UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2015

 

 

Commission File Number: 001-33082

 

 

HOMEINNS HOTEL GROUP

 

 

 

No. 124 Caobao Road

Xuhui District, Shanghai 200235

People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  x          Form 40-F  ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

     
  HOMEINNS HOTEL GROUP
   
   
  By: /s/ Cathy Xiangrong Li
  Name: Cathy Xiangrong Li
  Title:   Chief Financial Officer

 

Date: August 14, 2015

 

2

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

3

 

 

 

 



 

Exhibit 99.1

 

Homeinns Hotel Group Reports Second Quarter 2015 Financial Results

2,750 Hotels in Operation in 342 Cities Across China

 

Shanghai, August 11, 2015 – Homeinns Hotel Group (NASDAQ: HMIN) (“Homeinns” or “the Company”), a leading economy hotel chain in China, today announced its unaudited financial results for the second quarter ended June 30, 2015.

 

Second Quarter 2015 Highlights

 

·Total revenues decreased 1.8% year over year to RMB 1,667 million (US$268.9 million) for the second quarter of 2015, slightly lower than the previously provided guidance of RMB 1,670 million to RMB 1,700 million.
·Net income attributable to ordinary shareholders was RMB 72.1 million (US$11.6 million) for the second quarter of 2015, compared with net income of RMB 108.2 million for the second quarter of 2014. Adjusted net income attributable to ordinary shareholders (non-GAAP) decreased 37.7% year over year to RMB 105.0 million (US$16.9 million) for the second quarter of 2015.
·EBITDA (non-GAAP) decreased 15.4% year over year to RMB 323.2 million (US$52.1 million) for the second quarter of 2015. Adjusted EBITDA (non-GAAP) decreased 19.5% year over year to RMB 356.1 million (US$57.4 million) for the second quarter of 2015.
·Net operating cash inflow decreased 3.5% year over year to RMB 352.8 million (US$56.9 million) for the second quarter of 2015.
·As of June 30, 2015, Homeinns Hotel Group operated 2,750 hotels across 342 cities in China, with a net addition of 89 hotels during the second quarter of 2015.

 

Mr. David Sun, the Company’s chief executive officer, stated, “During the second quarter, we continued to face challenges associated with sustained difficult market conditions. Yet, we also continued to take important and necessary steps to make long-term investments in our business. Revenue growth and RevPAR remained under pressure given the surrounding economic climate. This, coupled with higher pre-opening costs, impacted our overall financial performance. However, we believe that our strategy to accelerate the development of mid-scale hotel offerings serves our overall best interest, given its encouraging performance to date. Moreover, during the second quarter, there were a number of other quite positive developments. In addition to further building our mid-scale offerings, Homeinn Plus and Yitel, we had great success in further enhancing our digital capabilities and membership recruitment, with both our mobile app user levels and our membership numbers reaching new highs. Lastly, we continued to control costs and improve efficiencies. All of this is keeping our operating foundation strong.”

 

Mr. Sun continued, “As we move into the second half of 2015, we expect the external conditions to remain quite challenging, and we are not counting on a market rebound in the remainder of the year. However, as we have stated before, we believe that the long-term prospects of the travel and lodging market in China are and will stay very strong and Homeinns is set to remain one of the strongest players in the industry. While further diversifying our product offerings, we will also develop unique ways to engage customers via traditional and digital marketing channels, and additionally maintain strict levels of operating discipline. This will all work together to ensure Homeinns perform very well over the long-term and deliver value to its customers, employees, business partners and shareholders.”

 

Hotel Development

   Hotels in Operations and Pipeline   Openings   Closures 
   Group   Homeinn   Motel   Fairyland   Yitel   Homeinn Plus*   2Q15   2Q15 
Total Number of Hotels   2,750    2,250    410    31    50    9    126    37**
Leased-and-Operated   915    699    163    22    23    8    14    11 
Franchised-and-Managed   1,835    1,551    247    9    27    1    112    26 
                                         
Contracted or Under Construction   184    122    28    1    19    14           
Leased-and-Operated   27    6    5    0    8    8           
Franchised-and-Managed   157    116    23    1    11    6           
Under Due Diligence   165    134    19    0    4    8           

 

*“Homeinn Plus”, a mid-scale brand newly launched in April 2015
**Among these closures, seven leased-and-operated hotels were closed due to conversion to Homeinn Plus and two leased-and-operated hotels were closed and converted to franchised-and-managed hotels.

 

 

 

 

Operating Metrics

   Total Hotels   Hotels Opened for
at least 18 Months		 
   2Q2015   1Q2015   2Q2014   2Q2015   2Q2014 
Occupancy Rate   83.3%   79.3%   86.7%   84.7%   88.1%
Average Daily Rate (ADR, RMB)   163    151    164    163    164 
Revenue per Available Room (RevPAR, RMB)   136    120    142    138    145 

 

For the second quarter of 2015, occupancy rate decreased by 3.4 percentage points while ADR decreased by 0.6%, resulting in a year-over-year decrease of 4.2% in RevPAR. The decrease in RevPAR was mainly due to continued difficult market conditions in the second quarter of 2015. Sequentially, RevPAR increased by 13.3% mainly due to seasonality. The first quarter is normally the slowest period in a year for the Company and the overall hotel industry.

 

As of June 30, 2015, a total of 2,103 hotels had been in operation for at least 18 months. The occupancy rate of these hotels declined year over year from 88.1% to 84.7%, and ADR decreased year over year from RMB 164 to RMB 163, resulting in a decrease in RevPAR by 4.8% from RMB145 to RMB138 during the second quarter of 2015.

 

Homeinns Hotel Group had a total of 38.6 million unique non-corporate members under its frequent guests program as of June 30, 2015.

 

Financial Results for Second Quarter2015

 

Revenues                
(RMB/USD in Millions)  Second Quarter 2015   Second Quarter 2014 
   RMB   USD   RMB   V% 
Leased-and-Operated Hotels  1,410.6   227.5   1,459.5   -3.4%
Franchised-and-Managed Hotels   256.7    41.4    239.1    7.4%
Total Revenues   1,667.3    268.9    1,698.6    -1.8%
Less: Business Taxes   -98.4    -15.9    -104.6    -5.9%
Net Revenues   1,568.9    253.0    1,594.0    -1.6%
                     

Note: “V%” represents year-over-year percentage change in amounts

Revenues from leased-and-operated hotels decreased 3.4% year over year to RMB 1.41 billion (US$227.5 million) for the second quarter of 2015. The year-over-year decrease in revenues from leased-and-operated hotels was mainly due to a decrease in RevPAR.

 

Revenues from franchised-and-managed hotels increased 7.4% year over year to RMB 256.7 million (US$41.4 million) for the second quarter of 2015. The year-over-year increase in revenues from franchised-and-managed hotels was mainly driven by an increase in the number of hotels and hotel rooms in operation, partially offset by a decrease in RevPAR.

 

Total Operating Costs and Expenses / Income from Operations                
(RMB/USD in Millions)   Second Quarter 2015  
                    Adjusted  
    GAAP Results     Non-GAAP Results*  
    RMB     USD     Vpts   RMB     USD     Vpts
Leased-and-Operated Hotel Costs     1,256.7       202.7     3.8pts     1,253.8       202.2     3.8pts
Personnel Costs of Franchised-and-Managed Hotels     66.0       10.6     0.6pts     62.9       10.1     0.6pts
Sales and Marketing Expenses     25.9       4.2     -0.2pts     25.7       4.1     -0.3pts
General and Administrative Expenses     82.7       13.3     0.2pts     70.5       11.4     0.5pts
                                         
Total Operating Costs and Expenses     1,431.2       230.8     4.2pts     1,413.0       227.9     4.5pts
                                         
Income from Operations     127.8       20.6     -4.7pts     146.1       23.6     -5.1pts

 

*AdjustedNon-GAAP results exclude share-based compensation expenses and integration costs.
Note:“Vpts” represents year-over-year change in percentage points of total revenues

 

 

 

 

Total operating costs and expenses were RMB 1.43 billion (US$230.8 million) for the second quarter of 2015, representing 85.8% of total revenues for the quarter. Total operating costs and expenses excluding any share-based compensation expenses and integration costs (non-GAAP) for the second quarter of 2015 were 84.7% of total revenues, compared to 80.2% in the same period a year ago.

 

·Total leased-and-operated hotel costs were RMB 1.26 billion (US$202.7 million) for the second quarter of 2015, representing 89.1% of the leased-and-operated hotel revenues for the quarter, compared to 83.4% in the same period a year ago. Total leased-and-operated hotel costs excluding any share-based compensation expenses and integration costs (non-GAAP) were 88.9% of the leased-and-operated hotel revenues in the second quarter of 2015, compared to 83.1% in the same period a year ago.

 

Pre-opening cost was RMB 19.9 million (US$3.2 million) for the second quarter of 2015, compared to RMB6.8 million in the second quarter of 2014. The increase is associated with a higher number of mid-scale hotels under construction.

 

The year-over-year increase in total leased-and-operated hotel costs as a percentage of leased-and-operated hotel revenues for the second quarter of 2015 was mainly due to a decrease in RevPAR which resulted in a lower revenue base per hotel while a significant portion of the hotel cost was fixed, as well as to the higher pre-opening cost in the second quarter of 2015.

 

·Personnel costs of franchised-and-managed hotels were RMB 66.0 million (US$10.6 million) for the second quarter of 2015, representing 25.7% of the franchised-and-managed hotel revenues for the second quarter of 2015, compared to 24.0% in the same period a year ago. Franchised-and-managed hotels personnel costs excluding share-based compensation expenses (non-GAAP) were 24.5% of franchised-and-managed hotel revenues in the second quarter of 2015, compared to 22.6% in the same period of 2014. The year-over-year increase in personnel costs of franchised-and-managed hotels as a percentage of franchised-and-managed hotel revenues for the second quarter of 2015 was mainly due to a decrease in RevPAR, which resulted in a lower revenue base per hotel, partially offset by lower performance-related bonuses in the quarter.

 

·Sales and marketing expenses were RMB 25.9 million (US$4.2 million) for the second quarter of 2015, representing 1.6% of total revenues for the quarter, compared to 1.8% in the same period a year ago. Sales and marketing expenses excluding share-based compensation expenses (non-GAAP) were 1.5% of total revenues for the second quarter of 2015, compared to 1.8% in the same period of 2014. The year-over-year decrease in sales and marketing expenses as a percentage of total revenues for the second quarter of 2015 was mainly due to the timing of certain marketing activities.

 

·General and administrative expenses were RMB 82.7 million (US$13.3 million) for the second quarter of 2015, representing 5.0% of total revenues, compared to 4.8% in the same period a year ago. General and administrative expenses excluding share-based compensation expenses and integration costs (non-GAAP) were 4.2% of total revenues for the second quarter of 2015, compared to 3.7% in the same period of 2014. The increase is due to a bad debt provision related to a specific hotel project.

 

Income from Operations was RMB 127.8million (US$20.6 million) for the second quarter of 2015, compared to income from operations of RMB 211.3 million in the same period a year ago. Income from operations excluding share-based compensation expenses and integration costs (non-GAAP) for the second quarter of 2015 was RMB146.1 million (US$23.6 million), or 8.8% of total revenues, compared to RMB 236.4 million, or 13.9% of total revenues, in the same period of 2014. The year-over-year decrease in income from operations margin for the quarter was mainly due to lower revenue base per hotel and higher pre-opening cost.

  

EBITDA (non-GAAP)

 

(RMB/USD in Millions)   Second Quarter 2015           Second Quarter 2014  
    RMB     USD     %Rev     V%     RMB     USD     %Rev  
EBITDA (Non-GAAP)     323.2       52.1       19.4 %     -15.4 %     382.1       61.6       22.5 %
Net Foreign Exchange (Gain)/Loss     -3.9       -0.6       -0.2 %             0.1       0.0       0.0 %
Share-Based Compensation Expenses     16.6       2.7       1.0 %             22.8       3.7       1.3 %
Acquisition Expenses     -       -       -               0.7       0.1       0.0 %
Integration Cost     1.6       0.3       0.1 %             1.6       0.3       0.1 %
Loss on Buy-Back of Convertible Notes     1.6       0.3       0.1 %             -       -       -  
Loss on Fair Value Change in Convertible Notes     17.0       2.7       1.0 %             35.0       5.6       2.1 %
Adjusted EBITDA (Non-GAAP)     356.1       57.4       21.4 %     -19.5 %     442.3       71.3       26.0 %

 

Note: “%Rev” represents amount as a percentage of total revenues

“V%” represents year-over-year percentage change in amounts

 

 

 

  

Net Income Attributable to Ordinary Shareholders

 

(RMB/USD in Millions)   Second Quarter 2015           Second Quarter 2014  
   RMB   USD   %Rev   V%   RMB   USD   %Rev 
Net Income (GAAP)   72.1    11.6    4.3%   -33.4%   108.2    17.4    6.4%
Net Foreign Exchange (Gain)/Loss   -3.9    -0.6    -0.2%        0.1    0.0    0.0%
Share-Based Compensation Expenses   16.6    2.7    1.0%        22.8    3.7    1.3%
Acquisition Expenses   -    -    -         0.7    0.1    0.0%
Integration Cost   1.6    0.3    0.1%        1.6    0.3    0.1%
Loss on Buy-Back of Convertible Notes   1.6    0.3    0.1%        -    -    - 
Loss on Fair Value Change in Convertible Notes   17.0    2.7    1.0%        35.0    5.6    2.1%
Adjusted Net Income (Non-GAAP)   105.0    16.9    6.3%   -37.7%   168.4    27.2    9.9%

 

Note: “%Rev” represents amount as a percentage of total revenues

“V%” represents year-over-year percentage change in amounts

 

Adjusted Net Income Attributable to Ordinary Shareholders (Non–GAAP) decreased year over year by 37.7%to RMB 105.0 million (US$16.9 million) for the second quarter of 2015, representing 6.3% of total revenues compared to 9.9% in the same period a year ago. The year-over-year decrease in adjusted net margin (non-GAAP)1was mainly due to a decrease in adjusted income from operations margin (non-GAAP)2, while partially offset by higher interest income and lower interest expense.

 

Basic and Diluted Earnings Per Share / Earnings Per ADS

 

   Second Quarter 2015 
   Ordinary Share   ADS Share 
   RMB   USD   RMB   USD 
Basic   0.75    0.12    1.50    0.24 
Diluted   0.75    0.12    1.50    0.24 
                     
Adjusted Basic (Non-GAAP)   1.09    0.18    2.18    0.35 
Adjusted Diluted (Non-GAAP)   1.07    0.17    2.14    0.35 

 

Cash Flow

 

Net operating cash inflow for the second quarter of 2015 was RMB352.8 million (US$56.9million), compared to RMB 365.8 million in the same period of 2014. Capitalized expenditures for the second quarter of 2015 were RMB 196.6 million (US$31.7 million), while related cash paid for capital expenditures during the quarter was RMB 124.6million (US$20.1 million).

 

Balance Sheet

 

As of June 30, 2015, Homeinns Hotel Group had cash and cash equivalents of RMB 891.0million (US$143.7 million). The outstanding balance of convertible notes issued in December 2010 (measured at fair value) was RMB953.1 million (US$153.7 million).

 

Outlook for Third Quarter 2015

 

Homeinns Hotel Group remains committed to its target of opening no fewer than 400 new hotels in the course of 2015, with approximately 10% as leased-and-operated hotels and 90% as franchised-and-managed hotels.

 

 

________________________

1“Adjusted net margin rate (non-GAAP)” is defined as adjusted net income (non-GAAP) as a percentage of total revenues.

 

2“Adjusted income from operations margin rate (non-GAAP)” is defined as income from operations excluding share-based compensation expenses and integration costs (non-GAAP) as a percentage of total revenues.

 

 

 

 

The Company expects its total revenues in the third quarter of 2015 to be in the range of RMB 1,830 million to RMB1,860 million.

 

With respect to the full year, given its performance in the first half of 2015 and the ongoing softer-than-expected market conditions, the Company now expects total revenues for 2015 to be in the range of RMB 6,550 million to RMB 6,650 million, below the initial guidance provided at the beginning of the year.

 

This forecast reflects the Company’s current and preliminary views, and remains 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 RMB6.2000to US$1.00, the noon buying rate for June 30, 2015 set forth in the H.10 statistical release of the Federal Reserve Board.

 

Conference Call Information

 

Management will hold an earnings conference call at 9 PM U.S. Eastern Time on Tuesday, August11, 2015 (9 AM Beijing/Hong Kong Time on Wednesday, August 12, 2015).

 

Dial-in details for the earnings conference call are as follows:

 

U.S.: 1855 298 3404 or +1 631 5142 526  
China mainland: 4001 200 539  
Hong Kong: 800 905 927 or +852 5808 3202  
U.K.: 0800 015 9725 or +44 (0) 20 3078 7622  
Australia: 1800 801 825 or +61 2 8524 5042  
Taiwan: 0080 161 5189 or +886 2 7708 3282  
International: +852 5808 3202  

 

Passcode for all regions: Homeinns

 

A replay of the conference call may be accessed by phone at the following numbers until the end of August 18, 2015 U.S. Eastern Time.

 

U.S.: 1866 846 0868  
China mainland: 4001 842 240  
Hong Kong: 800 966 697  
U.K.: 0800 169 7301  
Australia: +61 2 9641 7900  
International: 1800 008 585  
     
Replay Passcode: 9019076  

 

Live and archived webcasts of this conference call will be available at http://english.homeinns.com.

 

About Homeinns Hotel Group

 

Homeinns Hotel Group is a leading economy hotel chain in China based on number of hotels and hotel rooms as well as geographic coverage of the hotel chain. Since the Company commenced operations in 2002, it has built Homeinn as one of the best-known economy hotel brands in China. In October of 2011, the Company acquired Motel 168, another well-known hotel chain in China, as its second economy hotel brand. Homeinns Hotel 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. Homeinns Hotel Group's ADSs, each of which represents two ordinary shares, are currently trading on the NASDAQ Global Select Market under the symbol "HMIN." For more information about Homeinns Hotel Group, please visit http://english.homeinns.com.

 

Safe Harbor

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995.These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Any statements in this press release that are not historical facts are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include our anticipated growth strategies; our future results of operations and financial condition; the economic conditions of China; the regulatory environment in China; our ability to attract customers and leverage our brands; trends and competition in the lodging industry; the expected growth of the lodging market in China; and other factors and risks detailed in our filings with the Securities and Exchange Commission. This press release also contains statements or projections that are based upon information available to the public, as well as other information from sources which management believes to be reliable, but it is not guaranteed by us to be accurate, nor does it purport to be complete. We undertake no obligation to update or revise to the public any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

 

 

 

 

Non-GAAP Financial Measures

 

To supplement Homeinns Hotel Group’s unaudited consolidated financial results presented in accordance with U.S. GAAP, Homeinns Hotel Group uses the following non-GAAP measures:

(a)total operating costs and expenses excluding share-based compensation expenses and acquisition and integration costs
(b)total leased-and-operated hotel costs excluding share-based compensation expenses and integration costs
(c)personnel costs of franchised-and-managed hotels excluding share-based compensation expenses
(d)sales and marketing expenses excluding share-based compensation expenses
(e)general and administrative expenses excluding share-based compensation expenses and acquisition and integration costs
(f)income from operations excluding share-based compensation expenses and acquisition and integration costs
(g)adjusted net income attributable to shareholders excluding any share-based compensation expenses, foreign exchange gain or loss, acquisition and integration cost, upfront fee amortization of term loan, gain or loss from fair value change of convertible notes and interest swap derivatives and other non-operating expenses
(h)adjusted basic and diluted earnings per ADS and per share excluding foreign exchange gain or loss, share-based compensation expenses, gain on buy-back of convertible bonds, issuance costs for convertible notes, gain or loss from fair value change of convertible notes, acquisition and integration cost, non-operating expenses and upfront fee amortization of term loan, and
(i)adjusted EBITDA excluding foreign exchange gain or loss, share-based compensation expenses, gain on buy-back of convertible bonds, issuance costs for convertible notes, gain or loss from fair value change of convertible notes, acquisition and integration costs, non-operating expenses and upfront fee amortization of term loan

 

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this press release.

 

Homeinns Hotel Group believes that, used in conjunction with GAAP financial measures, these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance, and both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’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 Homeinns Hotel 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 Homeinns Hotel 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 Homeinns Hotel 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 Homeinns Hotel Group’s business. In addition, Homeinns Hotel 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 Homeinns Hotel Group does. Management compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. Homeinns Hotel 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 Homeinns Hotel Group’s future results will be unaffected by other charges and gains Homeinns Hotel Group considers to be outside the ordinary course of its business.

 

Homeinns Hotel Group completed its acquisition of 100% equity interest in Motel 168, or Motel, and took control of Motel effective on October 1, 2011. Homeinns Hotel Group had consolidated Motel’s operating and financial results since October 1, 2011. By the third quarter of 2013, Homeinns Hotel Group had substantially completed Motel’s integration and ceased to present separate operating metrics and revenues for Motel.

 

For investor and media inquiries, please contact:

 

Mingjia Ding

Homeinns Hotel Group

Tel: +86-21-3337-3333*3870

Email: mjding@homeinns.com

 

Cara O’Brien

FTI Consulting

Tel: +852-3768-4537

Email: cara.obrien@fticonsulting.com

 

 

 

 

Homeinns Hotel Group

Unaudited Condensed Consolidated Balance Sheet

             
   December 31, 2014   June 30, 2015 
   RMB '000   RMB '000   US$ '000 
             
ASSETS               
Current assets:               
Cash and cash equivalents   949,690    890,956    143,703 
Restricted cash   12,726    28,949    4,669 
Accounts receivable, net   95,501    112,484    18,143 
Receivables from related parties   3,476    5,698    919 
Consumables   44,446    35,745    5,765 
Prepayments and other current assets   171,703    181,943    29,346 
Deferred tax assets   129,685    138,771    22,382 
                
Total current assets   1,407,227    1,394,546    224,927 
                
                
                
                
Investment   11,709    14,740    2,377 
Property and equipment, net   4,000,041    3,885,761    626,736 
Goodwill   2,323,241    2,323,241    374,716 
Intangible assets, net   1,126,636    1,101,225    177,617 
Other assets   90,995    111,422    17,971 
Non-current deferred tax assets   434,847    459,542    74,120 
                
Total assets   9,394,696    9,290,477    1,498,464 
                
LIABILITIES               
Current liabilities:               
Accounts payable   86,949    77,051    12,428 
Payables to related parties   4,166    6,838    1,103 
Financial liability, current portion2   1,029,577    953,055    153,719 
Salaries and welfare payable   228,127    168,940    27,248 
Income tax payable   117,830    61,316    9,890 
Other taxes payable   34,074    34,356    5,541 
Deferred revenues   225,417    226,954    36,605 
Other unpaid and accruals   255,460    257,644    41,555 
Other payables   742,853    732,535    118,151 
Deferred tax liability   60,764    60,764    9,801 
                
                
Total current liabilities   2,785,217    2,579,453    416,041 
                
Deferred rental   705,284    755,024    121,778 
Deferred revenues   51,289    48,060    7,752 
Deposits due to franchisees   144,892    149,852    24,170 
Other long term payables   13,018    9,229    1,489 
Unfavorable lease liabilities   331,282    313,113    50,502 
Deferred tax liabilities   292,575    280,818    45,293 
                
Total liabilities   4,323,557    4,135,549    667,025 
                
                
Commitments and contingencies               
                
Shareholders’ equity               
Ordinary shares (US$0.005 par value; 200,000,000 shares authorized, 95,703,960 and 96,339,900 shares issued and outstanding as of December 31, 2014 and June 30 2015, respectively)   3,698    3,719    600 
                
Additional paid-in capital   3,191,076    3,241,809    522,872 
Statutory reserves   256,013    256,013    41,292 
                
Retained earnings   1,604,246    1,638,737    264,312 
                
Less: Treasury stock (0 and 37,696 shares as of December 31, 2014
and June 30 2015, respectively)		   -    (2,759)   (445)
                
Total Home Inns shareholders' equity   5,055,033    5,137,519    828,631 
                
Noncontrolling interests   16,106    17,409    2,808 
                
Total  shareholders’ equity   5,071,139    5,154,928    831,439 
                
Total liabilities and shareholders’ equity   9,394,696    9,290,477    1,498,464 
    -    -    - 

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2000

on June 30, 2015, representing the certificated exchange rate published by the Federal Reserve Board.

Note 2: Financial liabilities represent convertible notes  measured at fair value.

 

 

 


Homeinns Hotel Group

Unaudited Condensed Consolidated Statement of Operations

 

    Quarter Ended  
    June 30, 2014     March 31, 2015     June 30, 2015  
    RMB '000     RMB '000     RMB '000     US$ '000  
                         
Revenues:                                
 Leased-and-operated hotels     1,459,489       1,244,734       1,410,555       227,509  
 Franchised-and-managed hotels     239,113       225,733       256,728       41,408  
                                 
 Total revenues     1,698,602       1,470,467       1,667,283       268,917  
 Less: Business tax and related surcharges     (104,588 )     (88,351 )     (98,390 )     (15,869 )
                                 
 Net revenues     1,594,014       1,382,116       1,568,893       253,048  
                                 
 Operating costs and expenses:                                
    Leased-and-operated hotel costs –                                
 Rents and utilities     (509,722 )     (583,473 )     (522,581 )     (84,287 )
 Personnel costs     (269,365 )     (276,076 )     (274,804 )     (44,323 )
 Depreciation and amortization     (186,823 )     (195,595 )     (194,646 )     (31,395 )
 Consumables, food and beverage     (85,765 )     (78,239 )     (97,175 )     (15,673 )
 Others     (165,071 )     (130,786 )     (167,466 )     (27,011 )
                                 
    Total leased-and-operated hotel costs     (1,216,746 )     (1,264,169 )     (1,256,672 )     (202,689 )
                                 
    Personnel costs of Franchised-and-managed hotels     (57,284 )     (44,013 )     (65,966 )     (10,640 )
    Sales and marketing expenses     (30,703 )     (22,250 )     (25,863 )     (4,171 )
    General and administrative expenses     (81,968 )     (73,916 )     (82,735 )     (13,344 )
                                 
 Total operating costs and expenses     (1,386,701 )     (1,404,348 )     (1,431,236 )     (230,844 )
                                 
 Other income/(loss)     3,967       11,525       (9,826 )     (1,585 )
                                 
 Income/(loss) from operations     211,280       (10,707 )     127,831       20,619  
                                 
 Interest income     1,677       4,339       4,055       654  
 Interest expenses     (13,064 )     (5,667 )     (5,456 )     (880 )
 Gain/(loss) from equity investment     189       (98 )     (920 )     (148 )
 Loss on change in fair value of convertible notes     (35,016 )     (9,583 )     (17,016 )     (2,745 )
Loss on buy-back of convertible notes     -       (91 )     (1,591 )     (257 )
 Non-operating income     13,266       17       10,575       1,706  
 Foreign exchange (loss)/gain, net     (109 )     (4,061 )     3,914       631  
                                 
 Income/(loss) before income tax expenses and noncontrolling interests     178,223       (25,851 )     121,392       19,580  
                                 
 Income tax expense     (68,410 )     (10,946 )     (48,802 )     (7,871 )
                                 
 Net income/(loss)     109,813       (36,797 )     72,590       11,709  
                                 
 Less:Net income attributable to noncontrolling interests     (1,647 )     (774 )     (528 )     (85 )
                                 
                                 
 Net income/(loss) attributable to ordinary shareholders     108,166       (37,571 )     72,062       11,624  
                                 
Earnings per share                                
— Basic     1.14       (0.39 )     0.75       0.12  
                                 
— Diluted     1.13       (0.39 )     0.75       0.12  
                                 
Weighted average ordinary shares outstanding                                
— Basic     95,285       95,776       96,215       96,215  
                                 
— Diluted     95,407       95,776       96,215       96,215  
                                 
Share-based compensation expense was included in the statement of operations as follows:                                
Leased-and-operated hotel costs – Personnel costs     1,889       2,016       1,511       244  
Personnel costs of Franchised-and-managed hotels     3,156       3,817       3,057       493  
Sales and marketing expenses     154       241       151       24  
General and administrative expenses     17,583       18,227       11,877       1,916  

 

 

 

Homeinns Hotel Group

Reconciliation of GAAP and Non-GAAP Results

 

   Quarter Ended June 30, 2015 
   GAAP
Result		   %of Total
Revenue		   Share-based
Compensation		   Acquisition
 expenses		   Integration
 cost		   %of Total
Revenue		   Non-GAAP Result   %of Total
Revenue		 
   RMB '000       RMB '000       RMB '000       RMB '000     
   (unaudited)       (unaudited)       (unaudited)       (unaudited)     
                                 
Leased-and-operated hotel costs   (1,256,672)   75.4%   1,511    -    1,322    0.2%   (1,253,839)   75.2%
Personnel costs of Franchised-and-managed hotels   (65,966)   4.0%   3,057    -    -    0.2%   (62,909)   3.8%
Sales and marketing expenses   (25,863)   1.6%   151    -    -    0.0%   (25,712)   1.5%
General and administrative expenses   (82,735)   5.0%   11,877    -    317    0.7%   (70,541)   4.2%
                                         
Total operating costs and expenses   (1,431,236)   85.8%   16,596    -    1,639    1.1%   (1,413,001)   84.7%
                                         
Income from operations   127,831    7.7%   16,596    -    1,639    1.1%   146,066    8.8%

 

   Quarter Ended June 30, 2015 
   GAAP
Result		   %of Total
Revenue		   Share-based
Compensation		   Acquisition
 expenses		   Integration
 cost		   %of Total
Revenue		   Non-GAAP Result   %of Total
Revenue		 
   US$ '000       US$ '000       US$ '000       US$ '000     
   (unaudited)       (unaudited)       (unaudited)       (unaudited)     
                                 
Leased-and-operated hotel costs   (202,689)   75.4%   244    -    213    0.2%   (202,232)   75.2%
Personnel costs of Franchised-and-managed hotels   (10,640)   4.0%   493    -    -    0.2%   (10,147)   3.8%
Sales and marketing expenses   (4,171)   1.6%   24    -    -    0.0%   (4,147)   1.5%
General and administrative expenses   (13,344)   5.0%   1,916    -    51    0.7%   (11,377)   4.2%
                                         
Total operating costs and expenses   (230,844)   85.8%   2,677    -    264    1.1%   (227,903)   84.7%
                                         
Income from operations   20,619    7.7%   2,677    -    264    1.1%   23,560    8.8%

 

   Quarter Ended March 31, 2015 
   GAAP
Result		   %of Total
Revenue		   Share-based
Compensation		   Acquisition
 expenses		   Integration
 cost		   %of Total
Revenue		   Non-GAAP Result   %of Total
Revenue		 
   RMB '000       RMB '000       RMB '000       RMB '000     
   (unaudited)       (unaudited)       (unaudited)       (unaudited)     
                                         
Leased-and-operated hotel costs   (1,264,169)   86.0%   2,016    -    1,179    0.2%   (1,260,974)   85.8%
Personnel costs of Franchised-and-managed hotels   (44,013)   3.0%   3,817    -    -    0.3%   (40,196)   2.7%
Sales and marketing expenses   (22,250)   1.5%   241    -    -    0.0%   (22,009)   1.5%
General and administrative expenses   (73,916)   5.0%   18,227    -    317    1.3%   (55,372)   3.8%
                                         
Total operating costs and expenses   (1,404,348)   95.5%   24,301    -    1,496    1.8%   (1,378,551)   93.7%
                                         
(Loss)/income from operations   (10,707)   0.7%   24,301    -    1,496    1.8%   15,090    1.0%

 

   Quarter Ended June 30, 2014 
   GAAP
Result		   %of Total
Revenue		   Share-based
Compensation		   Acquisition
 expenses		   Integration
 cost		   %of Total
Revenue		   Non-GAAP Result   %of Total
Revenue		 
   RMB '000       RMB '000       RMB '000       RMB '000     
   (unaudited)       (unaudited)       (unaudited)       (unaudited)     
                                 
Leased-and-operated hotel costs   (1,216,746)   71.6%   1,889    -    1,328    0.2%   (1,213,529)   71.4%
Personnel costs of Franchised-and-managed hotels   (57,284)   3.4%   3,156    -    -    0.2%   (54,128)   3.2%
Sales and marketing expenses   (30,703)   1.8%   154    -    -    0.0%   (30,549)   1.8%
General and administrative expenses   (81,968)   4.8%   17,583    691    317    1.1%   (63,377)   3.7%
                                         
Total operating costs and expenses   (1,388,701)   81.6%   22,782    691    1,645    1.5%   (1,363,583)   80.2%
                                         
Income from operations   211,280    12.4%   22,782    691    1,645    1.5%   236,398    13.9%

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2000

on June 30, 2015, representing the certificated exchange rate published by the Federal Reserve Board.    

 

 

 

 

Homeinns Hotel Group

Reconciliation of GAAP and Non-GAAP Results (continued)                

 

   Quarter Ended 
   June 30, 2014   March 31, 2015   June 30, 2015 
   RMB '000   RMB '000   RMB '000   US$ '000 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
                 
Net income/(loss) attributable to ordinary shareholders (GAAP)   108,166    (37,571)   72,062    11,624 
Foreign exchange loss/(gain), net   109    4,061    (3,914)   (631)
Share-based compensation   22,782    24,301    16,596    2,677 
Acquisition expenses   691    -    -    - 
Integration cost   1,645    1,496    1,639    264 
Loss on buy-back of convertible notes   -    91    1,591    257 
Loss on change in fair value of convertible notes   35,016    9,583    17,016    2,745 
                     
                     
Adjusted net income attributable to ordinary shareholders (Non-GAAP)   168,409    1,961    104,990    16,936 

 

   Quarter Ended 
   June 30, 2014   March 31, 2015   June 30, 2015 
   RMB '000   RMB '000   RMB '000   US$ '000 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
Earnings per share (GAAP)                
— Basic   1.14    (0.39)   0.75    0.12 
                     
— Diluted   1.13    (0.39)   0.75    0.12 
                     
Weighted average ordinary shares outstanding                    
— Basic   95,285    95,776    96,215    96,215 
                     
— Diluted   95,407    95,776    96,215    96,215 
Adjusted earnings per share (Non-GAAP)                    
— Basic   1.77    0.02    1.09    0.18 
                     
— Diluted   1.69    0.02    1.07    0.17 
                     
Weighted average ordinary shares outstanding                    
— Basic   95,285    95,776    96,215    96,215 
                     
— Diluted   102,862    95,776    102,917    102,917 

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2000
on June 30, 2015, representing the certificated exchange rate published by the Federal Reserve Board.
Note 2: The non-GAAP adjustment items do not include the tax impact.    

 

 

 

 

Homeinns Hotel Group

Reconciliation of GAAP and Non-GAAP Results (continued)

 

   Quarter Ended 
   June 30, 2014   March 31, 2015   June 30, 2015 
   RMB '000   RMB '000   RMB '000   US$ '000 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
                 
Net income/(loss)   109,813    (36,797)   72,590    11,709 
Interest income   (1,677)   (4,339)   (4,055)   (654)
Interest expenses   13,064    5,667    5,456    880 
Income tax expense   68,410    10,946    48,802    7,871 
Depreciation and amortization   192,455    201,508    200,383    32,320 
                     
EBITDA (Non-GAAP)   382,065    176,985    323,176    52,126 
                     
Foreign exchange loss/(gain), net   109    4,061    (3,914)   (631)
Share-based compensation   22,782    24,301    16,596    2,677 
Acquisition expenses   691    -    -    - 
Integration cost   1,645    1,496    1,639    264 
Loss on buy-back of convertible notes   -    91    1,591    257 
Loss on change in fair value of convertible notes   35,016    9,583    17,016    2,745 
                     
Adjusted EBITDA (Non-GAAP)   442,308    216,517    356,104    57,438 
                     
%of total revenue   26.0%   14.7%   21.4%   21.4%

 

Note 1: The "Depreciation and amortization expense" includes the depreciation and amortization expenses of the Group.

The depreciation and amortization expenses of all leased-and-operated hotels are included in "Operating costs and expenses".

The depreciation and amortization expenses of administrative long-term assets are included in "General and administrative expenses".

 

 

 

 

Home Inns & Hotels Management Inc.

Operating Data              

 

   As of and for the quarter ended 
   June 30, 2014   March 31, 2015   June 30, 2015 
   Group   Group   Group 
Total Hotels in operation:   2,374    2,661    2,750 
      Leased-and-operated hotels   897    912    915 
      Franchised-and-managed hotels   1,477    1,749    1,835 
                
Total rooms   275,050    300,866    309,414 
                
Occupancy rate (as a percentage)   86.7%   79.3%   83.3%
                
Average daily rate (in RMB)   164    151    163 
                
RevPAR (in RMB)   142    120    136 

 

Like-for-like performance for hotels opened for at least 18 months at the end of the period        

 

   As of and for the quarter ended 
   June 30, 2014   June 30, 2015 
   Group   Group 
Total Hotels in operation:   2,103    2,103 
      Leased-and-operated hotels   874    874 
      Franchised-and-managed hotels   1,229    1,229 
           
Total rooms   242,194    242,194 
           
Occupancy rate (as a percentage)   88.1%   84.7%
           
Average daily rate (in RMB)   164    163 
Rev PAR (in RMB)   145    138 

 

“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.

 

 

 

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