Form 6-K Homeinns Hotel Group For: Aug 14

 

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

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

 

 

 

 

 

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

 

*Adjusted

Non-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: [email protected]

 

Cara O’Brien

FTI Consulting

Tel: +852-3768-4537

Email: [email protected]

 

 

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.