SHANGHAI, Nov. 12 /Xinhua-PRNewswire/ -- Home Inns & Hotels Management Inc. (Nasdaq: HMIN), a leading economy hotel chain in China, today announced its unaudited financial results for the quarter ended September 30th, 2008.
Third Quarter 2008 Financial Highlights
-- Total revenues for the quarter increased 98.0% year-over-year to RMB
527.3 million (US$ 77.7 million). This includes revenues of RMB 39.0
million (US$ 5.7 million) from the Top Star hotel chain which we
acquired and took control of in November of 2007.
-- EBITDA (non-GAAP) was RMB 93.5 million (US$ 13.8 million). Excluding
foreign exchange losses and share-based compensation expenses, adjusted
EBITDA (non-GAAP) was RMB 102.5 million (US$ 15.1 million), up 53.9%
year-over-year. Excluding the impact of Top Star, foreign exchange
losses and share-based compensation expenses, adjusted EBITDA (non-GAAP)
was RMB 101.4 million (US$ 14.9 million), up 52.3% year-over-year.
-- Income from operations was RMB 41.8 million (US$ 6.2 million). Income
from operations excluding share-based compensation expenses was RMB
48.4 million (US$ 7.1 million). Excluding the impact of Top Star,
income from operations excluding share-based compensation expenses was
RMB 53.4 million (US$ 7.9 million), an increase of 21.9% year-over-year.
-- Net income was RMB 29.5 million (US$ 4.3 million). Adjusted net income
(non-GAAP) was RMB 38.4 million (US$ 5.7 million), excluding share-
based compensation expenses of RMB 6.6 million (US$ 1.0 million) and
foreign exchange losses of RMB 2.4 million (US$ 0.3 million).
Excluding the impact of Top Star, foreign exchange losses and share-
based compensation expenses, adjusted net income (non-GAAP) was RMB
42.8 million (US$ 6.3 million), up 7.5% year-over-year.
-- Diluted earnings per ADS was RMB 0.79 (US$ 0.12). Non-GAAP adjusted
diluted earnings per ADS was RMB 1.02 (US$ 0.15). Excluding the impact
of Top Star, diluted earnings per ADS was RMB 0.90 (US$ 0.13), while
non-GAAP adjusted diluted earnings per ADS was RMB 1.13 (US$ 0.17).
Reconciliation between the adjusted earnings per ADS versus US GAAP
figures is included at the end of this press release.
"I am pleased that during our third quarter, in addition to achieving robust year-on-year growth in revenues, we also improved margins from previous quarters and resumed year-over-year growth in income from operations," remarked Mr. David Sun, Home Inns' Chief Executive Officer. "Our business is stable and healthy, and our expansion plan remains on schedule. We continue to be committed to growing our business profitably."
Operational Highlights
-- Hotel expansion accelerated with 48 net new hotels opened during the
quarter, consisting of a net of 20 leased-and-operated hotels and 28
franchised-and-managed hotels, compared with 30 net new hotels opened
in the third quarter of 2007, which consisted of a net of 26 leased-
and-operated hotels and four franchised-and-managed hotels. Home Inns
opened a net total of 148 hotels in the first three quarters of 2008,
or 74.0% of its targeted total new opening number for this year. In
comparison, only 50.8% of the new hotels scheduled for completion in
2007 were completed in the first three quarters of that year. As of
September 30, 2008, the Home Inns hotel chain included 414 hotels in
operation with an average of 120 rooms per hotel in operation, covering
83 cities in China and consisting of 291 leased-and-operated hotels and
123 franchised-and-managed hotels.
-- As of September 30, 2008, Home Inns had an additional 131 hotels
contracted, which consisted of 79 leased-and-operated hotels and 52
franchised-and-managed hotels. As of September 30, 2007, Home Inns had
96 hotels contracted, which consisted of 69 leased-and-operated hotels
and 27 franchised-and-managed hotels.
-- The occupancy rate for the Home Inns hotel chain was 85.9% in the third
quarter of 2008 and 95.4% in the same period of 2007. Occupancy rates
for the third quarter of 2008 were negatively impacted by the higher
proportion of hotels that had been opened for less than six months,
especially those in newly entered cities, as well as lower occupancy
rates at our Top Star hotels. Excluding Top Star, the occupancy rate
was 87.7% in the third quarter of 2008.
-- RevPAR, defined as revenue per available room, was RMB 155 in the third
quarter of 2008. RevPAR excluding Top Star was RMB 160 in the third
quarter of 2008, compared with RMB 174 in the same period in 2007.
RevPAR was negatively impacted by the same factors that negatively
impacted occupancy rate, as discussed above.
-- RevPAR for Home Inns' hotels which had been in operation for at least
18 months as of July 1, 2008 was RMB 193 in the third quarter of 2008,
compared to RevPAR of RMB 189 during the same period of 2007. The
increase was mainly due to a higher RevPAR of hotels in Beijing during
the Olympics, offsetting a reduction in overall travel activities
during the same period.
-- For the third quarter of 2008, our Top Star hotels had revenues of RMB
39.0 million, a loss from operations of RMB 4.9 million, and EBITDA
(non-GAAP) of RMB 1.0 million. Top Star's delayed ramp-up schedule is
mainly due to the impact of the Sichuan earthquake in May of this year
as well as the reduced travel activities during the Olympics. For this
October, Top Star's RevPAR recovered to RMB 106, exceeding its pre-
earthquake level.
"We again successfully executed on our expansion plan by opening 48 net new hotels during the quarter, meaning we have completed 148 of the 200 new hotels targeted for 2008," said Mr. Sun. "While these new hotels, especially those in new markets, had an anticipated effect of depressing some metrics, we are pleased that our mature hotels continue to provide stable revenues and income, further justifying the sensible investments we are currently making across China. Although we have not yet seen any significant impact on our business from the recent global financial turmoil, we are cautious at this time of uncertainty and have taken steps to ensure that our corporate plan remains flexible, allowing us to be well-positioned for continued growth and profitability."
Third Quarter 2008 Financial Results
For the third quarter of 2008, Home Inns had total revenues of RMB 527.3 million (US$ 77.7 million), representing a 98.0% increase year-over-year and a 17.7% increase sequentially. Excluding the impact of Top Star, total revenues were RMB 488.3 million (US$ 71.9 million), representing an 83.3% increase year-over-year and a 19.2% increase sequentially.
Total revenues from leased-and-operated hotels for the third quarter of 2008 were RMB 499.4 million (US$ 73.6 million), representing a 96.5% increase year-over-year and a 17.6% increase sequentially. Excluding the impact of Top Star, total revenues from leased-and-operated hotels for the third quarter of 2008 were RMB 460.4 million (US$ 67.8 million), representing an 81.1% increase year-over-year and a 19.2% increase sequentially. Home Inns opened a net of 20 new leased-and-operated hotels during the third quarter of 2008 to reach a total of 291 leased-and-operated hotels, including 25 Top Star hotels. Home Inns opened 26 new lease-and-operated hotels during the same period a year ago and ended the third quarter 2007 with 143 leased-and-operated hotels.
Total revenues from franchised-and-managed hotels for the third quarter of 2008 were RMB 27.9 million (US$ 4.1 million), representing a 129.1% increase year-over-year and a 18.6% increase sequentially. Home Inns opened 28 new franchised-and-managed hotels during the third quarter of 2008 to reach a total of 123 such hotels. Home Inns opened four net new franchised-and-managed hotels during the same period a year ago and ended the third quarter 2007 with 58 franchised-and-managed hotels.
The overall occupancy rate for the entire Home Inns hotel chain was 85.9% in the third quarter of 2008. Excluding the impact of Top Star, the occupancy rate for the Home Inns hotel chain was 87.7% for the quarter, compared with 95.4% in the same period in 2007 and 90.8% in the previous quarter. The decline was caused primarily by the impact of the higher proportion of new hotels, especially those in newly entered cities, as well as the reduced travel activities during the Olympics as we have discussed earlier.
Average daily rate (ADR) for the quarter was RMB 180. Excluding the impact of Top Star, ADR for the Home Inns hotel chain was RMB 183 for the quarter, compared with RMB 182 in the same period in 2007 and RMB 176 in the previous quarter. The higher ADR for the quarter was mainly due to a higher price for those hotels in Beijing during the Olympics.
RevPAR for the quarter was RMB 155. Excluding the impact of Top Star, RevPAR for the quarter was RMB 160, compared with RevPAR of RMB 174 in the same period in 2007 and RMB 160 in the previous quarter. RevPAR was negatively impacted by the same factors that negatively impacted occupancy rate, as discussed above.
Total operating costs and expenses for the third quarter of 2008 were RMB 454.3 million (US$ 66.9 million). Total operating costs and expenses excluding share-based compensation expenses (non-GAAP) for the quarter were RMB 447.8 million (US$ 65.9 million), or 84.9% of total revenues. Excluding the impact of Top Star, total operating costs and expenses for the quarter were RMB 412.4 million (US$ 60.7 million). Excluding the impact of Top Star, total operating costs and expenses excluding share-based compensation expenses (non-GAAP) for the quarter were RMB 405.8 million (US$ 59.8 million), or 83.1% of total revenues, compared to 77.7% in the same quarter 2007 and 84.6 % in the previous quarter.
Total leased-and-operated hotel costs for the third quarter of 2008 were RMB 406.3 million (US$ 59.8 million), representing 81.4 % of the leased-and-operated hotel revenues. Excluding the impact of Top Star, total leased-and-operated hotel costs were RMB 365.3 million (US$ 53.8 million), representing 79.3% of the leased-and-operated hotel revenues. Total leased-and-operated hotel costs represented 71.2% of the leased-and-operated hotel revenues for the same quarter in 2007 and 80.6% for the previous quarter excluding Top Star. Compared to a year ago, the large number of hotels under construction as well as longer duration these hotels remained under construction during the quarter led to higher rents and utilities and caused personnel costs and certain other costs to be a higher percentage of leased-and-operated hotel revenue for the quarter. Typically, once construction starts on a site, we begin to incur these costs, though we will not see revenue until the hotel is in operation. The costs associated with hotels under construction were RMB 30.3 million (US$ 4.5 million) in the third quarter of 2008, representing 6.6% of leased-and-operated hotel revenue without Top Star. These costs were RMB 9.7 million in the third quarter of 2007, representing 3.8% of leased-and-operated hotel revenue.
Sales and marketing expenses for the third quarter were RMB 7.4 million (US$ 1.1 million), an increase of 17.5% year-over-year and an increase of 35.8% sequentially. Excluding the impact of Top Star, sales and marketing expenses were RMB 6.8 million (US$ 1.0 million), an increase of 7.0% year-over-year and an increase of 40.7% sequentially. The increase was due to newly implemented advertising activities during the quarter.
General and administrative expenses for the third quarter were RMB 40.6 million (US$ 6.0 million). General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB 34.0 million (US$ 5.0 million), or 6.5% of the total revenues. Excluding the impact of Top Star, general and administrative expenses were RMB 40.4 million (US$ 5.9 million). General and administrative expenses excluding Top Star and share-based compensation expenses (non-GAAP) were RMB 33.8 million (US$ 5.0 million), or 6.9% of the total revenues, compared with 7.4% of the total revenues in the same period of 2007 and 7.4% in the previous quarter.
Income from operations for the quarter was RMB 41.8 million (US$ 6.2 million). Income from operations excluding share-based compensation expenses (non-GAAP) was RMB 48.4 million (US$ 7.1 million). Excluding the impact of Top Star, income from operations for the quarter was RMB 46.8 million (US$ 6.9 million), and income from operations excluding share-based compensation expenses (non-GAAP) was RMB 53.4 million (US$ 7.9 million) or 10.9% of total revenues, compared to 16.4% in the same period of 2007 and 9.5% in the previous quarter.
EBITDA (non-GAAP) for the third quarter of 2008 was RMB 93.5 million (US$ 13.8 million). Excluding foreign exchange losses and share-based compensation expenses, adjusted EBITDA (non-GAAP) was RMB 102.5 million (US$ 15.1 million), an increase of 53.9% year-over-year and up 24.7% from the previous quarter. Excluding the impact of Top Star, EBITDA (non-GAAP) for the quarter was RMB 92.5 million (US$ 13.6 million). Excluding the impact of Top Star, foreign exchange losses and share-based compensation expenses, adjusted EBITDA (non-GAAP) was RMB 101.4 million (US$ 14.9 million), up 52.3% year-over-year and up 28.9% from the previous quarter.
Excluding foreign exchange losses and share-based compensation expenses, adjusted net income (non-GAAP) for the third quarter of 2008 was RMB 38.4 million (US$ 5.7 million), a decrease of 3.4% year-over-year. GAAP net income for the quarter was RMB 29.5 million (US$ 4.3 million). Excluding the impact of Top Star, foreign exchange losses and share-based compensation expenses, adjusted net income (non-GAAP) was RMB 42.8 million (US$ 6.3 million), up 7.5% year-over-year. Excluding Top Star, GAAP net income for the quarter was RMB 33.8 million (US$ 5.0 million).
For the third quarter of 2008, excluding foreign exchange losses and share-based compensation expenses, adjusted basic and diluted earnings per share (non-GAAP) were RMB 0.54 (US$ 0.08) and RMB 0.51 (US$ 0.08), respectively. Adjusted basic and diluted earnings per ADS (non-GAAP) were RMB 1.08 (US$ 0.16) and RMB 1.02 (US$ 0.15), respectively. GAAP basic and diluted earnings per share were RMB 0.42 (US$ 0.06) and RMB 0.40 (US$ 0.06), respectively. GAAP basic and diluted earnings per ADS were RMB 0.83 (US$ 0.12) and RMB 0.79 (US$ 0.12) respectively. For the third quarter of 2008, excluding the impact of Top Star, foreign exchange losses and share-based compensation expenses, adjusted basic and diluted earnings per share (non-GAAP) were RMB 0.60 (US$ 0.09) and RMB 0.57 (US$ 0.08), respectively, and adjusted basic and diluted earnings per ADS (non-GAAP) were RMB 1.21 (US$ 0.18) and RMB 1.13 (US$ 0.17), respectively.
Net operating cash flow for the third quarter of 2008 was RMB 127.9 million (US$ 18.8 million). Capital expenditures for the quarter were RMB 260.4 million (US$ 38.4 million).
As of September 30, 2008, Home Inns had cash and cash equivalents of RMB 947.9 million (US$ 139.6 million). We had convertible bonds outstanding of RMB 1.1 billion (US$ 164.1 million) including principal and accrued interest. These are zero coupon bonds with a maturity on or around December 10, 2012, with a yield of 0.50% per annum. The bonds can be converted into a total of 5,650,780 Home Inns' ordinary shares at the option of the holders. The bonds have a non-call and non-put period of three years from the issuance date.
"Overall, our business is healthy and we are in a secure financial position. We have the necessary capital on hand for our business plan and a blueprint to reach a stage of self-funded growth. We are not facing any near-term refinancing needs, and we are mindful of the uncertainty in the global business and economic environment," remarked Ms. May Wu, Home Inns' Chief Financial Officer. "We will be flexible in our corporate planning so that we can respond in a timely manner to any changes and position ourselves for the growth and profitability of our business in the long run, about which we remain confident," continued Ms. Wu.
Outlook for Fourth Quarter 2008
Home Inns continues to expect to open a total of approximately 200 new hotels in 2008. Home Inns expects its total revenues in the fourth quarter of 2008 to be in the range from RMB 535 million (US$ 78.8 million) to RMB 555 million (US$ 81.7 million). This forecast reflects Home Inns' current and preliminary view, which is subject to change.
Conference Call Information
Home Inns' management will hold an earnings conference call at 8 PM on November 11, 2008 U.S. Eastern Standard Time (9 AM on November 12, 2008 Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows:
China Mainland (toll free): 10.800.130.0399
Hong Kong: +852.3002.1672
U.S (toll free): +1.888.396.2298
U.S. and International: +1.617.847.8708
Pass code for all regions: Home Inns
A replay of the conference call may be accessed by phone at the following number until 10 PM on December 11, 2008 U.S. Eastern Standard Time.
US toll free: +1.888.286.8010
International: +1.617.801.6888
Passcode: 12904234
Additionally, a live and archived webcast of this conference call will be available at http://english.homeinns.com .
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' ADS's, each of which represents two ordinary shares, are currently trading on the NASDAQ Global 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. Among other things, the outlook for the fourth quarter of 2008 and quotations from management in this announcement, as well as Home Inns' strategic and operational plans, contain forward-looking statements. Home Inns may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to first parties. Statements that are not historical facts, including statements about Home Inns' beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our anticipated growth strategies; our future business development, results of operations and financial condition; expected changes in our revenues and certain cost or expense items; our ability to attract customers and leverage our brand; trends and competition in the lodging industry; our ability to hire, train and retain qualified managerial and other employees; our ability to develop new hotels at desirable locations in a timely and cost-effective manner; the expected growth of the Chinese economy hotel market; and Chinese governmental policies relating to private managers and operators of hotels and applicable tax rates.
Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. Home Inns does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of November 11, 2008, and Home Inns undertakes no duty to update such information, except as required under applicable law.
Non-GAAP Financial Measures
To supplement Home Inns' un-audited consolidated financial results presented in accordance with U.S. GAAP, Home Inns uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC: total operating expenses excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, income from operations excluding share-based expenses, adjusted net income excluding foreign exchange losses and share-based compensation, adjusted basic and diluted earnings and ADS per share excluding foreign exchange losses and share-based compensation, EBITDA and adjusted EBITDA excluding foreign exchange losses and share-based compensation. 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 release.
Home Inns believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective and by excluding foreign exchange losses which may not be indicative of its operating performance. Home Inns believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Home Inns' historical performance and liquidity. Home Inns computes its non-GAAP financial measures using the same consistent method from quarter to quarter. Home Inns believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in our business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
Home Inns' management also believes that EBITDA, defined as earnings before interest, income tax expense, depreciation and amortization, is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions and income taxes. In addition, Home Inns' management believes that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of our financial performance. Given the significant investments that Home Inns has made in property, plant and equipment, depreciation and amortization expense comprises a meaningful portion of our cost structure. Home Inns' management believes that EBITDA will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. The presentation of EBITDA should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business.
The use of EBITDA and adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets, income tax expense, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Further, foreign exchange losses and share-based compensation expenses have been and will be incurred and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our financial results. Additionally, EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. Home Inns compensates for these limitations by providing the relevant disclosure of our depreciation and amortization, interest expense and interest income, income tax expense, capital expenditures and other relevant items both in our reconciliations to the U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance. The term EBITDA or adjusted EBITDA is not defined under U.S. GAAP, and EBITDA or adjusted EBITDA is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider this data in isolation or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our EBITDA and adjusted EDITDA 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 we do.
Reconciliations of Home Inns' non-GAAP financial measures, including EBITDA and adjusted EBITDA, to consolidated statement of operations information are included at the end of this press release.
Home Inns & Hotels Management Inc.
Consolidated Balance Sheet Information
December 31, 2007 September 30, 2008
RMB '000 RMB '000 US$ '000
(audited) (unaudited)(unaudited)
ASSETS
Current assets:
Cash and cash equivalents 1,562,600 947,946 139,611
Restricted cash 173,849 -- --
Accounts receivable 16,913 29,920 4,407
Receivables from related parties 1,372 882 130
Consumables 18,992 25,499 3,755
Prepayments and other current assets 61,927 53,166 7,829
Deferred tax assets, current 16,574 30,907 4,552
Total current assets 1,852,227 1,088,320 160,284
Property and equipment, net 1,147,682 1,756,821 258,740
Goodwill 397,778 390,882 57,568
Intangible assets, net 46,739 45,775 6,742
Other assets 68,088 49,558 7,299
Deferred tax assets, non-current 49,024 76,229 11,227
Total assets 3,561,538 3,407,585 501,860
LIABILITIES
Current liabilities:
Accounts payable 13,007 22,359 3,293
Payables to related parties 6,651 5,881 866
Short-term borrowings 269,000 -- --
Salaries and welfare payable 48,260 69,905 10,295
Income tax payable 43,083 44,670 6,579
Other taxes payable 8,901 12,263 1,806
Deferred revenues 23,807 37,086 5,462
Provisions for customer reward
program 5,439 8,406 1,238
Other unpaid and accruals 36,570 51,252 7,548
Other payables 350,204 370,265 54,532
Total current liabilities 804,922 622,087 91,619
Deferred rental 94,226 121,714 17,926
Deferred revenues, non-current 14,031 17,317 2,550
Long-term loan 18,036 -- --
Unfavorable lease liability 19,894 16,223 2,389
Convertible bond 1,110,308 1,114,521 164,144
Deferred tax liability, non-current 13,637 15,158 2,232
Total liabilities 2,075,054 1,907,020 280,860
Minority interest 11,087 18,140 2,672
Commitments and contingencies
Shareholders' equity
Ordinary shares (US$0.005 par value;
177,075,114 and 200,000,000 shares
authorized, 70,487,385 and
70,972,396 shares issued and
outstanding as of December 31, 2007
and September 30, 2008, respectively) 2,874 2,891 426
Additional paid-in capital 1,362,942 1,383,317 203,732
Statutory reserves 41,333 41,333 6,087
Retained earnings 68,248 54,884 8,083
Total shareholders' equity 1,475,397 1,482,425 218,328
Total liabilities and shareholders'
equity 3,561,538 3,407,585 501,860
Note 1: The conversion of Renminbi (RMB) into United States dollars (US$)
is based on the noon buying rate of US$1.00=RMB6.7899 on September
30, 2008 in The City of New York for cable transfers of RMB as
certified for customs purpose by Federal Reserve Bank of New York.
Home Inns & Hotels Management Inc.
Consolidated Statement of Operations Information
Quarter Ended
September
30, 2007 June 30, 2008
RMB '000 RMB '000 US$ '000 RMB '000 RMB '000
(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
Top Star excluding
Top Star
Revenues:
Leased-and
-operated
hotels 254,182 424,569 61,899 38,408 386,161
Franchised-
and-managed
hotels 12,179 23,521 3,429 -- 23,521
Total revenues 266,361 448,090 65,328 38,408 409,682
Less: Business
tax and
related
surcharges (15,618) (26,359) (3,843) (2,076) (24,283)
Net revenues 250,743 421,731 61,485 36,332 385,399
Operating costs
and expenses:
Leased-and
-operated
hotel costs -
Rents and
utilities (73,729) (149,429) (21,786) (16,504) (132,925)
Personnel
costs* (39,683) (82,175) (11,980) (7,522) (74,653)
Depreciation
and
amortization (20,827) (43,961) (6,409) (5,532) (38,429)
Consumables,
food and
beverage (21,259) (31,851) (4,644) (1,860) (29,991)
Others (25,442) (41,274) (6,017) (6,082) (35,192)
Total leased
-and-operated
hotel costs (180,940) (348,690) (50,836) (37,500) (311,190)
Sales and
marketing
expenses (6,306) (5,454) (795) (655) (4,799)
General and
administrative
expenses* (24,001) (36,307) (5,293) (461) (35,846)
Total operating
costs and
expenses (211,248) (390,451) (56,924) (38,616) (351,835)
Income from
operations 39,495 31,280 4,561 (2,284) 33,564
Interest income 8,610 5,935 865 40 5,894
Interest expense (1,274) (7,435) (1,084) (88) (7,347)
Other non-operating
income 2,315 1,666 243 231 1,435
Foreign exchange
gain or loss, net (10,238) (13,742) (2,003) 900 (14,642)
Income before income
tax expense, minority
interests and share
of income of
affiliated companies 38,908 17,704 2,582 (1,201) 18,905
Income tax expense (12,518) (8,954) (1,305) -- (8,954)
Minority interests (1,122) (1,287) (188) -- (1,287)
Net income 25,267 7,463 1,089 (1,201) 8,664
Amount allocated
to participating
preference
shareholders -- -- -- -- --
Net income available
to ordinary
shareholders 25,267 7,463 1,089 (1,201) 8,664
Earnings per share
- Basic 0.36 0.11 0.02 0.12
- Diluted 0.35 0.10 0.01 0.12
Weighted average
ordinary shares
outstanding
- Basic 69,294 70,821 70,821 70,821
- Diluted 72,166 72,743 72,743 72,743
* Share-based
compensation
expense was
included in
the statement
of operations
as follows:
Leased-and-
operated hotel
costs -
Personnel costs 3 3 -- 3
General and
administrative
expenses 4,270 5,432 792 5,432
Quarter Ended
September 30, 2008
RMB '000 US$ '000 RMB '000 RMB '000
(unaudited)(unaudited)(unaudited)(unaudited)
Top Star excluding
Top Star
Revenues:
Leased-and-operated
hotels 499,409 73,552 39,023 460,386
Franchised-and-managed
hotels 27,907 4,110 -- 27,907
Total revenues 527,316 77,662 39,023 488,293
Less: Business tax and
related surcharges (31,153) (4,588) (2,035) (29,119)
Net revenues 496,163 73,074 36,988 459,175
Operating costs and expenses:
Leased-and-operated hotel
costs -
Rents and utilities (170,872) (25,166) (17,826) (153,046)
Personnel costs* (93,609) (13,787) (7,830) (85,779)
Depreciation and
amortization (50,136) (7,384) (5,451) (44,685)
Consumables, food and
beverage (41,818) (6,159) (3,961) (37,857)
Others (49,869) (7,345) (5,966) (43,903)
Total leased-and-operated
hotel costs (406,305) (59,841) (41,035) (365,270)
Sales and marketing
expenses (7,407) (1,091) (657) (6,750)
General and administrative
expenses* (40,631) (5,984) (243) (40,388)
Total operating costs and
expenses (454,342) (66,916) (41,935) (412,407)
Income from operations 41,821 6,158 (4,947) 46,768
Interest income 3,597 530 40 3,557
Interest expense (5,800) (854) -- (5,800)
Other non-operating income 3,123 460 540 2,584
Foreign exchange gain or
loss, net (2,360) (348) (1) (2,359)
Income before income tax expense,
minority interests and share of
income of affiliated companies 40,381 5,946 (4,369) 44,750
Income tax expense (9,785) (1,441) -- (9,785)
Minority interests (1,134) (167) -- (1,134)
Net income 29,463 4,338 (4,369) 33,832
Amount allocated to participating
preference shareholders -- -- -- --
Net income available to ordinary
shareholders 29,463 4,338 (4,369) 33,832
Earnings per share
- Basic 0.42 0.06 0.48
- Diluted 0.40 0.06 0.45
Weighted average ordinary shares
outstanding
- Basic 70,897 70,897 70,897
- Diluted 78,128 78,128 78,128
* Share-based compensation
expense was included in the
statement of operations as
follows:
Leased-and-operated hotel
costs - Personnel costs 3 -- 3
General and administrative
Expenses 6,586 970 6,586
Note 1: The conversion of Renminbi (RMB) into United States dollars
(US$) is based on the noon buying rate of US$1.00=RMB6.7899 on
September 30, 2008 in The City of New York for cable transfers of
RMB as certified for customs purpose by Federal Reserve Bank of
New York.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results
Quarter Ended September 30, 2008
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
RMB '000 RMB '000 RMB '000
Leased-and-operated hotel
costs (406,305) 77.1% 3 0.0% (406,302) 77.1%
Sales and marketing
expenses (7,407) 1.4% -- 0.0% (7,407) 1.4%
General and administrative
expenses (40,631) 7.7% 6,586 1.2% (34,045) 6.5%
Total operating costs and
expenses (454,342) 86.2% 6,589 1.2% (447,753) 84.9%
Income from operations 41,821 7.9% 6,589 1.2% 48,410 9.2%
Quarter Ended September 30, 2008
(excluding Top Star)
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
RMB '000 RMB '000 RMB '000
Leased-and-operated hotel
costs (365,270) 74.8% 3 0.0% (365,267) 74.8%
Sales and marketing
expenses (6,750) 1.4% -- 0.0% (6,750) 1.4%
General and administrative
expenses (40,388) 8.3% 6,586 1.3% (33,802) 6.9%
Total operating costs and
expenses (412,407) 84.5% 6,589 1.3% (405,819) 83.1%
Income from operations 46,768 9.6% 6,589 1.3% 53,357 10.9%
Quarter Ended September 30, 2008
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
US$ '000 US$ '000 US$ '000
Leased-and-operated hotel
costs (59,841) 77.1% -- 0.0% (59,841) 77.1%
Sales and marketing expenses (1,091) 1.4% -- 0.0% (1,091) 1.4%
General and administrative
expenses (5,984) 7.7% 970 1.2% (5,014) 6.5%
Total operating costs and
expenses (66,916) 86.2% 970 1.2% (65,946) 84.9%
Income from operations 6,158 7.9% 970 1.2% 7,128 9.2%
Quarter Ended September 30, 2008
(excluding Top Star)
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
US$ '000 US$ '000 US$ '000
Leased-and-operated hotel
costs (53,796) 74.8% -- 0.0% (53,796) 74.8%
Sales and marketing expenses (994) 1.4% -- 0.0% (994) 1.4%
General and administrative
expenses (5,948) 8.3% 970 1.3% (4,978) 6.9%
Total operating costs and
expenses (60,738) 84.5% 970 1.3% (59,768) 83.1%
Income from operations 6,888 9.6% 970 1.3% 7,858 10.9%
Quarter Ended June 30, 2008
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
RMB '000 RMB '000 RMB '000
Leased-and-operated hotel
costs (348,690) 77.8% 3 0.0% (348,688) 77.8%
Sales and marketing
expenses (5,454) 1.2% -- 0.0% (5,454) 1.2%
General and administrative
expenses (36,307) 8.1% 5,432 1.2% (30,875) 6.9%
Total operating costs and
expenses (390,451) 87.1% 5,435 1.2% (385,017) 85.9%
Income from operations 31,280 7.0% 5,435 1.2% 36,714 8.2%
Quarter Ended June 30, 2008
(excluding Top tar)
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
RMB '000 RMB '000 RMB '000
Leased-and-operated hotel
costs (311,190) 76.0% 3 0.0% (311,187) 76.0%
Sales and marketing
expenses (4,799) 1.2% -- 0.0% (4,799) 1.2%
General and administrative
expenses (35,846) 8.7% 5,432 1.3% (30,414) 7.4%
Total operating costs and
expenses (351,835) 85.9% 5,435 1.3% (346,400) 84.6%
Income from operations 33,564 8.2% 5,435 1.3% 38,999 9.5%
Quarter Ended September 30, 2007
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
RMB '000 RMB '000 RMB '000
Leased-and-operated hotel
costs (180,940) 67.9% 3 0.0% (180,937) 67.9%
Sales and marketing
expenses (6,306) 2.4% -- 0.0% (6,306) 2.4%
General and administrative
expenses (24,002) 9.0% 4,270 1.6% (19,732) 7.4%
Total operating costs and
expenses (211,248) 79.3% 4,273 1.6% (206,975) 77.7%
Income from operations 39,495 14.8% 4,273 1.6% 43,768 16.4%
Note 1: The conversion of Renminbi (RMB) into United States dollars (US$)
is based on the noon buying rate of US$1.00=RMB6.7899 on September
30, 2008 in The City of New York for cable transfers of RMB as
certified for customs purpose by Federal Reserve Bank of New York.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
September
30, 2007 June 30, 2008
RMB '000
(excluding
RMB '000 RMB '000 US$ '000 Top Star)
(unaudited) (unaudited)(unaudited) (unaudited)
Net income (GAAP) 25,267 7,463 1,089 8,664
Foreign exchange
losses (gains), net 10,239 13,742 2,003 14,642
Share-based
compensation 4,273 5,435 792 5,435
Adjusted net income
excluding foreign
exchange losses, share-
based compensation 39,779 26,640 3,884 28,741
Quarter Ended
September 30, 2008
RMB '000
(excluding
RMB '000 US$ '000 Top Star)
(unaudited) (unaudited) (unaudited)
Net income (GAAP) 29,463 4,338 33,832
Foreign exchange losses
(gains), net 2,360 348 2,359
Share-based compensation 6,589 970 6,589
Adjusted net income excluding
foreign exchange losses, share-
based compensation 38,412 5,656 42,780
Quarter Ended
September
30, 2007 June 30, 2008
RMB '000
(excluding
RMB '000 RMB '000 US$ '000 Top Star)
(unaudited)(unaudited)(unaudited)(unaudited)
Earnings per share (GAAP)
- Basic 0.36 0.11 0.02 0.12
- Diluted 0.35 0.10 0.01 0.12
Earnings per share excluding
foreign exchange losses,
share-based compensation
- Basic 0.57 0.38 0.05 0.41
- Diluted 0.55 0.36 0.05 0.38
Weighted average ordinary shares
Outstanding
- Basic 69,294 70,821 70,821 70,821
- Diluted 72,166 78,394 78,394 78,394
September 30, 2008
RMB'000
(excluding
RMB '000 US$ '000 Top Star)
(unaudited) (unaudited) (unaudited)
Earnings per share (GAAP)
- Basic 0.42 0.06 0.48
- Diluted 0.40 0.06 0.45
Earnings per share excluding foreign
exchange losses, share-based
compensation
- Basic 0.54 0.08 0.60
- Diluted 0.51 0.08 0.57
Weighted average ordinary shares
outstanding
- Basic 70,897 70,897 70,897
- Diluted 78,128 78,128 78,128
Note 1: The conversion of Renminbi (RMB) into United States dollars (US$)
is based on the noon buying rate of US$1.00=RMB6.7899 on September
30, 2008 in The City of New York for cable transfers of RMB as
certified for customs purpose by Federal Reserve Bank of New York.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
September
30, 2007 June 30, 2008
RMB '000
(excluding
RMB '000 RMB '000 US$ '000 Top Star)
(unaudited)(unaudited)(unaudited)(unaudited)
Net income (GAAP) 25,268 7,463 1,089 8,664
Interest income (8,610) (5,935) (865) (5,894)
Interest expenses 1,274 7,435 1,084 7,347
Income tax expense 12,518 8,954 1,305 8,954
Depreciation and
amortization 21,622 45,080 6,572 39,548
EBITDA (Non-GAAP) 52,072 62,997 9,185 58,619
Foreign exchange losses,
net 10,239 13,742 2,003 14,642
Share-based compensation 4,273 5,435 792 5,435
EBITDA excluding foreign
exchange losses, share-based
compensation 66,584 82,173 11,981 78,695
% of total revenue 25.0% 18.3% 18.3% 19.2%
Quarter Ended
September 30, 2008
RMB'000
(excluding
RMB '000 US$ '000 Top Star)
(unaudited) (unaudited) (unaudited)
Net income (GAAP) 29,463 4,338 33,832
Interest income (3,597) (530) (3,557)
Interest expenses 5,800 854 5,800
Income tax expense 9,785 1,441 9,785
Depreciation and amortization 52,066 7,668 46,615
EBITDA (Non-GAAP) 93,516 13,771 92,475
Foreign exchange losses, net 2,360 348 2,359
Share-based compensation 6,589 970 6,589
EBITDA excluding foreign exchange
losses, share-based compensation 102,465 15,089 101,423
% of total revenue 19.4% 19.4% 20.8%
Home Inns & Hotels Management Inc.
Operating Data
As of and for the quarter ended
September
30, 2007 June 30, 2008 September 30, 2008
excluding excluding
Top Top Top Top
Star Star Star Star
Total Hotels in
operation: 201 366 26 340 414 25 389
Lease-and
operated
hotels 143 271 26 245 291 25 266
Franchised-
and-managed
hotels 58 95 0 95 123 0 123
Total rooms 23,954 44,088 4,125 39,963 49,459 3,958 45,501
Occupancy rate (as
a percentage) 95.4% 88.2% 66.8% 90.8% 85.9% 67.4% 87.7%
Average daily rate
(in RMB) 182 173 142 176 180 143 183
RevPAR (in RMB) 174 153 95 160 155 96 160
Like-for-like performance for hotels opened for at least 18 months as of the beginning of the current quarter
As of and for the quarter ended
September 30, 2007 September 30, 2008
Total Hotels in operation: 135 135
Lease-and-operated hotels 96 96
Franchised-and-managed hotels 39 39
Total rooms 16,424 16,424
Occupancy rate (as a percentage) 101.3% 97.0%
Average daily rate (in RMB) 187 199
RevPAR (in RMB) 189 193
For investor and media inquiries, please contact:
Ethan Ruan
Home Inns & Hotels Management Inc.
Tel: +86-21-3401-9898 x2004
Email: zjruan@homeinns.com
Peter Schmidt
Tel: +86-10-8591-1953
Email: peter.schmidt@fd.com
