns’ shareholders (non-GAAP), which excludes any share-based compensation expenses, foreign exchange gain, loss from fair value change of convertible notes, integration cost, non-operating expenses and upfront fee amortization of term loan, was RMB 24.6 million (US$3.9 million) for the first quarter of 2012. Excluding Motel 168, net loss attributable to Home Inns’ shareholders for the first quarter of 2012 was RMB 50.0 million (US$7.9 million). Excluding Motel 168, adjusted net income attributable to Home Inns’ shareholders (non-GAAP) excluding any share-based compensation expenses, foreign exchange gain, loss from fair value change of convertible notes, non-operating expenses and amortization of upfront fee incurred for the term loan borrowing, was RMB 3.6 million (US$0.6 million), compared to that of RMB 47.5 million from the same period in 2011 and RMB 35.2 million for the fourth quarter of 2011.
The following data refers to the first quarter of 2012. Basic and diluted losses per share were both RMB 1.14 (US$0.18). Basic and diluted losses per ADS were both RMB 2.28 (US$0.36). Excluding any share-based compensation expenses, foreign exchange gain, loss from fair value change of convertible notes, integration cost, non-operating expenses and amortization of upfront fee of the term loan borrowing, adjusted basic and diluted losses per share (non-GAAP) were both RMB 0.27 (US$0.04). Adjusted basic and diluted losses per ADS (non-GAAP) were both RMB 0.54 (US$0.09). Outstanding convertible bonds issued in 2007, outstanding convertible notes issued in 2010 and stock options were excluded in the computation of diluted earnings per share due to their anti-dilutive effect for the first quarter of 2012..
Net operating cash flow for the first quarter of 2012 was RMB 30.8 million (US$4.9 million), compared to RMB 55.4 million from the first quarter of 2011. Capitalized expenditures for the first quarter of 2012 were RMB 170.3 million (US$27.0 million), while related cash paid for capital expenditures during the quarter was RMB 299.8 million (US$47.6 million).
As of March 31, 2012, Home Inns had cash and cash equivalents of RMB 1.51 billion (US$240.3 million). The outstanding balance of its convertible bonds (issued in 2007) was RMB 113.2 million (US$18.0 million) including principal and accrued interest. Outstanding balance of long-term financial liability (measured at fair value) arose from the convertible notes issued in December 2010 was RMB 1.01 billion (US$159.8 million). The balance of US Dollar-denominated 4-year term loan facility was RMB 1.51 billion (US$239.9 million).
This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2975 to US$1.00, the noon buying rate for March 30, 2012 set forth in the H.10 statistical release of the Federal Reserve Board.
Because of the lack of dilutive impact on net loss, basic and diluted losses per ADS are the same. Adjusted basic and diluted losses per ADS (non-GAAP) exclude foreign exchange gain, share-based compensation expenses, integration cost, loss from change in fair value of convertible notes, non-operating expenses and amortization of upfront fee of the term loan borrowing. Please refer to “Reconciliations of GAAP and Non-GAAP Results” at the end of this press release.
Outlook for Second Quarter 2012
Home Inns expects total revenues for the group in the second quarter of 2012 to be in the range of RMB 1,430 million to (US$227.1 million) to RMB 1,460 million (US$231.8 million).
Total revenues for Motel 168 brand in the second quarter of 2012 are expected to be in the range of RMB 390 million (US$61.9 million) to RMB 400 million (US$63.5 million).
Excluding Motel 168, total revenues in the second quarter of 2012 are expected to be in the range of RMB 1,040 million (US$165.1 million) to RMB 1,060 million (US$168.3 million).
This forecast reflects Home Inns’ current and preliminary view, which is subject to change. Our revenue and new hotel openings guidance for the full year 2012 remains unchanged.
Conference Call Information
Home Inns’ management will hold an earnings conference call at 9:00 PM on May 10, 2012 U.S. Eastern Daylight Time (9:00 AM on May 11, 2012 Beijing/Hong Kong Time).
Dial-in details for the earnings conference call are as follows:
China Mainland (toll free): 800.819.0121
Hong Kong (toll free): 800.930.346
Hong Kong: +852.2475.0994
U.S. (toll free): +1.866.519.4004
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 May 18, 2012 U.S. Eastern Daylight Time.
U.S. toll free: +1.866.214.5335
China toll free: 10.800.714.0386
Hong Kong toll free: 800.901.596
International: +61.2.8235.5000
Conference ID number: 71740461
Live and archived webcasts of this conference call will be available at http://english.homeinns.com.
Annual Report
Home Inns filed its Annual Report on Form 20-F for the year ended December 31, 2011 with the Securities and Exchange Commission on April 24, 2012. The Annual Report on Form 20-F can be accessed through the “SEC Filings” page on the Home Inns website at http://english.homeinns.com. Home Inns will provide a hard copy of its complete audited financial statements free of charge to its shareholders and ADS holders upon request. Requests should be directed to .(JavaScript must be enabled to view this email address) or Investor Relations Department, Home Inns & Hotels Management Inc., No.124 Caobao Road, Xuhui District, Shanghai 200235, People’s Republic of China.
About Home Inns
Home Inns is a leading economy hotel chain in China based on the number of hotels and hotel rooms, as well as the geographic coverage of the hotel chain. Since Home Inns commenced operations in 2002, it has become one of the best-known economy hotel brands in China. Home Inns offers 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’ ADSs, each of which represents two ordinary shares, trade on the NASDAQ Global Select Market under the symbol “HMIN.” For more information about Home Inns, 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 do we purport it 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’ unaudited consolidated financial results presented in accordance with U.S. GAAP, Home Inns uses the following non-GAAP measures: total operating costs and expenses excluding share-based compensation expenses, acquisition and integration costs, general and administrative expenses excluding share-based compensation expenses, acquisition and integration costs, income from operations excluding share-based compensation expenses, acquisition and integration costs, adjusted net income attributable to shareholders 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, withholding tax for profit distribution of previous periods, non-operating expenses and upfront fee amortization of term loan, 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, withholding tax for profit distribution of previous periods, non-operating expenses and upfront fee amortization of term loan, and 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. Any financial data referring to “Excluding Motel 168” are also non-GAAP financial measures. 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 believes that in conjunction with GAAP financial measures, these non-GAAP financial measures provide meaningful supplemental information regarding its performance, and both management and investors benefit from referring to these non-GAAP financial measures in assessing its 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’ 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’ 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’ 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’ business. In addition, Home Inns’ 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 does. Management compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. Home Inns 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, which is inconsequential.
The presentation of EBITDA and adjusted EBITDA should not be construed as an indication that Home Inns’ future results will be unaffected by other charges and gains Home Inns considers to be outside the ordinary course of its business.
Home Inns completed its acquisition of 100% equity interest in Motel 168, and took control of Motel 168 effective on October 1, 2011. Home Inns consolidated Motel 168’s operating and financial results since October 1, 2011. Home Inns presented certain separated financial data of Motel 168 in this earning release, for the purpose of providing more information to investors.. Home Inns will provide separated financial data of Motel 168 through the 2012 fiscal year.
For investor and media inquiries, please contact:
Calvin Lau
Home Inns & Hotels Management Inc.
Tel: + 86-21-3401-9898*2504
Email: .(JavaScript must be enabled to view this email address)
Cara O’Brien
FTI Consulting
Tel: +852-3768-4537
Email: .(JavaScript must be enabled to view this email address)
Home Inns & Hotels Management Inc.
Unaudited Condensed Consolidated Balance Sheet
December 31, 2011 March 31, 2012
—-
RMB ‘000 RMB ‘000 US$ ‘000
ASSETS
Current assets:
Cash and cash equivalents 1,786,038 1,511,793 240,062
Restricted cash 205,926 210,950 33,497
Accounts receivable, net 91,980 94,696 15,037
Receivables from related parties 6,379 6,628 1,052
Consumables 43,049 38,481 6,111
Prepayments and other current assets 137,887 116,302 18,468
Deferred tax assets 75,446 73,699 11,703
——— ——— ———
Total current assets 2,346,705 2,052,549 325,930
— —
Investment in a jointly controlled entity 8,301 7,799 1,238
Property and equipment, net 3,452,846 3,468,321 550,746
Goodwill 2,197,728 2,197,728 348,984
Intangible assets, net 1,174,452 1,165,085 185,008
Other assets 170,039 167,285 26,564
Non-current deferred tax assets 199,765 228,327 36,257
———
Total assets 9,549,836 9,287,094 1,474,727
========= ========= =========
LIABILITIES
Current liabilities:
Accounts payable 91,457 65,272 10,365
Payables to related parties 2,797 3,239 514
Short term loans 346,550 346,187 54,972
Finance lease liabilities 7,006 7,003 1,112
Salaries and welfare payable 178,032 105,550 16,761
Income tax payable 80,356 63,498 10,083
Other taxes payable 27,295 28,221 4,481
Deferred revenues 202,870 200,826 31,890
Convertible bonds 113,051 113,189 17,974
Other unpaid and accruals 154,498 177,013 28,108
Other payables 847,090 707,957 112,418
Deferred tax liability 38,313 48,482 7,699
——— ——— ——-
Total current liabilities 2,089,315 1,866,437 296,377
— —
Long term loans 1,165,666 1,164,446 184,906
Deferred rental 593,955 620,415 98,518
Deferred revenues 79,202 66,944 10,630
Finance lease liabilities 7,750 6,173 980
Deposits 63,472 73,155 11,617
Unfavorable lease liabilities 396,774 388,776 61,735
Financial liability 979,008 1,006,375 159,805
Deferred tax liabilities 294,728 292,580 46,460
———
Total liabilities 5,669,870 5,485,301 871,028
— —
Commitments and contingencies
Shareholders’ equity
Ordinary shares (US$0.005 par value; 200,000,000 shares 3,542 3,545 563
authorized, 90,659,882 and 90,751,272 shares issued
and outstanding as of December 31, 2011 and March 31
2012, respectively)
Additional paid-in capital 2,683,923 2,708,645 430,114
Statutory reserves 125,863 125,863 19,986
Retained earnings 1,051,976 948,805 150,664
—
Total Home Inns shareholders’ equity 3,865,304 3,786,858 601,327
— —
Noncontrolling interests 14,662 14,935 2,372
——— ——— ——-
Total shareholders’ equity 3,879,966 3,801,793 603,699
— —
Total liabilities and shareholders’ equity 9,549,836 9,287,094 1,474,727
========= ========= =========
Note 1: The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is
based on rate of US$1.00=RMB6.2975
on March 30, 2012, representing the certificated exchange rate published by the
Federal Reserve Board.
Home Inns & Hotels Management Inc.
Unaudited Condensed Consolidated Statement of Operations
Quarter Ended
———
March 31, 2011 December 31, 2011 March 31, 2012
—-
RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 US$ ‘000 RMB ‘000 RMB ‘000
Group Group Motel 168 excluding Group Group Motel 168 excluding
Motel 168 Motel 168
Revenues:
Leased-and-operated hotels 687,287 1,181,157 351,380 829,777 1,127,837 179,093 311,755 816,082
Franchised-and-managed hotels 69,263 128,743 16,243 112,500 127,864 20,304 15,523 112,341
——— ——— ——— ———
Total revenues 756,550 1,309,900 367,623 942,277 1,255,701 199,397 327,278 928,423
Less: Business tax and related
surcharges (48,164) (81,307) (21,258) (60,049) (76,976) (12,223) (19,627) (57,349)
Net revenues 708,386 1,228,593 346,365 882,228 1,178,725 187,174 307,651 871,074
— —
Operating costs and expenses:
Leased-and-operated hotel costs -
Rents and utilities (268,741) (452,605) (160,964) (291,641) (492,314) (78,176) (157,632) (334,682)
Personnel costs (123,411) (224,501) (65,606) (158,895) (254,558) (40,422) (77,629) (176,929)
Depreciation and amortization (85,614) (139,023) (46,012) (93,011) (149,893) (23,802) (44,804) (105,089)
Consumables, food and beverage (42,440) (104,687) (40,518) (64,169) (67,743) (10,757) (16,207) (51,536)
Others (72,542) (145,826) (43,783) (102,043) (132,354) (21,017) (42,987) (89,367)
- - -
Total leased-and-operated hotel
costs (592,748) (1,066,642) (356,883) (709,759) (1,096,862) (174,174) (339,259) (757,603)
Personnel costs of Franchised-and-
managed hotels (10,262) (20,083) (2,335) (17,748) (22,593) (3,588) (3,676) (18,917)
Sales and marketing expenses (9,954) (19,574) (3,557) (16,017) (18,175) (2,886) (3,350) (14,825)
General and administrative expenses (63,952) (89,088) (13,858) (75,230) (79,972) (12,699) (20,484) (59,488)
Total operating costs and expenses (676,916) (1,195,387) (376,633) (818,754) (1,217,602) (193,347) (366,769) (850,833)
- —- - - —- - - -
Other income - - - - 1,947 309 1,083 864
Income/(loss) from operations 31,470 33,206 (30,268) 63,474 (36,930) (5,864) (58,035) 21,105
——— ——— ——— ——— ———
Interest income 5,084 11,497 1,773 9,724 7,062 1,121 318 6,744
Interest expenses (6,264) (28,313) (630) (27,683) (30,922) (4,910) (229) (30,693)
Loss from equity investment - (853) (853) - (502) (80) (502)
Gain/(loss) on change in fair value
of convertible notes 15,086 35,966 - 35,966 (24,800) (3,938) - (24,800)
Non-operating income 5,610 5,748 3,780 1,968 3,439 547 290 3,149
Non-operating expenses - (7,315) - (7,315) (3,585) (569) - (3,585)
Foreign exchange (loss)/gain, net (1,568) 18,495 548 17,947 2,254 358 (526) 2,780
——— ——— —- ——— ——- —- —— ——-
Income/(loss) before income tax
expenses and noncontrolling
interests 49,418 68,431 (25,650) 94,081 (83,984) (13,335) (58,684) (25,300)
——— ——— ———
Income tax (expense)/benefit (15,688) (33,815) 8,134 (41,949) (18,917) (3,004) 5,483 (24,400)
Net income/(loss) 33,730 34,616 (17,516) 52,132 (102,901) (16,339) (53,201) (49,700)
——— ——— ——— -
Less:Net income attributable to
noncontrolling interests (1,211) (1,957) - (1,957) (273) (43) - (273)
——— ——— —- ——— —— —- —- ——
Net income/(loss) attributable to
Home Inns’ shareholders 32,519 32,659 (17,516) 50,175 (103,174) (16,382) (53,201) (49,973)
====== ====== ======= ====== ======== ======= ======= =======
Earnings per share
- Basic 0.40 0.36 0.55 (1.14) (0.18) (0.55)
==== ==== ==== ===== ===== =====
- Diluted 0.06 (0.06) 0.11 (1.14) (0.18) (0.55)
==== ===== ==== ===== ===== =====
Weighted average ordinary shares
outstanding
- Basic 81,811 90,596 90,596 90,666 90,666 90,666
====== ====== ====== ====== ====== ======
- Diluted 91,413 99,672 99,672 90,666 90,666 90,666
====== ====== ====== ====== ====== ======
Share-based compensation expense was
included in the statement of
operations as follows:
Leased-and-operated hotel costs -
Personnel costs - 1,637 1,637 1,955 310 1,955
Personnel costs of Franchised-and-
managed hotels - 1,709 1,709 2,164 344 2,164
Sales and marketing expenses - 317 317 374 59 374
General and administrative expenses 16,991 15,831 15,831 17,619 2,798 17,619
Note 1: The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on rate of US$1.00=RMB6.2975
on March 30, 2012, representing the certificated exchange rate published by the Federal Reserve Board.
Note 2: The Company started consolidation of the operating results of Motel 168 effective October 1,2011, therefore the acquisition had no impact on the first quarter of 2011.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results
Quarter Ended March 31, 2012 Quarter Ended March 31, 2012(excluding Motel 168)
———
GAAP %of Total Share-based Acquisition Integration %of Total Non-GAAP Result %of Total GAAP %of Total Share-based Acquisition Integration %of Total Non-GAAP Result %of Total
Result Revenue Compensation expenses cost Revenue Revenue Result Revenue Compensation expenses cost Revenue Revenue
——— ——- - —— ——— ——- - ——
RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (1,096,862) 87.4% 1,955 - 14,463 1.3% (1,080,444) 86.0% (757,603) 81.6% 1,955 - - 0.2% (755,648) 81.4%
Personnel costs of Franchised-
and-managed hotels (22,593) 1.8% 2,164 - - 0.2% (20,429) 1.6% (18,917) 2.0% 2,164 - - 0.2% (16,753) 1.8%
Sales and marketing expenses (18,175) 1.4% 374 - - 0.0% (17,801) 1.4% (14,825) 1.6% 374 - - 0.0% (14,451) 1.6%
General and administrative
expenses (79,972) 6.4% 17,619 - 10,090 2.2% (52,263) 4.2% (59,488) 6.4% 17,619 - - 1.9% (41,869) 4.5%
——— —- ——— ——— —- —-
Total operating costs and
expenses (1,217,602) 97.0% 22,112 - 24,553 3.7% (1,170,937) 93.2% (850,833) 91.6% 22,112 - - 2.4% (828,721) 89.3%
========== ====== === ====== ========== ======== ====== === === ========
(Loss)/income from operations (36,930) 2.9% 22,112 - 24,553 3.7% 9,735 0.8% 21,105 2.3% 22,112 - - 2.4% 43,217 4.7%
======= ====== === ====== ===== ====== ====== === === ======
Quarter Ended March 31, 2012 Quarter Ended March 31, 2012(excluding Motel 168)
———
GAAP %of Total Share-based Acquisition Integration %of Total Non-GAAP Result %of Total GAAP %of Total Share-based Acquisition Integration %of Total Non-GAAP Result %of Total
Result Revenue Compensation expenses cost Revenue Revenue Result Revenue Compensation expenses cost Revenue Revenue
——— ——- - —— ——— ——- - ——
US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Leased-and-operated hotel costs (174,174) 87.4% 310 - 2,297 1.3% (171,567) 86.0% (120,302) 81.6% 310 - - 0.2% (119,992) 81.4%
Personnel costs of Franchised-
and-managed hotels (3,588) 1.8% 344 - - 0.2% (3,244) 1.6% (3,004) 2.0% 344 - - 0.2% (2,660) 1.8%
Sales and marketing expenses (2,886) 1.4% 59 - - 0.0% (2,827) 1.4% (2,354) 1.6% 59 - - 0.0% (2,295) 1.6%
General and administrative
expenses (12,699) 6.4% 2,798 - 1,602 2.2% (8,299) 4.2% (9,446) 6.4% 2,798 - - 1.9% (6,648) 4.5%