Form 6-K Homeinns Hotel Group For: Mar 17

 

 

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 2016

 

 

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 17, 2016

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

 

 

Exhibit 99.1

 

Homeinns Hotel Group Reports Fourth Quarter and Full Year 2015 Financial Results

2,922 Hotels in Operation in 355 Cities across China

 

Shanghai, March 16, 2016 – 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, 2015.

  

Fourth Quarter and Full Year 2015 Highlights

 

·

Total revenues increased 2.6% year over year to RMB 1,677.4 million (US$258.9 million) for the fourth quarter of 2015. For the full year 2015, total revenues decreased 0.2% year over year to RMB 6,671.1 million (US$1,029.8 million).

·

Net loss attributable to ordinary shareholders was RMB 13.1 million (US$2.0 million) for the fourth quarter of 2015, compared with net income attributable to ordinary shareholders of RMB 84.6 million for the fourth quarter of 2014. For the full year 2015, net income attributable to ordinary shareholders was RMB 167.0 million (US$25.8 million), compared with net income attributable to ordinary shareholders of RMB 513.1 million for the full year 2014.

·

Adjusted net income attributable to ordinary shareholders (non-GAAP) decreased 44.6% year over year to RMB 61.5 million (US$9.5 million) for the fourth quarter of 2015. For the full year 2015, adjusted net income attributable to ordinary shareholders (non-GAAP) decreased 30.2% year over year to RMB 373.9 million (US$57.7 million).

·

EBITDA (non-GAAP) decreased 28.3% year over year to RMB 239.7 million (US$37.0 million) for the fourth quarter of 2015. For the full year 2015, EBITDA (non-GAAP) decreased 24.7% year over year to RMB 1,168.8 million (US$180.4 million).

·

Adjusted EBITDA (non-GAAP) decreased 12.9% year over year to RMB 314.2 million (US$48.5 million) for the fourth quarter of 2015. For the full year 2015, adjusted EBITDA (non-GAAP) decreased 12.7% year over year to RMB 1,375.7 million (US$212.4 million).

·

Net operating cash inflow decreased 37.9% year over year to RMB 216.2 million (US$33.4 million) for the fourth quarter of 2015 and decreased 16.2% year over year to RMB 1,127.8 million (US$174.1 million) for the full year 2015.

·

As of December 31, 2015, Homeinns operated 2,922 hotels in 355 cities across China, with a net addition of 135 hotels during the fourth quarter and 313 hotels during the full year 2015.

 

Hotel Development

 

		Hotels in Operations and Pipeline
		Group				Homeinn				Motel				Fairy- land				Yitel				Homeinn Plus				Superior*				Ripple*				Pebble Motel*				Comma**
Total Number of Hotels			2,922				2,341				422				29				68				53				1				2				4				2
Leased-and-Operated			929				680				162				21				29				35				0				0				0				2
Franchised-and-Managed			1,987				1,661				260				8				39				18				0				1				0				0
Franchised			6				0				0				0				0				0				1				1				4				0
Contracted or under Construction			171				95				22				2				21				20				0				0				0				11
Leased-and-Operated			33				4				2				0				8				8				0				0				0				11
Franchised-and-Managed			138				91				20				2				13				12				0				0				0				0
Under Due Diligence			165				129				10				0				10				9				0				1				3				3

* Superior, Ripple and Pebble Motel are new hotel brands launched during the fourth quarter of 2015.

**Comma is an apartment product launched during the fourth quarter of 2015.

  

		Openings								Closures*
		4Q2015				FY2015				4Q2015				FY2015
Total Number of Hotels			170				431				35				118
Leased-and-Operated			32				62				20				47
Franchised-and-Managed			132				363				15				71
Franchised			6				6				0				0

* Among these closures, 11 leased-and-operated hotels were closed due to conversion to our other brands, and one leased-and-operated hotel was closed and converted to a franchised-and-managed hotel during the fourth quarter of 2015. 26 leased-and-operated hotels were closed to convert to our other brands, and 3 leased-and-operated hotels were closed and converted to franchised-and-managed hotels during the full year 2015.

 

  

Operating Metrics

 

		Total Hotels
		4Q2015				3Q2015				4Q2014				FY2015				FY2014
Occupancy Rate			83.1	%			86.6	%			79.6	%			83.2	%			83.6	%
Average Daily Rate (ADR, RMB)			159				171				163				162				165
Revenue per Available Room (RevPAR, RMB)			132				148				130				134				138

 

		Hotels Opened for at least 18 Months
		4Q2015				4Q2014				FY2015				FY2014
Occupancy Rate			84.0	%			81.3	%			84.5	%			85.3	%
Average Daily Rate (ADR, RMB)			157				161				161				165
Revenue per Available Room (RevPAR, RMB)			132				131				136				141

  

For the fourth quarter of 2015, occupancy rate increased by 3.5 percentage points while ADR decreased by 2.5% compared with the fourth quarter of 2014, resulting in an increase of 1.5% in RevPAR. For the full year 2015, occupancy rate decreased by 0.4 percentage points while ADR decreased by 1.8% compared with the full year 2014, resulting in a decrease of 2.9% in RevPAR.

 

As of December 31, 2015, a total of 2,257 hotels had been in operation for at least 18 months. During the fourth quarter of 2015, occupancy rate of these hotels increased year over year from 81.3% to 84.0%, and ADR decreased year over year from RMB 161 to RMB 157, resulting in an increase in RevPAR by 0.8% from RMB 131 to RMB 132. For the full year 2015, occupancy rate of these hotels decreased year over year from 85.3% to 84.5%, and ADR decreased year over year from RMB 165 to RMB 161, resulting in a decrease in RevPAR by 3.5% from RMB 141 to RMB 136.

 

Homeinns Hotel Group had a total of 53.9 million unique non-corporate members under its frequent guests program as of December 31, 2015.

 

Financial Results for Fourth Quarter and Full Year 2015

 

Revenues
(RMB/USD in Millions)		4Q2015								4Q2014								FY2015								FY2014
		RMB				USD				RMB				V%				RMB				USD				RMB				V%
Leased-and-Operated Hotels			1,402.3				216.5				1,391.1				0.8	%			5,631.2				869.3				5,741.8				-1.9	%
Franchised-and-Managed Hotels			275.2				42.5				244.2				12.7	%			1,039.9				160.5				940.9				10.5	%
Total Revenues			1,677.4				258.9				1,635.3				2.6	%			6,671.1				1,029.8				6,682.7				-0.2	%
Less: Business Taxes			-99.7				-15.4				-100.3				-0.6	%			-395.4				-61.0				-411.1				-3.8	%
Net Revenues			1,577.7				243.6				1,535.0				2.8	%			6,275.7				968.8				6,271.6				0.1	%

 

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

For the fourth quarter of 2015, revenues from leased-and-operated hotels increased 0.8% year over year to RMB 1.40 billion (US$216.5 million). The year-over-year increase in revenues from leased-and-operated hotels in the fourth quarter of 2015 was mainly due to an increase in RevPAR. Revenues from franchised-and-managed hotels increased 12.7% year over year to RMB 275.2 million (US$42.5 million) for the fourth quarter of 2015. The year-over-year increase in revenues from franchised-and-managed hotels in the fourth quarter of 2015 was mainly driven by an increase in the number of hotels and hotel rooms in operation.

 

For the full year 2015, revenues from leased-and-operated hotels decreased 1.9% year over year to RMB 5.63 billion (US$869.3 million). The year-over-year decrease in revenues from leased-and-operated hotels in the full year 2015 was mainly due to a decrease in RevPAR. Revenues from franchised-and-managed hotels increased 10.5% year over year to RMB 1.04 billion (US$160.5 million) for the full year 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, although partially offset by a decrease in RevPAR.

 

 

  

Total Operating Costs and Expenses / Income from Operations

 

(RMB/USD in Millions)		Fourth Quarter 2015
														Adjusted
		GAAP Results												Non-GAAP Results*
		RMB				USD				Vpts				RMB				USD				Vpts
Leased-and-Operated Hotel Costs			1,352.7				208.8				1.2	pts			1,349.6				208.3				1.3	pts
Personnel Costs of Franchised-and-Managed Hotels			35.7				5.5				0.0	pts			31.8				4.9				0.0	pts
Sales and Marketing Expenses			41.3				6.4				1.1	pts			41.2				6.4				1.1	pts
General and Administrative Expenses			122.7				18.9				2.6	pts			68.5				10.6				0.3	pts
Total Operating Costs and Expenses			1,552.3				239.6				4.9	pts			1,491.1				230.2				2.7	pts
Income from Operations			19.9				3.1				-5.1	pts			81.0				12.5				-2.8	pts

 

		Full Year 2015
														Adjusted
		GAAP Results												Non-GAAP Results*
		RMB				USD				Vpts				RMB				USD				Vpts
Leased-and-Operated Hotel Costs			5,211.7				804.5				3.0	pts			5,199.9				802.7				3.0	pts
Personnel Costs of Franchised-and-Managed Hotels			228.2				35.2				0.4	pts			214.8				33.2				0.4	pts
Sales and Marketing Expenses			115.1				17.8				0.1	pts			114.4				17.7				0.1	pts
General and Administrative Expenses			362.0				55.9				0.8	pts			258.3				39.9				0.2	pts
Total Operating Costs and Expenses			5,917.0				913.4				4.2	pts			5,787.5				893.4				3.7	pts
Income from Operations			350.7				54.1				-4.3	pts			480.3				74.1				-3.8	pts

*Adjusted Non-GAAP results exclude share-based compensation expenses, integration costs, and expenses related to going-private activities.

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

 

For the fourth quarter of 2015, total operating costs and expenses were RMB 1.55 billion (US$239.6 million), representing 92.5% of total revenues. Total operating costs and expenses excluding any share-based compensation expenses, integration costs and expenses related to going-private activities (non-GAAP) for the fourth quarter of 2015 were 88.9% of total revenues, compared to 86.2% in the same period a year ago.

 

For the full year 2015, total operating costs and expenses were RMB 5.92 billion (US$913.4 million), representing 88.7% of total revenues. Total operating costs and expenses excluding any share-based compensation expenses, integration costs and expenses related to going-private activities (non-GAAP) for the full year 2015 were 86.8% of total revenues, compared to 83.1% in the same period a year ago.

 

·

Total leased-and-operated hotel costs were RMB 1.35 billion (US$208.8 million) for the fourth quarter of 2015, representing 96.5% of the leased-and-operated hotel revenues, compared to 93.3% 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 96.2% of the leased-and-operated hotel revenues in the fourth quarter of 2015, compared to 93.1% in the same period a year ago. The year-over-year increase in total leased-and-operated hotel costs as a percentage of leased-and-operated hotel revenues for the fourth quarter of 2015 was mainly due to the higher rental and depreciation cost from our having a higher proportion of midscale hotels and to the higher depreciation cost from economy hotel upgrading.

 

Total leased-and-operated hotel costs were RMB 5.21 billion (US$804.5 million) for the full year 2015, representing 92.5% of the leased-and-operated hotel revenues, compared to 87.5% in 2014. Total leased-and-operated hotel costs excluding any share-based compensation expenses and integration costs (non-GAAP) were 92.3% of the leased-and-operated hotel revenues in the full year 2015, compared to 87.2% in 2014. The year-over-year increase in total leased-and-operated hotel costs as a percentage of leased-and-operated hotel revenues for the full year 2015 was mainly due to increased rental and depreciation costs and a decrease in RevPAR which resulted in a lower revenue base per hotel while a significant portion of the hotel costs was fixed.

 

Pre-opening cost was RMB 22.5 million (US$3.5 million) for the fourth quarter of 2015, compared to RMB 18.5 million in the fourth quarter of 2014. For the full year 2015, pre-opening cost was RMB 77.4 million (US$11.9 million), compared to RMB 44.6 million in 2014.

 

  

·

Personnel costs of franchised-and-managed hotels were RMB 35.7 million (US$5.5 million) for the fourth quarter of 2015, representing 13.0% of the franchised-and-managed hotel revenues, compared to 14.0% in the same period a year ago. Franchised-and-managed hotels personnel costs excluding share-based compensation expenses (non-GAAP) were 11.6% of franchised-and-managed hotel revenues in the fourth quarter of 2015, compared to 12.6% in the same period of 2014. The year-over-year decrease in personnel costs of franchised-and-managed hotels as a percentage of franchised-and-managed hotel revenues for the fourth quarter of 2015 was mainly due to the lower year-end bonuses.

 

Personnel costs of franchised-and-managed hotels were RMB 228.2 million (US$35.2 million) for the full year 2015, representing 21.9% of the franchised-and-managed hotel revenues, compared to 21.4% in 2014. Franchised-and-managed hotels personnel costs excluding share-based compensation expenses (non-GAAP) were 20.7% of franchised-and-managed hotel revenues in the full year 2015, compared to 20.0% in 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 full year 2015 was mainly due to a lower revenue base per hotel.

 

·

Sales and marketing expenses were RMB 41.3 million (US$6.4 million) for the fourth quarter of 2015, representing 2.5% of total revenues, compared to 1.4% in the same period a year ago. Sales and marketing expenses excluding share-based compensation expenses (non-GAAP) were 2.5% of total revenues for the fourth quarter of 2015, compared to 1.4% in the same period of 2014. The year-over-year increase in sales and marketing expenses as a percentage of total revenues for the fourth quarter of 2015 was mainly due to the increased cost related to membership loyalty program.

 

Sales and marketing expenses were RMB 115.1 million (US$17.8 million) for the full year 2015, representing 1.7% of total revenues, compared to 1.6% in 2014. Sales and marketing expenses excluding share-based compensation expenses (non-GAAP) were 1.7% of total revenues for the full year 2015, compared to 1.6% in 2014.

 

·

General and administrative expenses were RMB 122.7 million (US$18.9 million) for the fourth quarter of 2015, representing 7.3% of total revenues, compared to 4.7% in the same period a year ago. General and administrative expenses excluding share-based compensation expenses, integration costs, and expenses related to going-private activities (non-GAAP) were 4.1% of total revenues for the fourth quarter of 2015, compared to 3.7% in the same period of 2014. The year-over-year increase in general and administrative expenses as a percentage of total revenues for the fourth quarter of 2015 was mainly due to increased staff cost for new product development.

 

General and administrative expenses were RMB 362.0 million (US$55.9 million) for the full year 2015, representing 5.4% of total revenues, compared to 4.7% in 2014. General and administrative expenses excluding share-based compensation expenses, integration costs, acquisition expenses, and expenses related to going-private activities (non-GAAP) were 3.9% of total revenues for the full year 2015, compared to 3.7% in 2014. The year-over-year increase in general and administrative expenses as a percentage of total revenues for the full year 2015 was mainly due to a bad debt provision related to a specific hotel project.

 

Income from Operations was RMB 19.9 million (US$3.1 million) for the fourth quarter of 2015 compared to RMB 102.5 million in the same period a year ago. Income from operations excluding share-based compensation expenses, integration costs and expenses related to going-private activities (non-GAAP) for the fourth quarter of 2015 was RMB 81.0 million (US$12.5 million), or 4.8% of total revenues, compared to RMB 125.6 million, or 7.7% of total revenues, in the same period of 2014.

 

For the full year of 2015, income from operations was RMB 350.7 million (US$54.1 million) compared to RMB 640.6 million in 2014. Income from operations excluding share-based compensation expenses, integration costs and expenses related to going-private activities (non-GAAP) for the full year 2015 was RMB 480.3 million (US$74.1 million), or 7.2% of total revenues, compared to RMB 736.3 million, or 11.0% of total revenues, in 2014.

 

EBITDA (non-GAAP)

 

(RMB/USD in Millions)		Fourth Quarter 2015																Fourth Quarter 2014
		RMB				USD				%Rev				V%				RMB				USD				%Rev
EBITDA (Non-GAAP)			239.7				37.0				14.3	%			-28.3	%			334.3				51.6				20.4	%
Foreign Exchange Loss/(Gain), Net			5.9				0.9				0.4	%							-4.6				-0.7				-0.3	%
Share-Based Compensation			17.7				2.7				1.1	%							21.3				3.3				1.3	%
Expenses Related to Going-Private Activities			41.9				6.5				2.5	%							-				-				-
Integration Costs			1.6				0.3				0.1	%							1.8				0.3				0.1	%
Loss on Change in Fair Value of Convertible Notes			7.5				1.2				0.4	%							7.9				1.2				0.5	%
Adjusted EBITDA (Non-GAAP)			314.2				48.5				18.7	%			-12.9	%			360.7				55.7				22.1	%

 

  

		Full Year 2015																Full Year 2014
		RMB				USD				%Rev				V%				RMB				USD				%Rev
EBITDA (Non-GAAP)			1,168.8				180.4				17.5	%			-24.7	%			1,553.1				239.8				23.2	%
Foreign Exchange Loss, Net			41.0				6.3				0.6	%							11.5				1.8				0.2	%
Share-Based Compensation			76.4				11.8				1.1	%							87.7				13.5				1.3	%
Acquisition Expenses			-				-				-								0.7				0.1				0.0	%
Expenses Related to Going-Private Activities			46.7				7.2				0.7	%							-				-				-
Integration Costs			6.4				1.0				0.1	%							7.3				1.1				0.1	%
Gain on Waived Liability Related with Motel Acquisition			-				-				-								-11.9				-1.8				-0.2	%
Loss/(Gain) on Buy-Back of Convertible Notes			1.7				0.3				0.0	%							-0.7				-0.1				0.0	%
Loss/(Gain) on Change in Fair Value of Convertible Notes			34.6				5.3				0.5	%							-71.9				-11.1				-1.1	%
Adjusted EBITDA (Non-GAAP)			1,375.7				212.4				20.6	%			-12.7	%			1,575.7				243.3				23.6	%

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)		Fourth Quarter 2015																Fourth Quarter 2014
		RMB				USD				%Rev				V%				RMB				USD				%Rev
Net Income Attributable to Ordinary Shareholders (GAAP)			-13.1				-2.0				-0.8	%			-115.4	%			84.6				13.1				5.2	%
Foreign Exchange Loss/(Gain), Net			5.9				0.9				0.4	%							-4.6				-0.7				-0.3	%
Share-Based Compensation			17.7				2.7				1.1	%							21.3				3.3				1.3	%
Expenses Related to Going-Private Activities			41.9				6.5				2.5	%							-				-				-
Integration Costs			1.6				0.3				0.1	%							1.8				0.3				0.1	%
Loss/(Gain) on Change in Fair Value of Convertible Notes			7.5				1.2				0.4	%							7.9				1.2				0.5	%
Adjusted net income attributable to ordinary shareholders (Non-GAAP)			61.5				9.5				3.7	%			-44.6	%			110.9				17.1				6.8	%

 

		Full Year 2015																Full Year 2014
		RMB				USD				%Rev				V%				RMB				USD				%Rev
Net Income Attributable to Ordinary Shareholders (GAAP)			167.0				25.8				2.5	%			-67.4	%			513.1				79.2				7.7	%
Foreign Exchange Loss, Net			41.0				6.3				0.6	%							11.5				1.8				0.2	%
Share-Based Compensation			76.4				11.8				1.1	%							87.7				13.5				1.3	%
Acquisition Expenses			-				-				-								0.7				0.1				0.0	%
Expenses Related to Going-Private Activities			46.7				7.2				0.7	%							-				-				-
Integration Costs			6.4				1.0				0.1	%							7.3				1.1				0.1	%
Gain on Waived Liability Related with Motel Acquisition			-				-				-								-11.9				-1.8				-0.2	%
Loss/(Gain) on Buy-Back of Convertible Notes			1.7				0.3				0.0	%							-0.7				-0.1				0.0	%
Loss/(Gain) on Change in Fair Value of Convertible Notes			34.6				5.3				0.5	%							-71.9				-11.1				-1.1	%
Adjusted net income attributable to ordinary shareholders (Non-GAAP)			373.9				57.7				5.6	%			-30.2	%			535.8				82.7				8.0	%

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 44.6% to RMB 61.5 million (US$9.5 million) for the fourth quarter 2015, representing 3.7% of total revenues compared to 6.8% in the same period a year ago. For the full year 2015, adjusted net income attributable to ordinary shareholders (Non–GAAP) decreased year over year by 30.2% to RMB 373.9 million (US$57.7 million), representing 5.6% of total revenues compared to 8.0% in 2014. The year-over-year decreases in adjusted net margins (non-GAAP)¹ for both the quarter and full year were mainly due to the decreases in adjusted income from operations margin (non-GAAP)².

 

 

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, integration costs, acquisition expenses, and expenses related to going-private activities (non-GAAP) as a percentage of total revenues.

 

  

Basic and Diluted Earnings Per Share / Earnings Per ADS

 

		Fourth Quarter 2015																Full Year 2015
		Ordinary Share								ADS Share								Ordinary Share								ADS Share
		RMB				USD				RMB				USD				RMB				USD				RMB				USD
Basic			-0.14				-0.02				-0.28				-0.04				1.74				0.27				3.48				0.54
Diluted			-0.14				-0.02				-0.28				-0.04				1.74				0.27				3.48				0.54
Adjusted Basic (Non-GAAP)			0.64				0.10				1.28				0.20				3.89				0.60				7.78				1.20
Adjusted Diluted (Non-GAAP)			0.64				0.10				1.28				0.20				3.83				0.59				7.66				1.18

 

Cash Flow

 

For the fourth quarter of 2015, net operating cash inflow was RMB 216.2 million (US$33.4 million), compared to RMB 348.1 million in the same period of 2014. Capitalized expenditures for the fourth quarter of 2015 were RMB 284.5 million (US$43.9 million), while related cash paid for capital expenditures during the quarter was RMB 151.8 million (US$23.4 million).

 

For the full year 2015, net operating cash inflow was RMB 1.13 billion (US$174.1 million), compared to RMB 1.35 billion in 2014. Capitalized expenditures for the full year 2015 were RMB 727.4 million (US$112.3 million), while related cash paid for capital expenditures during the year was RMB 619.4 million (US$95.6 million).

 

Balance Sheet

 

As of December 31, 2015, Homeinns Hotel Group had cash and cash equivalents of RMB 1,093.7 million (US$168.8 million). The convertible notes issued in December 2010 were fully repaid in December 2015.

 

Upcoming HMIN Extraordinary General Meeting

 

The Company has scheduled an extraordinary general meeting to be held on March 25, 2016, at 10:00 a.m. Shanghai time, at the executive offices of the Company, located at 124 Cao Bao Road, Shanghai, 200235, People’s Republic of China. The extraordinary general meeting is being convened to consider and vote on, among other matters, the proposal to authorize and approve the previously announced agreement and plan of merger dated as of December 6, 2015, among (i) the Company, (ii) BTG Hotels Group (HONGKONG) Holdings Co., Limited (“Holdco”), a wholly owned subsidiary of BTG Hotels (Group) Co., Ltd., a PRC joint stock company that is listed on the Shanghai Stock Exchange (“BTG Hotels”), (iii) BTG Hotels Group (CAYMAN) Holding Co., Ltd (“Merger Sub”), a wholly owned subsidiary of Holdco, and (iv) solely for the purposes of certain sections thereof, BTG Hotels. Subject to the approval of the extraordinary general meeting, Merger Sub will be merged with and into the Company pursuant to the agreement and plan of merger, with the Company continuing as the surviving company. A related transaction statement on Schedule 13E-3 and a proxy statement with respect thereto were filed with the SEC on February 23, 2016. Investors, shareholders and ADS holders of the Company are urged to read carefully and in their entirety these and other materials filed with or furnished to the SEC when they become available, as they contain important information about the Company, the proposed merger and related matters. The proxy statement was mailed to the Company’s ADS holders on or about February 26, 2016 and to the Company’s shareholders on or about March 4, 2016. The Special Committee of the Board comprised of independent directors reviewed the transaction and recommends that stockholders approve the transaction.

 

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 6.4778 to US$1.00, the noon buying rate for December 31, 2015 set forth in the H.10 statistical release of the Federal Reserve Board.

 

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 and expenses related to going-private activities

(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 and expenses related to going-private activities

 

(f)

income from operations excluding share-based compensation expenses and acquisition and integration costs and expenses related to going-private activities

 

(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 and expenses related to going-private activities

 

(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 expenses related to going-private activities

 

(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 and expenses related to going-private activities

 

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				December 31, 2015
		RMB '000				RMB '000				US$ '000
ASSETS
Current assets:
Cash and cash equivalents			949,690				1,093,695				168,837
Restricted cash			12,726				11,522				1,779
Accounts receivable, net			95,501				106,122				16,382
Receivables from related parties			3,476				3,469				536
Consumables			44,446				51,032				7,878
Prepayments and other current assets			171,703				246,544				38,060
Deferred tax assets			129,685				131,166				20,249
Total current assets			1,407,227				1,643,550				253,721
Investment			11,709				14,682				2,267
Property and equipment, net			4,000,041				3,831,431				591,471
Goodwill			2,323,241				2,326,289				359,117
Intangible assets, net			1,126,636				1,079,616				166,664
Other assets			90,995				109,161				16,852
Non-current deferred tax assets			434,847				487,596				75,272
Total assets			9,394,696				9,492,325				1,465,364
LIABILITIES
Current liabilities:
Accounts payable			86,949				103,382				15,959
Notes payable			-				4,496				694
Payables to related parties			4,166				15,697				2,423
Financial liability, current portion2			1,029,577				-				-
Short-term loans			-				424,680				65,559
Salaries and welfare payable			228,127				211,487				32,648
Income tax payable			117,830				116,340				17,960
Other taxes payable			34,074				48,188				7,439
Deferred revenues			225,417				216,123				33,364
Long-term loans, current portion			-				50,000				7,719
Other unpaid and accruals			255,460				305,481				47,160
Other payables			742,853				854,521				131,915
Deferred tax liability			60,764				46,949				7,248
Total current liabilities			2,785,217				2,397,344				370,088
Long term loans							100,000				15,437
Deferred rental			705,284				695,008				107,291
Deferred revenues			51,289				46,349				7,155
Deposits due to franchisees			144,892				155,402				23,990
Other long term payables			13,018				5,314				820
Unfavorable lease liabilities			331,282				294,944				45,532
Deferred tax liabilities			292,575				287,817				44,431
Total liabilities			4,323,557				3,982,178				614,744
Commitments and contingencies
Shareholders’ equity
Ordinary shares (US$0.005 par value; 200,000,000 shares authorized, 95,703,960 and 97,535,374 shares issued and outstanding as of December 31, 2014 and December 31, 2015, respectively)			3,698				3,757				580
Additional paid-in capital			3,191,076				3,403,361				525,388
Statutory reserves			256,013				286,369				44,208
Retained earnings			1,604,246				1,740,929				268,753
Less: Treasury stock (0 and 37,696 shares as of December 31, 2014 and December 31, 2015, respectively)			-				(2,759	)			(426	)
Total Home Inns shareholders' equity			5,055,033				5,431,657				838,503
Noncontrolling interests			16,106				78,490				12,117
Total  shareholders’ equity			5,071,139				5,510,147				850,620
Total liabilities and shareholders’ equity			9,394,696				9,492,325				1,465,364

  

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.4778 on December 31, 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																Year Ended
		December 31, 2014				September 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
		RMB '000				96,238				RMB '000				US$ '000				RMB '000				RMB '000				US$ '000
Revenues:
Leased-and-operated hotels			1,391,084				1,573,685				1,402,267				216,473				5,741,804				5,631,242				869,314
Franchised-and-managed hotels			244,219				282,257				275,152				42,476				940,944				1,039,871				160,528
Total revenues			1,635,303				1,855,942				1,677,419				258,949				6,682,748				6,671,113				1,029,842
Less: Business tax and related surcharges			(100,323	)			(108,934	)			(99,720	)			(15,394	)			(411,118	)			(395,394	)			(61,038	)
Net revenues			1,534,980				1,747,008				1,577,699				243,555				6,271,630				6,275,719				968,804
Operating costs and expenses:
Leased-and-operated hotel costs –
Rents and utilities			(564,347	)			(554,722	)			(578,745	)			(89,343	)			(2,172,804	)			(2,239,521	)			(345,722	)
Personnel costs			(256,033	)			(293,685	)			(262,696	)			(40,553	)			(1,075,222	)			(1,107,260	)			(170,931	)
Depreciation and amortization			(187,816	)			(200,365	)			(202,325	)			(31,234	)			(742,886	)			(792,930	)			(122,407	)
Consumables, food and beverage			(97,864	)			(120,355	)			(113,233	)			(17,480	)			(362,760	)			(409,001	)			(63,139	)
Others			(192,474	)			(169,037	)			(195,657	)			(30,204	)			(669,441	)			(662,946	)			(102,341	)
Total leased-and-operated hotel costs			(1,298,534	)			(1,338,164	)			(1,352,656	)			(208,814	)			(5,023,113	)			(5,211,658	)			(804,540	)
Personnel costs of Franchised-and-managed hotels			(34,280	)			(82,570	)			(35,670	)			(5,506	)			(201,244	)			(228,219	)			(35,231	)
Sales and marketing expenses			(22,700	)			(25,626	)			(41,337	)			(6,381	)			(109,813	)			(115,075	)			(17,765	)
General and administrative expenses			(77,426	)			(82,733	)			(122,656	)			(18,935	)			(312,008	)			(362,041	)			(55,889	)
Total operating costs and expenses			(1,432,940	)			(1,529,093	)			(1,552,319	)			(239,636	)			(5,646,178	)			(5,916,993	)			(913,425	)
Other income/(loss)			448				(4,165	)			(5,529	)			(854	)			15,193				(7,995	)			(1,234	)
Income from operations			102,488				213,750				19,851				3,065				640,645				350,731				54,145
Interest income			3,777				6,610				4,243				655				9,295				19,248				2,971
Interest expenses			(5,674	)			(5,303	)			(5,850	)			(903	)			(41,759	)			(22,276	)			(3,439	)
Loss from equity investment			(193	)			(163	)			(405	)			(63	)			(324	)			(1,587	)			(245	)
(Loss)/gain on change in fair value of convertible notes			(7,851	)			(570	)			(7,455	)			(1,151	)			71,945				(34,624	)			(5,345	)
Gain/(loss) on buy-back of convertible notes			-				-				-				-				650				(1,682	)			(260	)
Non-operating income			41,400				44,146				26,914				4,155				81,739				81,651				12,605
Foreign exchange gain/(loss), net			4,606				(35,012	)			(5,876	)			(907	)			(11,500	)			(41,034	)			(6,335	)
Income before income tax expenses and noncontrolling interests			138,553				223,458				31,422				4,851				750,691				350,427				54,097
Income tax expense			(53,064	)			(74,270	)			(43,722	)			(6,750	)			(231,323	)			(177,741	)			(27,438	)
Net income/(loss)			85,489				149,188				(12,300	)			(1,899	)			519,368				172,686				26,659
Less:Net income attributable to noncontrolling interests			(918	)			(3,590	)			(750	)			(116	)			(6,253	)			(5,643	)			(871	)
Net income/(loss) attributable to ordinary shareholders			84,571				145,598				(13,050	)			(2,015	)			513,115				167,043				25,788
Earnings per share
— Basic			0.88				1.51				(0.14	)			(0.02	)			5.38				1.74				0.27
— Diluted			0.88				1.51				(0.14	)			(0.02	)			4.55				1.74				0.27
Weighted average ordinary shares outstanding
— Basic			95,655				96,347				96,517				96,517				95,345				96,216				96,216
— Diluted			95,655				96,347				96,517				96,517				102,814				96,238				96,238
Share-based compensation expense was included in the statement of operations as follows:
Leased-and-operated hotel costs – Personnel costs			1,856				1,349				1,763				272				7,702				6,638				1,025
Personnel costs of Franchised-and-managed hotels			3,479				2,727				3,822				590				13,152				13,423				2,072
Sales and marketing expenses			179				129				121				19				832				642				99
General and administrative expenses			15,810				13,684				11,949				1,845				66,020				55,736				8,604

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.4778 on December 31, 2015, 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, 2015
		GAAP Result				% of Total Revenue				Share-based Compensation				Expenses related to going private activities				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			(1,352,656	)			80.6	%			1,763				-				1,316				0.2	%			(1,349,577	)			80.5	%
Personnel costs of Franchised-and-managed hotels			(35,670	)			2.1	%			3,822				-				-				0.2	%			(31,848	)			1.9	%
Sales and marketing expenses			(41,337	)			2.5	%			121				-				-				0.0	%			(41,216	)			2.5	%
General and administrative expenses			(122,656	)			7.3	%			11,949				41,907				317				3.2	%			(68,483	)			4.1	%
Total operating costs and expenses			(1,552,319	)			92.5	%			17,655				-				1,633				3.6	%			(1,491,124	)			88.9	%
Income from operations			19,851				1.2	%			17,655				-				1,633				3.6	%			81,046				4.8	%

  

		Quarter Ended December 31, 2015
		GAAP Result				% of Total Revenue				Share-based Compensation				Expenses related to going private activities				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			(208,814	)			80.6	%			272				-				203				0.2	%			(208,339	)			80.5	%
Personnel costs of Franchised-and-managed hotels			(5,506	)			2.1	%			590				-				-				0.2	%			(4,916	)			1.9	%
Sales and marketing expenses			(6,381	)			2.5	%			19				-				-				0.0	%			(6,362	)			2.5	%
General and administrative expenses			(18,935	)			7.3	%			1,845				6,469				49				3.2	%			(10,572	)			4.1	%
Total operating costs and expenses			(239,636	)			92.5	%			2,726				-				252				3.6	%			(230,189	)			88.9	%
Income from operations			3,065				1.2	%			2,726				-				252				3.6	%			12,512				4.8	%

 

		Quarter Ended September 30, 2015
		GAAP Result				% of Total Revenue				Share-based Compensation				Expenses related to going private activities				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			(1,338,164	)			72.1	%			1,349				-				1,295				0.1	%			(1,335,520	)			72.0	%
Personnel costs of Franchised-and-managed hotels			(82,570	)			4.4	%			2,727				-				-				0.1	%			(79,843	)			4.3	%
Sales and marketing expenses			(25,626	)			1.4	%			129				-				-				0.0	%			(25,497	)			1.4	%
General and administrative expenses			(82,733	)			4.5	%			13,684				4,797				317				1.0	%			(63,935	)			3.4	%
Total operating costs and expenses			(1,529,093	)			82.4	%			17,889				-				1,612				1.3	%			(1,504,795	)			81.1	%
Income from operations			213,750				11.5	%			17,889				-				1,612				1.3	%			238,048				12.8	%

 

		Quarter Ended December 31, 2014
		GAAP Result				% of Total Revenue				Share-based Compensation				Expenses related to going private activities				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	%

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.4778 on December 31, 2015, representing the certificated exchange rate published by the Federal Reserve Board.

 

 

Homeinns Hotel Group

Reconciliation of GAAP and Non-GAAP Results (continued)

 

		Year Ended December 31, 2015
		GAAP Result				% of Total Revenue				Share-based Compensation				Expenses related to going private activities				Acquisition expenses				Integration  cost				% of Total Revenue				Non-GAAP Result				% of Total Revenue
		RMB '000								RMB '000				RMB '000				RMB '000				RMB '000								RMB '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs			(5,211,658	)			78.1	%			6,638				-				-				5,112				0.2	%			(5,199,908	)			77.9	%
Personnel costs of Franchised-and-managed hotels			(228,219	)			3.4	%			13,423				-				-				-				0.2	%			(214,796	)			3.2	%
Sales and marketing expenses			(115,075	)			1.7	%			642				-				-				-				0.0	%			(114,433	)			1.7	%
General and administrative expenses			(362,041	)			5.4	%			55,736				46,704				-				1,268				1.6	%			(258,333	)			3.9	%
Total operating costs and expenses			(5,916,993	)			88.7	%			76,439				46,704				-				6,380				1.9	%			(5,787,470	)			86.8	%
Income from operations			350,731				5.3	%			76,439				46,704				-				6,380				1.9	%			480,254				7.2	%

 

		Year Ended December 31, 2015
		GAAP Result				% of Total Revenue				Share-based Compensation				Expenses related to going private activities				Acquisition expenses				Integration  cost				% of Total Revenue				Non-GAAP Result				% of Total Revenue
		US$ '000								US$ '000				US$ '000				US$ '000				US$ '000								US$ '000
		(unaudited)								(unaudited)				(unaudited)				(unaudited)				(unaudited)								(unaudited)
Leased-and-operated hotel costs			(804,541	)			78.1	%			1,025				-				-				789				0.2	%			(802,727	)			77.9	%
Personnel costs of Franchised-and-managed hotels			(35,231	)			3.4	%			2,072				-				-				-				0.2	%			(33,159	)			3.2	%
Sales and marketing expenses			(17,765	)			1.7	%			99				-				-				-				0.0	%			(17,665	)			1.7	%
General and administrative expenses			(55,889	)			5.4	%			8,604				7,210				-				196				1.6	%			(39,880	)			3.9	%
Total operating costs and expenses			(913,426	)			88.7	%			11,800				7,210				-				985				1.9	%			(893,431	)			86.8	%
Income from operations			54,144				5.3	%			11,800				7,210				-				985				1.9	%			74,138				7.2	%

 

		Year Ended December 31, 2014
		GAAP Result				% of Total Revenue				Share-based Compensation				Expenses related to going private activities				Acquisition expenses				Integration  cost				% of Total Revenue				Non-GAAP Result				% of Total Revenue
		RMB '000								RMB '000				RMB '000				RMB '000				RMB '000								RMB '000
		(unaudited)								(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	%

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.4778 on December 31, 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																Year Ended
		December 31, 2014				September 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
		RMB '000				RMB '000				RMB '000				US$ '000				RMB '000				RMB '000				US$ '000
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net income/(loss) attributable to ordinary shareholders (GAAP)			84,571				145,598				(13,050	)			(2,015	)			513,115				167,043				25,788
Foreign exchange (gain)/loss, net			(4,606	)			35,012				5,876				907				11,500				41,034				6,335
Share-based compensation			21,324				17,889				17,655				2,726				87,706				76,439				11,800
Acquisition expenses			-				-				-				-				691				-				-
Expenses related to going private activities			-				4,797				41,907				6,469				-				46,704				7,210
Integration cost			1,795				1,612				1,633				252				7,285				6,380				985
Gain on waived liability related with Motel acquisition			-																(11,919	)			-				-
(Gain)/loss on buy-back of convertible notes			-				-				-				-				(650	)			1,682				260
Loss/(gain) on change in fair value of convertible notes			7,851				570				7,455				1,151				(71,945	)			34,624				5,345
Adjusted net income attributable to ordinary shareholders (Non-GAAP)			110,935				205,478				61,476				9,490				535,783				373,906				57,721

 

		Quarter Ended																Year Ended
		December 31, 2014				September 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
		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			0.88				1.51				(0.14	)			(0.02	)			5.38				1.74				0.27
— Diluted			0.88				1.51				(0.14	)			(0.02	)			4.55				1.74				0.27
Weighted average ordinary shares outstanding
— Basic			95,655				96,347				96,517				96,517				95,345				96,216				96,216
— Diluted			95,655				96,347				96,517				96,517				102,814				96,238				96,238
Adjusted earnings per share (Non-GAAP)
— Basic			1.16				2.13				0.64				0.10				5.62				3.89				0.60
— Diluted			1.13				2.05				0.64				0.10				5.43				3.83				0.59
Weighted average ordinary shares outstanding
— Basic			95,655				96,347				96,517				96,517				95,345				96,216				96,216
— Diluted			102,704				102,702				96,604				96,604				102,814				102,449				102,449

 

Note 1: The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on rate of US$1.00=RMB6.4778 on December 31, 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																Year Ended
		December 31, 2014				Sept 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
		RMB '000				RMB '000				RMB '000				US$ '000				RMB '000				RMB '000				US$ '000
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net income/(loss)			85,489				149,188				(12,300	)			(1,899	)			519,368				172,686				26,658
Interest income			(3,777	)			(6,610	)			(4,243	)			(655	)			(9,295	)			(19,248	)			(2,971	)
Interest expenses			5,674				5,303				5,850				903				41,759				22,276				3,439
Income tax expense			53,064				74,270				43,722				6,750				231,323				177,741				27,438
Depreciation and amortization			193,863				206,823				206,667				31,904				769,911				815,381				125,873
EBITDA (Non-GAAP)			334,313				428,974				239,696				37,003				1,553,066				1,168,836				180,437
Foreign exchange loss/(gain), net			(4,606	)			35,012				5,876				907				11,500				41,034				6,335
Share-based compensation			21,324				17,889				17,655				2,726				87,706				76,439				11,800
Acquisition expenses			-				-				-				-				691				-				-
Expenses related to going private activities			-				4,797				41,907				6,469				-				46,704				7,210
Integration cost			1,795				1,612				1,633				252				7,285				6,380				985
Gain on waived liability related with Motel acquisition			-				-				-				-				(11,919	)			-				-
(Gain)/loss on buy-back of convertible notes			-				-				-				-				(650	)			1,682				260
Loss/(gain) on change in fair value of convertible notes			7,851				570				7,455				1,151				(71,945	)			34,624				5,345
Adjusted EBITDA (Non-GAAP)			360,677				488,854				314,222				48,508				1,575,734				1,375,699				212,372
%of total revenue			22.1	%			26.3	%			18.7	%			18.7	%			23.6	%			20.6	%			20.6	%

 

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												As of and for the year ended
		December 31, 2014				September 30, 2015				December 31, 2015				December 31, 2014				December 31, 2015
		Group				Group				Group				Group				Group
Total Hotels in operation:			2,609				2,787				2,922				2,609				2,922
Leased-and-operated hotels			914				917				929				914				929
Franchised-and-managed hotels			1,695				1,870				1,993				1,695				1,993
Total rooms			296,075				311,608				321,802				296,075				321,802
Occupancy rate (as a percentage)			79.6	%			86.6	%			83.1	%			83.6	%			83.2	%
Average daily rate (in RMB)			163				171				159				165				162
RevPAR (in RMB)			130				148				132				138				134

 

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								As of and for the year ended
		December 31, 2014				December 31, 2015				December 31, 2014				December 31, 2015
		Group				Group				Group				Group
Total Hotels in operation:			1,899				2,257				1,899				2,257
Leased-and-operated hotels			844				873				844				873
Franchised-and-managed hotels			1,055				1,384				1,055				1,384
Total rooms			221,376				255,319				221,376				255,319
Occupancy rate (as a percentage)			81.3	%			84.0	%			85.3	%			84.5	%
Average daily rate (in RMB)			161				157				165				161
RevPAR (in RMB)			131				132				141				136

 

“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.