Form 6-K Homeinns Hotel Group For: Mar 12

 

 

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 March 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: March 12, 2015

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release: Homeinns Hotel Group Reports Fourth Quarter and Full Year 2014 Financial Results

 

Exhibit 99.2 – Press Release: Homeinns Hotel Group Announces Share Repurchase Program

 

 

Exhibit 99.1

 

Homeinns Hotel Group Reports Fourth Quarter and Full Year 2014 Financial Results

2,609 Hotels in Operation in 335 Cities in China

Adjusted Net Margin (Non-GAAP)^[1] Improved Year over Year for the Ninth Consecutive Quarter

 

 

Shanghai, March 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 fourth quarter and full year ended December 31, 2014.

 

 

Fourth Quarter and Full Year 2014 Financial Highlights

 

·

Total revenues increased 1.6% year over year to RMB 1.64 billion (US$263.6 million) for the fourth quarter of 2014 and increased 5.2% to RMB 6.68 billion (US$1.08 billion) for the full year 2014, which was within the guidance range.

 

·

Net income attributable to ordinary shareholders increased 558.0% year over year to RMB 84.6 million (US$13.6 million) for the fourth quarter of 2014 and increased 161.5% to RMB 513.1 million (US$82.7 million) for the full year 2014. Adjusted net income attributable to ordinary shareholders (non-GAAP) increased 20.8% year over year to RMB 110.9 million (US$17.9 million) for the fourth quarter of 2014 and increased 26.7% to RMB 535.8 million (US$86.4 million) for the full year 2014.

 

·

EBITDA (non-GAAP) increased 30.8% year over year to RMB 333.4 million (US$53.7 million) for the fourth quarter of 2014 and increased 32.7% to RMB 1.55 billion (US$249.3 million) for the full year 2014. Adjusted EBITDA (non-GAAP) increased 7.8% year over year to RMB 359.8 million (US$58.0 million) for the fourth quarter of 2014 and increased 12.8% to RMB 1.57 billion (US$253.0 million) for the full year 2014.

 

·

Net operating cash inflow increased 22.8% year over year to RMB 348.1 million (US$56.1 million) for the fourth quarter of 2014 and increased 12.8% to RMB 1.35 billion (US$216.8 million) for the full year 2014.

 

“We are very gratified that despite sustained market challenges, we met our previously provided revenue expectations for the fourth quarter and achieved year-over-year adjusted net margin improvement for the ninth consecutive quarterly period,” said Mr. David Sun, the Company’s chief executive officer. “Performance of our mature economy hotels remained relatively resilient despite the market softness. Our franchise focused strategy, effective cost control and productivity enhancement initiatives did a great deal to help protect our margin and bottom line. We are also very pleased with the positive development and performance of our mid-scale Yitel hotels.”

 

Key Financial Results              

 

(RMB in Millions except RMB per ADS)			4Q2014				4Q2013				V%				FY14				FY13				V%
Total Revenues			1,635.3				1,609.7				1.6	%			6,682.7				6,353.0				5.2	%
Income from Operations			102.5				105.5				-2.9	%			640.6				524.6				22.1	%
Adj. Income from Operations*			125.6				127.2				-1.2	%			736.3				625.6				17.7	%
Net Income			84.6				12.9				558.0	%			513.1				196.2				161.5	%
Adj. Net Income*			110.9				91.8				20.8	%			535.8				422.8				26.7	%
EBITDA*			333.4				254.9				30.8	%			1,546.8				1,165.6				32.7	%
Adj. EBITDA*			359.8				333.9				7.8	%			1,569.5				1,391.2				12.8	%
Diluted earnings per ADS			1.77				0.27				549.7	%			9.10				4.20				116.5	%
Adj. Diluted Earnings per ADS*			2.26				1.91				18.4	%			10.85				8.83				22.9	%

 

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

* Indicates a non-GAAP financial measure (see commentary at the end of this earnings release for full details).

 

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

 

 

Fourth Quarter and Full Year 2014 Operational Highlights

 

·

Homeinns Hotel Group added a net of 113 hotels in the fourth quarter of 2014, including the opening of 129 new hotels and the closure of 16 hotels. During the full year, Homeinns Hotel Group added a net of 429 hotels, including the opening of 486 new hotels and the closure of 57 hotels. As of December 31, 2014, Homeinns Hotel Group operated 2,609 hotels across 335 cities in China under four brands. There were a total of 401 hotel projects in the development pipeline as of December 31, 2014, including 201 hotels contracted or under construction (173 of which were franchised-and-managed hotels) and 200 hotels under due diligence (all of which were for franchised-and-managed hotels), demonstrating continued strong interest from franchise partners in all of the Company’s hotel brands.

 

		Hotels in Operations and Pipeline																								Openings								Closures
		Group				Homeinn				Motel				Fairyland				Yitel				Homeinn Plus*				4Q14				FY14				4Q14				FY14
Total Number of Hotels			2,609				2,135				402				31				41								129				486				16			57
Leased-and-Operated			914				705				167				24				18								5				50				1			6
Franchised-and-Managed			1,695				1430				235				7				23								124				436				15			51
Contracted or under Construction			201				139				31				5				20				6
Leased-and-Operated			28				7				5				2				11				3
Franchised-and-Managed			173				132				26				3				9				3
Under Due Diligence			200				169				24				0				5				2

 

 

* “Homeinn Plus” is a new mid-scale brand expected to be launched soon.

Note: There were two transfers of leased-and-operated hotel to franchised-and-managed hotel under “Homeinn” brand in 2014.

 

·

As of December 31, 2014, Homeinns Hotel Group had a total of 23.0 million unique active non-corporate members under its frequent guests program.

 

Operating Metrics          

 

		4Q2014				3Q2014				4Q2013				FY2014				FY2013
Occupancy Rate			79.6	%			86.7	%			84.0	%			83.6	%			86.1	%
Average Daily Rate (ADR, RMB)			163				174				163				165				165
Revenue per Available Room (RevPAR, RMB)			130				151				137				138				142

 

·

For the fourth quarter of 2014, occupancy rate decreased by 4.4 percentage points while ADR remained stable, resulting in a year-over-year decrease of 5.1% in RevPAR. The decrease in occupancy rate was mainly due to continued soft macroeconomic conditions in the fourth quarter of 2014. Sequentially, RevPAR decreased by 13.9% mainly due to seasonality.

 

·

For the full year 2014, occupancy rate decreased by 2.5 percentage points while ADR remained stable resulting in a year-over-year decrease of 2.8% in RevPAR. The decrease in occupancy was mainly due to the soft macroeconomic conditions throughout the year.

 

Like-for-like performance for hotels opened for at least 18 months    

 

		4Q2014				4Q2013				FY2014				FY2013
Total Hotels in operation:			1,899				1,899				1,899				1,899
Leased-and-operated hotels			844				846				844				846
Franchised-and-managed hotels			1,055				1,053				1,055				1,053
Occupancy rate			81.8	%			85.3	%			85.9	%			87.8	%
Average daily rate (ADR, RMB)			164				163				166				166
Revenue per Available Room (RevPAR, RMB)			134				139				143				146

 

 

As of December 31, 2014, a total of 1,899 hotels were in operation for at least 18 months. These hotels’ ADR increased year over year slightly from RMB 163 to RMB 164, while occupancy rate declined year over year from 85.3% to 81.8%, resulting in a decrease in RevPAR by 3.6% from RMB 139 to RMB 134 during the fourth quarter of 2014. For the full year, the same group of hotels’ ADR remained flat year over year, while occupancy rate declined year over year from 87.8% to 85.9%, resulting in a decrease in RevPAR by 2.1% from RMB 146 to RMB 143. The decrease in occupancy rate for both the fourth quarter and full year 2014 was mainly due to the soft market conditions, and was in line with industry performance.

 

Detailed Overview of Financial Results for Fourth Quarter and Full Year 2014

 

Total Revenues              

(RMB/USD in Millions)		Fourth Quarter 2014												Full Year 2014
		RMB				USD				V%				RMB				USD				V%
Leased-and-Operated Hotels			1,391.1				224.2				-0.8	%			5,741.8				925.4				2.8	%
Franchised-and-Managed Hotels			244.2				39.4				17.4	%			940.9				151.7				22.9	%
Total Revenues			1,635.3				263.6				1.6	%			6,682.7				1,077.1				5.2	%
Less: Business Taxes			-100.3				-16.2				1.9	%			-411.1				-66.3				4.9	%
Net Revenues			1,535.0				247.4				1.6	%			6,271.6				1,010.8				5.2	%

 

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

 

·

The year-over-year decrease in total revenues from leased-and-operated hotels in the fourth quarter 2014 was due to the decrease of RevPAR. The year-over-year increase in total revenues from franchised-and-managed hotels in the fourth quarter 2014 was mainly driven by an increase in the number of hotels and hotel rooms in operation, partially offset by a decrease in RevPAR.

·

The year-over-year increases in total revenues from both leased-and-operated and franchised-and-managed hotels in the full year 2014 were 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 / Total Operating Income    

(RMB/USD in Millions)		Fourth Quarter 2014
																						Adjusted
		GAAP Results												Reconciliation								Non-GAAP Results
		RMB				USD				Vpts				RMB				USD				RMB				USD				Vpts
Leased-and-Operated Hotel Costs			1,298.5				209.3				2.0	pts			3.3				0.5				1,295.2				208.7				2.0	pts
Franchised-and-Managed Hotel Personnel Costs			34.3				5.5				0.1	pts			3.5				0.6				30.8				5.0				0.1	pts
Sales and Marketing Expenses			22.7				3.7				-1.5	pts			0.2				0.0				22.5				3.6				-1.5	pts
General and Administrative Expenses			77.4				12.5				-0.3	pts			16.1				2.6				61.3				9.9				-0.4	pts
Total Operating Costs and Expenses			1,432.9				230.9				0.3	pts			23.1				3.7				1,409.8				227.2				0.2	pts
Total Operating Income			102.5				16.5				-0.3	pts			23.1				3.7				125.6				20.2				-0.2	pts

 

(RMB/USD in Millions)		Full Year 2014
																						Adjusted
		GAAP Results												Reconciliation								Non-GAAP Results
		RMB				USD				Vpts				RMB				USD				RMB				USD				Vpts
Leased-and-Operated Hotel Costs			5,023.1				809.6				-1.4	pts			13.7				2.2				5,009.4				807.4				-1.3	pts
Franchised-and-Managed Hotel Personnel Costs			201.2				32.4				0.5	pts			13.2				2.1				188.1				30.3				0.5	pts
Sales and Marketing Expenses			109.8				17.7				-0.1	pts			0.8				0.1				109.0				17.6				-0.1	pts
General and Administrative Expenses			312.0				50.3				-0.3	pts			68.0				11.0				244.0				39.3				-0.2	pts
Total Operating Costs and Expenses			5,646.2				910.0				-1.3	pts			95.7				15.4				5,550.5				894.6				-1.1	pts
Total Operating Income			640.6				103.3				1.3	pts			95.7				15.4				736.3				118.7				1.2	pts

 

Note: “Vpts” represents year-over-year change in percentage points of total revenues

 

 

Total operating costs and expenses were RMB 1.43 billion (US$230.9 million) for the fourth quarter of 2014, representing 87.6% of total revenues for the quarter. Total operating costs and expenses excluding any share-based compensation expenses and integration costs (non-GAAP) for the fourth quarter of 2014 were 86.2% of total revenues, compared to 86.0% in the same period a year ago.

 

Total operating costs and expenses were RMB 5.65 billion (US$910.0 million) for the full year 2014, representing 84.5% of total revenues for the year. Total operating costs and expenses excluding any share-based compensation expenses and acquisition and integration costs (non-GAAP) were 83.1% of total revenues for the full year 2014 compared to 84.2% for the full year 2013.

 

·

Total leased-and-operated hotel costs were RMB 1.30 billion (US$209.3 million) for the fourth quarter of 2014, representing 93.3% of the leased-and-operated hotel revenues for the quarter compared to 88.9% 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 93.1% of the leased-and-operated hotel revenues in the fourth quarter of 2014 compared to 88.6% in the same period a year ago.

 

Total leased-and-operated hotel costs were RMB 5.02 billion (US$809.6 million) for the full year 2014, representing 87.5% of the leased-and-operated hotels revenues for the year compared to 87.1% for the full year 2013. Total leased-and-operated hotel costs excluding any share-based compensation expenses and acquisition and integration costs (non-GAAP) were 87.2% of the leased-and-operated hotel revenues for the full year 2014 compared to 86.7% for the full year 2013.

 

The year-over-year increase in total leased-and-operated hotel costs as a percentage of leased-and-operated hotel revenues for both the fourth quarter and full year 2014 were mainly due to the decreased RevPAR resulting in a lower revenue base per hotel while a significant portion of the hotel cost was fixed.

 

Pre-opening cost was RMB 18.5 million (US$3.0 million) for the fourth quarter of 2014 compared to RMB 13.5 million in the fourth quarter of 2013, and RMB 44.6 million (US$ 7.2 million) for the full year 2014 compared to RMB 77.9 million for the full year 2013.

 

·

Franchised-and-managed hotels personnel costs were RMB 34.3 million (US$5.5 million) for the fourth quarter of 2014, representing 14.0% of the franchised-and-managed hotel revenues for the quarter, compared to 15.3% in the same period a year ago. Franchised-and-managed hotels personnel costs excluding share-based compensation expenses (non-GAAP) were 12.6% of franchised-and-managed hotel revenues in the fourth quarter of 2014, compared to 14.0% in the same period of 2013. The year-over-year decrease in franchised-and-managed hotels personnel costs as a percentage of franchised-and-managed hotel revenues for the fourth quarter was mainly due to the lower year-end bonuses.

 

 

Franchised-and-managed hotels personnel costs were RMB 201.2 million (US$32.4 million) for the full year 2014, representing 21.4% of the franchised-and-managed hotel revenues for the year, compared to 20.6% for the full year 2013. Franchised-and-managed hotels personnel costs excluding share-based compensation expenses (non-GAAP) were 20.0% of franchised-and-managed hotel revenues for the full year 2014, compared to 19.1% for the full year 2013. The year-over-year increase in franchised-and-managed hotel personnel costs as a percentage of franchised-and-managed hotel revenues was mainly due to a lower revenue base per hotel resulting from a decreased RevPAR in 2014.

 

·

Sales and marketing expenses were RMB 22.7 million (US$3.7 million) for the fourth quarter of 2014, representing 1.4% of total revenues for the quarter compared to 2.9% in the same period a year ago. Sales and marketing expenses excluding share-based compensation expenses (non-GAAP) were 1.4% of total revenues for the fourth quarter of 2014 compared to 2.9% in the same period of 2013. The year-over-year decrease in sales and marketing expenses as a percentage of total revenues for the fourth quarter was mainly due to the timing of certain branding initiatives and promotional programs. Due to the soft market condition, we did not invest heavily in such initiatives and programs in the fourth quarter of 2014.

 

Sales and marketing expenses were RMB 109.8 million (US$17.7 million) for the full year 2014, representing 1.6% of total revenues for the year compared to 1.7% for the full year 2013. Sales and marketing expenses excluding share-based compensation expenses (non-GAAP) were 1.6% of total revenues for the full year 2014 compared to 1.7% for the full year 2013. The company remained the consistent on-going marketing efforts to support brand building and revenue growth.

 

·

General and administrative expenses were RMB 77.4 million (US$12.5 million) for the fourth quarter of 2014, representing 4.7% of total revenues compared to 5.1% in the same period a year ago. General and administrative expenses excluding share-based compensation expenses and integration costs (non-GAAP) were 3.7% of total revenues for the quarter compared to 4.1% in the same period of 2013.

 

General and administrative expenses were RMB 312.0 million (US$50.3 million) for the full year 2014, representing 4.7% of total revenues compared to 4.9% for the full year 2013. General and administrative expenses excluding share-based compensation expenses and acquisition and integration costs (non-GAAP) were 3.7% of total revenues for the full year 2014 compared to 3.9% for the full year 2013.

 

The year-over-year decreases in general and administrative expenses as a percentage of total revenues for both the fourth quarter and full year 2014 were driven by effective cost control at headquarters and continued leverage from economy of scale.

 

Income from Operations was RMB 102.5 million (US$16.5 million) for the fourth quarter of 2014, representing 6.3% of total revenues compared to 6.6% in the same period a year ago. Income from operations excluding share-based compensation expenses and integration costs (non-GAAP) for the fourth quarter of 2014 was RMB 125.6 million (US$20.2 million), or 7.7% of total revenues, compared to RMB 127.2 million, or 7.9% of total revenues, in the same period of 2013. The year-over-year decrease in income from operations margin rate for the quarter was mainly due to lower revenue base per hotel, which was partially offset by the increased mix of higher-margin revenue contribution from franchised-and-managed operations, as well as to higher pre-opening cost, which was mainly due to timing of new leased and operated hotel development, and to a certain extent, accelerated Yitel development.

 

Income from operations was RMB 640.6 million (US$103.3 million) for the full year 2014, representing 9.6% of total revenues compared to 8.3% in the same period a year ago. Income from operations excluding share-based compensation expenses and acquisition and integration costs (non-GAAP) for the full year 2014 was RMB 736.3 million (US$118.7 million), or 11.0% of total revenues, compared to 9.8% of total revenues for full year 2013. The year-over-year increase in income from operations margin rate for the full year 2014 was mainly driven by the increased mix of higher-margin revenue contribution from franchised-and-managed operations, productivity gains and continual cost control initiatives.

 

EBITDA (non-GAAP)  

(RMB/USD in Millions)						Fourth Quarter 2014																Fourth Quarter 2013
		RMB				USD				%Rev				V%				RMB				USD				%Rev
EBITDA (Non-GAAP)			333.4				53.7				20.4	%			30.8	%			254.9				41.1				15.8	%
Net Foreign Exchange (Gain)			-4.6				-0.7				-0.3	%							-13.6				-2.2				-0.8	%
Share-Based Compensation Expenses			21.3				3.4				1.3	%							19.6				3.2				1.2	%
Integration Cost			1.8				0.3				0.1	%							2.0				0.3				0.1	%
Loss on Fair Value Change in Convertible Notes			7.9				1.3				0.5	%							70.9				11.4				4.4	%
Adjusted EBITDA (Non-GAAP)			359.8				58.0				22.0	%			7.8	%			333.9				53.8				20.7	%

 

(RMB/USD in Millions)						Full Year 2014																Full Year 2013
		RMB				USD				%Rev				V%				RMB				USD				%Rev
EBITDA (Non-GAAP)			1,546.8				249.3				23.1	%			32.7	%			1,165.6				187.9				18.3	%
Net Foreign Exchange Loss/(Gain)			11.5				1.9				0.2	%							-49.8				-8.0				-0.8	%
Share-Based Compensation Expenses			87.7				14.1				1.3	%							86.0				13.9				1.4	%
Accelerated fee amortization on early extinguishment of Term Loan			-				-				-								41.9				6.7				0.7	%
Acquisition expenses			0.7				0.1				0.0	%							-				-				-
Integration Cost			7.3				1.2				0.1	%							15.0				2.4				0.2	%
Gain on waived liability related with Motel acquisition			-11.9				-1.9				-0.2	%							-				-				-
Gain on buy-back of convertible notes			-0.7				-0.1				0.0	%							-				-				-
(Gain) on change in fair value of interest swap transaction			-				-				-								-0.9				-0.1				0.0	%
(Gain)/Loss on Fair Value Change in Convertible Notes			-71.9				-11.6				-1.1	%							133.4				21.5				2.1	%
Adjusted EBITDA (Non-GAAP)			1,569.5				253.0				23.5	%			12.8	%			1,391.2				224.2				21.9	%

 

Note:

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

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

 

 

Consolidated Net Income Attributable to Homeinns Hotel Group’s Shareholders

(RMB/USD in Millions)						Fourth Quarter 2014																Fourth Quarter 2013
		RMB				USD				%Rev				V%				RMB				USD				%Rev
Net Income (GAAP)			84.6				13.6				5.2	%			558.0	%			12.9				2.1				0.8	%
Net Foreign Exchange Loss / (Gain)			-4.6				-0.7				-0.3	%							-13.6				-2.2				-0.8	%
Share-Based Compensation Expenses			21.3				3.4				1.3	%							19.6				3.2				1.2	%
Integration Cost			1.8				0.3				0.1	%							2.0				0.3				0.1	%
Loss on Fair Value Change in Convertible Notes			7.9				1.3				0.5	%							70.9				11.4				4.4	%
Adjusted Net Income (Non-GAAP)			110.9				17.9				6.8	%			20.8	%			91.8				14.8				5.7	%

 

(RMB/USD in Millions)						Full Year 2014																Full Year 2013
		RMB				USD				%Rev				V%				RMB				USD				%Rev
Net Income (GAAP)			513.1				82.7				7.7	%			161.5	%			196.2				31.6				3.1	%
Net Foreign Exchange Loss / (Gain)			11.5				1.9				0.2	%							-49.8				-8.0				-0.8	%
Share-Based Compensation Expenses			87.7				14.1				1.3	%							86.0				13.9				1.4	%
Acquisition expenses			0.7				0.1				0.0	%							-				-				-
Integration Cost			7.3				1.2				0.1	%							15.0				2.4				0.2	%
Interest expenses -- Upfront fee amortization of term loans			-				-				-								1.0				0.2				0.0	%
Accelerated fee amortization on early extinguishment of Term Loan			-				-				-								41.9				6.7				0.7	%
Gain on waived liability related with Motel acquisition			-11.9				-1.9				-0.2	%							-				-				-
Gain on buy-back of convertible notes			-0.7				-0.1				0.0	%							-				-				-
(Gain)/loss on change in fair value of interest swap transaction			-				-				-								-0.9				-0.1				0.0	%
(Gain)/loss on Fair Value Change in Convertible Notes			-71.9				-11.6				-1.1	%							133.4				21.5				2.1	%
Adjusted Net Income (Non-GAAP)			535.8				86.4				8.0	%			26.7	%			422.8				68.1				6.7	%

 

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) increased year over year by 20.8% to RMB 110.9 million (US$17.9 million) for the fourth quarter of 2014, representing 6.8% of total revenues compared to 5.7% in the same period a year ago, and increased 26.7% to RMB 535.8 million (US$86.4 millon) for the full year, representing 8.0% of total revenues compared to 6.7% in the same period a year ago. The year-over-year increases in adjusted net margin rate for both the quarter and full year were mainly due to lower interest expense benefited from operating cash inflow and higher non-operating income.

 

Basic and Diluted Earnings Per Ordinary Share and Per ADS      

		Fourth Quarter 2014																Full Year 2014
		Ordinary Share								ADS Share								Ordinary Share								ADS Share
		RMB				USD				RMB				USD				RMB				USD				RMB				USD
Basic			0.88				0.14				1.77				0.28				5.38				0.87				10.76				1.73
Diluted			0.88				0.14				1.77				0.28				4.55				0.73				9.10				1.47
Adjusted Basic (Non-GAAP)			1.16				0.19				2.32				0.37				5.62				0.91				11.24				1.81
Adjusted Diluted (Non-GAAP)			1.13				0.18				2.26				0.36				5.43				0.87				10.85				1.75

 

Cash Flow

 

Net operating cash inflow for the fourth quarter of 2014 was RMB 348.1 million (US$56.1 million), compared to RMB 283.5 million in the same period of 2013. Capitalized expenditures for the fourth quarter of 2014 were RMB 187.5 million (US$30.2 million), while related cash paid for capital expenditures during the quarter was RMB 181.2 million (US$29.2 million).

 

For the full year 2014, net operating cash inflow was RMB 1.35 billion (US$216.8 million), compared to RMB 1.19 billion for the full year 2013. Capitalized expenditures for the full year 2014 were RMB 606.5 million (US$97.7 million), while related cash paid for capital expenditures during the full year 2014 was RMB 612.8 million (US$98.8 million).

 

Balance Sheet

 

As of December 31, 2014, Homeinns Hotel Group had cash and cash equivalents of RMB 949.7 million (US$153.1 million). The outstanding balance of convertible notes issued in December 2010 (measured at fair value) was RMB 1.03 billion (US$165.9 million).

 

Other Recent Events

 

In a separate press release issued today, the Company announced that its Board of Directors has approved a share repurchase program of up to $35 million, effective for one year from March 11, 2015. Under the program, the Company is authorized to repurchase up to $35 million worth of outstanding American depositary shares and ordinary shares of the Company from time to time depending on market conditions and other factors and in accordance with relevant rules under United States securities regulations. The repurchase program does not obligate Homeinns to make repurchases at any specific time. Homeinns’ Board of Directors will review the share repurchase program periodically and may authorize adjustment of its terms and size accordingly. The share repurchase program will be funded by the Company’s available cash balance.

 

 

Outlook for First Quarter and Full Year 2015

 

Homeinns Hotel Group targets to open no fewer than 400 new hotels in 2015, including approximately 10% as leased-and-operated hotels and 90% as franchised-and-managed hotels.

 

Homeinns Hotel Group expects total revenues for the Company for 2015 to be in the range of RMB 6,800 million to RMB 7,000 million. Total revenues for the Company in the first quarter of 2015 are expected to be in the range of RMB 1,445 million to RMB 1,475 million.

 

These forecasts reflect the Company’s current and preliminary views and are subject to change.

 

Mr. Sun continued, “As we look ahead into 2015, we are not expecting a quick market rebound and therefore we will be careful in balancing the speed of new hotel development with profitability and will also take the opportunity to fine-tune our focus for hotel expansion. The success of our multi-branded platform has given us the confidence to devote more resources to the mid-scale hotel segment by further accelerating Yitel development and rolling out our new brand, Homeinn Plus. Meanwhile, we will focus intently on internal programs to further enhance customer service and the customer experience and improve operating efficiency and cost control effectiveness. On top of this, we will also continue to drive new initiatives such as the online retail platform and the Home Alliance program to capture new opportunities with innovation and technology improvements. Taken together, we believe that all of these initiatives will leave us well placed in 2015 to navigate the market and take full advantage of the market recovery when it arrives. We remain confident about the long-term prospects of the travel and lodging market in China and about our ability to deliver value to shareholders.”

 

This announcement contains translations of certain RMB amounts into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB 6.2046 to US$1.00, the noon buying rate for December 31, 2014 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 Wednesday, March 11, 2015 (9 AM Beijing/Hong Kong Time on Thursday, March 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 March 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:	1800 008 585 or +61 2 9641 7900
International:	+61 2 9641 7900
Replay Passcode:	1192819

 

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 Group’s performance, and both management and investors benefit from referring to these non-GAAP financial measures in assessing the Group’s performance and when planning and forecasting future periods. Management believes that EBITDA, defined as earnings before interest, income tax expense, depreciation and amortization, is a useful financial metric to assess 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, and took control of Motel effective on October 1, 2011. Homeinns Hotel Group has consolidated Motel’s operating and financial results since October 1, 2011. Homeinns Hotel Group has presented certain separated financial data of Motel in this earning release for the purpose of providing more information to investors. Homeinns Hotel Group had substantially completed Motel’s integration as of the third quarter of 2013 and ceased to present separate operating metrics and revenues for Motel.

 

For investor and media inquiries, please contact:

 

Ethan Ruan

Homeinns Hotel Group

Tel: +86-21-3337-3333*3872

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, 2013				December 31, 2014
		RMB '000				RMB '000				US$ '000
ASSETS
Current assets:
Cash and cash equivalents			1,156,743				949,690				153,062
Restricted cash			173,276				12,726				2,051
Accounts receivable, net			99,964				95,501				15,392
Receivables from related parties			5,509				3,476				560
Consumables			41,231				44,446				7,163
Prepayments and other current assets			181,232				171,703				27,674
Deferred tax assets			78,839				129,685				20,901
Total current assets			1,736,794				1,407,227				226,803
Investment			5,833				11,709				1,887
Property and equipment, net			4,049,337				4,000,041				644,690
Goodwill			2,254,631				2,323,241				374,438
Intangible assets, net			1,112,499				1,126,636				181,581
Other assets			86,027				90,995				14,666
Non-current deferred tax assets			407,564				434,847				70,085
Total assets			9,652,685				9,394,696				1,514,150
LIABILITIES
Current liabilities:
Accounts payable			89,170				86,949				14,014
Payables to related parties			3,029				4,166				671
Financial liability, current portion2			-				1,029,577				165,938
Finance lease liabilities			1,376				-				-
Salaries and welfare payable			222,865				228,127				36,767
Income tax payable			88,551				117,830				18,991
Other taxes payable			31,344				34,074				5,492
Deferred revenues			202,949				225,417				36,331
Other unpaid and accruals			228,881				255,460				41,173
Other payables			911,642				742,853				119,725
Deferred tax liability			52,155				60,764				9,793
Total current liabilities			1,831,962				2,785,217				448,895
Long term loans			713,337				-				-
Deferred rental			691,456				705,284				113,671
Deferred revenues			54,075				51,289				8,266
Deposits due to franchisees			115,351				144,892				23,352
Other long term payables			20,537				13,018				2,098
Unfavorable lease liabilities			337,627				331,282				53,393
Financial liabilities2			1,157,295				-				-
Deferred tax liabilities			283,522				292,575				47,155
Total liabilities			5,205,162				4,323,557				696,830
Commitments and contingencies
Shareholders’ equity
Ordinary shares (US$0.005 par value; 200,000,000 shares authorized, 94,814,866 and 95,703,960 shares issued and outstanding as of December 31, 2013 and December 31 2014, respectively)			3,671				3,698				596
Additional paid-in capital			3,080,596				3,191,076				514,308
Statutory reserves			206,892				256,013				41,262
Retained earnings			1,140,252				1,604,246				258,558
Total Home Inns shareholders' equity			4,431,411				5,055,033				814,724
Noncontrolling interests			16,112				16,106				2,596
Total  shareholders’ equity			4,447,523				5,071,139				817,320
Total liabilities and shareholders’ equity			9,652,685				9,394,696				1,514,150

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2046 on December 31, 2014, 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																Year Ended
		December 31, 2013				September 30, 2014				December 31, 2014								December 31,2013				December 31,2014
		RMB '000				RMB '000				RMB '000				US$ '000				RMB '000				RMB '000				US$ '000
Revenues:
Leased-and-operated hotels			1,401,635				1,612,027				1,391,084				224,202				5,587,480				5,741,804				925,411
Franchised-and-managed hotels			208,048				264,358				244,219				39,361				765,491				940,944				151,653
Total revenues			1,609,683				1,876,385				1,635,303				263,563				6,352,971				6,682,748				1,077,064
Less: Business tax and related surcharges			(98,490	)			(111,943	)			(100,323	)			(16,169	)			(391,821	)			(411,118	)			(66,260	)
Net revenues			1,511,193				1,764,442				1,534,980				247,394				5,961,150				6,271,630				1,010,804
Operating costs and expenses:
Leased-and-operated hotel costs –
Rents and utilities			(533,188	)			(539,156	)			(564,347	)			(90,956	)			(2,108,924	)			(2,172,804	)			(350,192	)
Personnel costs			(256,064	)			(279,158	)			(256,033	)			(41,265	)			(1,073,754	)			(1,075,222	)			(173,294	)
Depreciation and amortization			(180,503	)			(188,102	)			(187,816	)			(30,270	)			(692,945	)			(742,886	)			(119,731	)
Consumables, food and beverage			(92,034	)			(108,793	)			(97,864	)			(15,773	)			(343,029	)			(362,760	)			(58,466	)
Others			(184,221	)			(180,919	)			(192,474	)			(31,021	)			(648,299	)			(669,441	)			(107,894	)
Total leased-and-operated hotel costs			(1,246,010	)			(1,296,128	)			(1,298,534	)			(209,285	)			(4,866,951	)			(5,023,113	)			(809,577	)
Personnel costs of Franchised-and-managed hotels			(31,855	)			(71,131	)			(34,280	)			(5,525	)			(157,314	)			(201,244	)			(32,435	)
Sales and marketing expenses			(47,040	)			(31,375	)			(22,700	)			(3,659	)			(109,935	)			(109,813	)			(17,699	)
General and administrative expenses			(81,406	)			(81,457	)			(77,426	)			(12,479	)			(313,480	)			(312,008	)			(50,287	)
Total operating costs and expenses			(1,406,311	)			(1,480,091	)			(1,432,940	)			(230,948	)			(5,447,680	)			(5,646,178	)			(909,998	)
Other income			637				139				448				72				11,089				15,193				2,449
Income from operations			105,519				284,490				102,488				16,518				524,559				640,645				103,255
Interest income			2,331				2,864				3,777				609				6,216				9,295				1,498
Interest expenses			(11,958	)			(11,040	)			(5,674	)			(914	)			(54,149	)			(41,759	)			(6,730	)
Accelerated fee amortization on early extinguishment of Term Loan			-				-				-				-				(41,872	)			-				-
Loss from equity investment			(466	)			(10	)			(193	)			(31	)			(792	)			(324	)			(52	)
(Loss)/gain on change in fair value of convertible notes			(70,870	)			29,304				(7,851	)			(1,265	)			(133,404	)			71,945				11,595
Gain on buy-back of convertible notes			-				650				-				-				-				650				105
Non-operating income			20,879				27,073				41,400				6,672				53,663				81,739				13,174
Non-operating expenses			-				-				-				-				(1,000	)			-				-
Foreign exchange gain/(loss), net			13,551				(841	)			4,606				742				49,830				(11,500	)			(1,853	)
Income before income tax expenses and noncontrolling interests			58,986				332,490				138,553				22,331				403,051				750,691				120,992
Income tax expense			(46,374	)			(84,384	)			(53,064	)			(8,552	)			(206,997	)			(231,323	)			(37,283	)
Net income			12,612				248,106				85,489				13,779				196,054				519,368				83,709
Less:Net loss/(income) attributable to noncontrolling interests			241				(2,594	)			(918	)			(148	)			168				(6,253	)			(1,008	)
Net income attributable to ordinary shareholders			12,853				245,512				84,571				13,631				196,222				513,115				82,701
Earnings per share
— Basic			0.14				2.57				0.88				0.14				2.12				5.38				0.87
— Diluted			0.14				2.15				0.88				0.14				2.10				4.55				0.73
Weighted average ordinary shares outstanding
— Basic			93,880				95,556				95,655				95,655				92,676				95,345				95,345
— Diluted			94,440				103,025				95,655				95,655				93,418				102,814				102,814
Share-based compensation expense was included in the statement of operations as follows:
Leased-and-operated hotel costs – Personnel costs			1,789				1,525				1,856				299				7,904				7,702				1,241
Personnel costs of Franchised-and-managed hotels			2,743				2,679				3,479				561				11,013				13,152				2,120
Sales and marketing expenses			431				246				179				29				1,514				832				134
General and administrative expenses			14,656				13,663				15,810				2,548				65,584				66,020				10,640

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2046 on December 31, 2014, representing the certificated exchange rate published by the Federal Reserve Board.

 

 

Homeinns Hotel Group

Reconciliation of GAAP and Non-GAAP Results            

 

		Quarter Ended December 31, 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								RMB '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs			(1,298,534	)			79.4	%			1,856				-				1,478				0.2	%			(1,295,200	)			79.2	%
Personnel costs of Franchised-and-managed hotels			(34,280	)			2.1	%			3,479				-				-				0.2	%			(30,801	)			1.9	%
Sales and marketing expenses			(22,700	)			1.4	%			179				-				-				0.0	%			(22,521	)			1.4	%
General and administrative expenses			(77,426	)			4.7	%			15,810				-				317				1.0	%			(61,299	)			3.7	%
Total operating costs and expenses			(1,432,940	)			87.6	%			21,324				-				1,795				1.4	%			(1,409,821	)			86.2	%
Income from operations			102,488				6.3	%			21,324				-				1,795				1.4	%			125,607				7.7	%

 

		Quarter Ended December 31, 2014
		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								US$ '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs			(209,285	)			79.4	%			299				-				238				0.2	%			(208,748	)			79.2	%
Personnel costs of Franchised-and-managed hotels			(5,525	)			2.1	%			561				-				-				0.2	%			(4,964	)			1.9	%
Sales and marketing expenses			(3,659	)			1.4	%			29				-				-				0.0	%			(3,630	)			1.4	%
General and administrative expenses			(12,479	)			4.7	%			2,548				-				51				1.0	%			(9,880	)			3.7	%
Total operating costs and expenses			(230,948	)			87.6	%			3,437				-				289				1.4	%			(227,222	)			86.2	%
Income from operations			16,518				6.3	%			3,437				-				289				1.4	%			20,244				7.7	%

 

		Quarter Ended September 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								RMB '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs		(1,296,128		)		69.1		%		1,525				-				1,427				0.2		%		(1,293,176		)		68.9		%
Personnel costs of Franchised-and-managed hotels		(71,131		)		3.8		%		2,679				-				-				0.1		%		(68,452		)		3.6		%
Sales and marketing expenses			(31,375	)			1.7	%			246				-				-				0.0	%			(31,129	)			1.7	%
General and administrative expenses			(81,457	)			4.3	%			13,663				-				317				0.7	%			(67,477	)			3.6	%
Total operating costs and expenses			(1,480,091	)			78.9	%			18,113				-				1,744				1.1	%			(1,460,234	)			77.8	%
Income from operations			284,490				15.2	%			18,113				-				1,744				1.1	%			304,347				16.2	%

 

		Quarter Ended December 31, 2013
		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								RMB '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs		(1,246,010		)		77.4		%		1,789				-				1,704				0.2		%		(1,242,517		)		77.2		%
Personnel costs of Franchised-and-managed hotels		(31,855		)		2.0		%		2,743				-				-				0.2		%		(29,112		)		1.8		%
Sales and marketing expenses			(47,040	)			2.9	%			431				-				-				0.0	%			(46,609	)			2.9	%
General and administrative expenses			(81,406	)			5.1	%			14,656				-				317				0.9	%			(66,433	)			4.1	%
Total operating costs and expenses			(1,406,311	)			87.4	%			19,619				-				2,021				1.3	%			(1,384,671	)			86.0	%
Income from operations			105,519				6.6	%			19,619				-				2,021				1.3	%			127,159				7.9	%

 

		Year Ended December 31, 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								RMB '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs		(5,023,113		)		75.2		%		7,702				-				6,017				0.2		%		(5,009,394		)		75.0		%
Personnel costs of Franchised-and-managed hotels		(201,244		)		3.0		%		13,152				-				-				0.2		%		(188,092		)		2.8		%
Sales and marketing expenses			(109,813	)			1.6	%			832				-				-				0.0	%			(108,981	)			1.6	%
General and administrative expenses			(312,008	)			4.7	%			66,020				691				1,268				1.0	%			(244,029	)			3.7	%
Total operating costs and expenses			(5,646,178	)			84.5	%			87,706				691				7,285				1.4	%			(5,550,496	)			83.1	%
Income from operations			640,645				9.6	%			87,706				691				7,285				1.4	%			736,327				11.0	%

 

		Year Ended December 31, 2014
		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								US$ '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs			(809,577	)			75.2	%			1,241				-				970				0.2	%			(807,366	)			75.0	%
Personnel costs of Franchised-and-managed hotels			(32,435	)			3.0	%			2,120				-				-				0.2	%			(30,315	)			2.8	%
Sales and marketing expenses			(17,699	)			1.6	%			134				-				-				0.0	%			(17,565	)			1.6	%
General and administrative expenses			(50,287	)			4.7	%			10,640				111				204				1.0	%			(39,332	)			3.7	%
Total operating costs and expenses			(909,998	)			84.5	%			14,135				111				1,174				1.4	%			(894,578	)			83.1	%
Income from operations			103,255				9.6	%			14,135				111				1,174				1.4	%			118,675				11.0	%

 

		Year Ended December 31, 2013
		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								RMB '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs			(4,866,951	)			76.6	%			7,904				-				13,761				0.3	%			(4,845,286	)			76.3	%
Personnel costs of Franchised-and-managed hotels			(157,314	)			2.5	%			11,013				-				-				0.2	%			(146,301	)			2.3	%
Sales and marketing expenses			(109,935	)			1.7	%			1,514				-				-				0.0	%			(108,421	)			1.7	%
General and administrative expenses			(313,480	)			4.9	%			65,584				-				1,286				1.1	%			(246,610	)			3.9	%
Total operating costs and expenses			(5,447,680	)			85.8	%			86,015				-				15,047				1.6	%			(5,346,618	)			84.2	%
Income from operations			524,559				8.3	%			86,015				-				15,047				1.6	%			625,621				9.8	%

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2046 on December 31, 2014, representing the certificated exchange rate published by the Federal Reserve Board.                                

 

 

Homeinns Hotel Group

Reconciliation of GAAP and Non-GAAP Results (continued)                

 

		Quarter Ended																Year Ended
		December 31, 2013				September 30, 2014				December 31, 2014								December 31, 2013				December 31, 2014
		RMB '000				RMB '000				RMB '000				US$ '000				RMB '000				RMB '000				US$ '000
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net income attributable to ordinary shareholders (GAAP)			12,853				245,512				84,571				13,631				196,222				513,115				82,701
Foreign exchange (gain)/loss, net			(13,551	)			841				(4,606	)			(742	)			(49,830	)			11,500				1,853
Share-based compensation			19,619				18,113				21,324				3,437				86,015				87,706				14,135
Acquisition expenses			-				-				-				-				-				691				111
Integration cost			2,021				1,744				1,795				289				15,047				7,285				1,174
Interest expenses -- Upfront fee amortization of term loans			-				-				-				-				959				-				-
Accelerated fee amortization on early extinguishment of Term Loan			-				-				-				-				41,872				-				-
Gain on waived liability related with Motel acquisition			-				(11,919	)			-				-				-				(11,919	)			(1,921	)
Gain on buy-back of convertible notes			-				(650	)			-				-				-				(650	)			(105	)
Non-operating income-- Gain on change in fair value of interest swap transaction			-				-				-				-				(912	)			-				-
Loss/(gain) on change in fair value of convertible notes			70,870				(29,304	)			7,851				1,265				133,404				(71,945	)			(11,595	)
Adjusted net income attributable to ordinary shareholders (Non-GAAP)			91,812				224,337				110,935				17,880				422,777				535,783				86,353

 

		Quarter Ended																Year Ended
		December 31, 2013				September 30, 2014				December 31, 2014								December 31, 2013				December 31, 2014
		RMB '000				RMB '000				RMB '000				US$ '000				RMB '000				RMB '000				US$ '000
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Earnings per share (GAAP)
— Basic			0.14				2.57				0.88				0.14				2.12				5.38				0.87
— Diluted			0.14				2.15				0.88				0.14				2.10				4.55				0.73
Weighted average ordinary shares outstanding
— Basic			93,880				95,556				95,655				95,655				92,676				95,345				95,345
— Diluted			94,440				103,025				95,655				95,655				93,418				102,814				102,814
Adjusted earnings per share (Non-GAAP)
— Basic			0.98				2.35				1.16				0.19				4.56				5.62				0.91
— Diluted			0.96				2.23				1.13				0.18				4.41				5.43				0.87
Weighted average ordinary shares outstanding
— Basic			93,880				95,556				95,655				95,655				92,676				95,345				95,345
— Diluted			101,894				103,025				102,704				102,704				100,872				102,814				102,814

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.2046 on December 31, 2014, 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																Year Ended
		December 31, 2013				September 31, 2014				December 31, 2014								December 31, 2013				December 31, 2014
		RMB '000				RMB '000				RMB '000				US$ '000				RMB '000				RMB '000				US$ '000
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net income attributable to ordinary shareholders			12,853				245,512				84,571				13,631				196,222				513,115				82,701
Interest income			(2,331	)			(2,864	)			(3,777	)			(609	)			(6,216	)			(9,295	)			(1,498	)
Interest expenses			11,958				11,040				5,674				914				54,149				41,759				6,730
Income tax expense			46,374				84,384				53,064				8,552				206,997				231,323				37,283
Depreciation and amortization			186,061				198,086				193,863				31,245				714,482				769,911				124,087
EBITDA (Non-GAAP)			254,915				536,158				333,395				53,733				1,165,634				1,546,813				249,303
Foreign exchange (gain)/loss, net			(13,551	)			841				(4,606	)			(742	)			(49,830	)			11,500				1,853
Share-based compensation			19,619				18,113				21,324				3,437				86,015				87,706				14,135
Accelerated fee amortization on early extinguishment of Term Loan							-				-				-				41,872				-				-
Acquisition expenses							-				-				-				-				691				111
Integration cost			2,021				1,744				1,795				289				15,047				7,285				1,174
Gain on waived liability related with Motel acquisition							(11,919	)			-				-				-				(11,919	)			(1,921	)
Gain on buy-back of convertible notes							(650	)			-				-				-				(650	)			(105	)
Non-operating income-- Gain on change in fair value of interest swap transaction																			(912	)			-				-
Loss/(gain) on change in fair value of convertible notes			70,870				(29,304	)			7,851				1,265				133,404				(71,945	)			(11,595	)
Adjusted EBITDA (Non-GAAP)			333,874				514,983				359,759				57,982				1,391,230				1,569,481				252,955
%of total revenue			20.7	%			27.4	%			22.0	%			22.0	%			21.9	%			23.5	%			23.5	%

 

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".                        

 

 

Homeinns Hotel Group

Operating Data    

 

		As of and for the quarter ended																																				As of and for the year ended
		December 31, 2013												September 30, 2014												December 31, 2014												December 31, 2013												December 31, 2014
		Group				Motel 168				excluding Motel 168				Group				Motel 168				excluding Motel 168				Group				Motel 168				excluding Motel 168				Group				Motel 168				excluding Motel 168				Group				Motel 168				excluding Motel 168
Total Hotels in operation:			2,180				378				1,802				2,496				392				2,104				2,609				402				2,207				2,180				378				1,802				2,609				402				2,207
Leased-and-operated hotels			872				163				709				910				167				743				914				167				747				872				163				709				914				167				747
Franchised-and-managed hotels			1,308				215				1,093				1,586				225				1,361				1,695				235				1,460				1,308				215				1,093				1,695				235				1,460
Total rooms			256,555				52,889				203,666				286,012				52,942				233,070				296,075				53,699				242,376				256,555				52,889				203,666				296,075				53,699				242,376
Occupancy rate (as a percentage)			84.0	%			80.8	%			84.8	%			86.7	%			83.9	%			87.6	%			79.6	%			77.1	%			80.1	%			86.1	%			81.3	%			87.3	%			83.6	%			80.4	%			84.3	%
Average daily rate (in RMB)			163				161				164				174				168				176				163				163				163				165				160				167				165				162				166
RevPAR (in RMB)			137				130				139				151				141				154				130				125				131				142				130				146				138				130				140

 

Like-for-like performance for hotels opened for at least 18 months during the current quarter and the full year                                            

 

		As of and for the quarter ended																								As of and for the year ended
		December 31, 2013												December 31, 2014												December 31, 2013												December 31, 2014
		Group				Motel 168				excluding Motel 168				Group				Motel 168				excluding Motel 168				Group				Motel 168				excluding Motel 168				Group				Motel 168				excluding Motel 168
Total Hotels in operation:			1,899				334				1,565				1,899				334				1,565				1,899				334				1,565				1,899				334				1,565
Leased-and-operated hotels			846				180				666				844				180				664				846				180				666				844				180				664
Franchised-and-managed hotels			1,053				154				899				1,055				154				901				1,053				154				899				1,055				154				901
Total rooms			222,830				44,378				178,452				221,376				43,168				178,208				222,830				44,378				178,452				221,376				43,168				178,208
Occupancy rate (as a percentage)			85.3	%			82.0	%			86.1	%			81.8	%			79.8	%			82.3	%			87.8	%			82.7	%			89.2	%			85.9	%			82.5	%			86.8	%
Average daily rate (in RMB)			163				159				164				164				163				164				166				159				168				166				162				167
RevPAR (in RMB)			139				130				141				134				130				135				146				132				150				143				134				145

 

Two homeinn Leased-and-operated hotels were legally converted into Franchised-and-managed hotels in 2014.

“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.

The operating data of multi-brand conversion hotels were included in "Motel 168".                     

 

 

Exhibit 99.2

 

Homeinns Hotel Group Announces Share Repurchase Program

 

Shanghai, March 11, 2015 — Homeinns Hotel Group (NASDAQ: HMIN) (“Homeinns” or the “Company”), a leading economy hotel chain in China, today announced that its Board of Directors has approved a share repurchase program of up to $35 million, effective for one year from March 11, 2015.

 

Under the program, the Company is authorized to repurchase up to $35 million worth of outstanding American depositary shares (“ADSs”) and ordinary shares of the Company from time to time depending on market conditions and other factors and in accordance with relevant rules under United States securities regulations. The repurchase program does not obligate Homeinns to make repurchases at any specific time. Homeinns’ Board of Directors will review the share repurchase program periodically and may authorize adjustment of its terms and size accordingly. The share repurchase program will be funded by the Company’s available cash balance.

 

Mr. David Sun, the Company’s chief executive officer, commented: “This share repurchase program reflects our confidence in the value of our company, and in the long-term prospects for both our business and the travel and lodging industry in China. We also view this as the beginning of our effort to return cash to shareholders, as we transition to a brand franchising and hotel management company with strong free cash flow generating capability. We believe that the share repurchase program is in the best interest of our shareholders.”

 

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.

 

 

For investor and media inquiries, please contact:

 

Ethan Ruan
Homeinns Hotel Group
Tel: +86-21-3337-3333*3872
Email: [email protected]

 

Cara O’Brien
FTI Consulting
Tel: + 852-3768-4537
Email: [email protected]