Full Year Total Revenues Increase 71.5% Year-over-Year; Home Inns Chain Consisted of 266 Hotels in Operation as of the end of 2007
SHANGHAI, China, March 4 /Xinhua-PRNewswire/ -- Home Inns & Hotels Management Inc. (Nasdaq: HMIN), a leading economy hotel chain in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31st, 2007.
Fourth Quarter 2007 Financial Highlights
-- Total revenues for the quarter increased 82.9% year-over-year to RMB
327.6 million (US$ 44.9 million), including revenues of RMB 19.8
million (US$ 2.7 million) from the recently acquired Top Star hotel
chain.
-- Net loss was RMB15.2 million (US$ 2.1 million), including share-based
compensation expenses of RMB 4.6 million (US$ 0.6 million), foreign
exchange losses of RMB24.1 million (US$ 3.3 million), and RMB 13.2
million (US$ 1.8 million) related to the impact of Top Star.
-- Income from operations was RMB 13.9 million (US$ 1.9 million). Income
from operations excluding share-based compensation expenses and
restructuring cost related to the acquisition of Top Star was RMB 23.2
million (US$ 3.2 million), an increase of 6.7% year-over-year.
Excluding the impact of Top Star, income from operations excluding
share-based compensation expenses increased 45.9% to RMB 31.7 million
(US$ 4.3 million).
-- EBITDA (non-GAAP) decreased 19.6% to RMB 22.0 million (US$ 3.0
million), year-over-year. Excluding the impact of the acquisition of
Top Star, foreign exchange losses and share-based compensation
expenses, adjusted EBITDA (non-GAAP) was RMB 60.7 million (US$ 8.3
million), up 73.4% year-over-year.
-- Diluted earnings per ADS were RMB -0.43 (US$ -0.06). Non-GAAP adjusted
diluted earnings per ADS were RMB 0.46 (US$ 0.06). Excluding the impact
of Top Star, diluted earnings per ADS were RMB -0.06 (US$ -0.01), while
non-GAAP adjusted diluted earnings per ADS were RMB 0.68 (US$ 0.09).
Reconciliation between the adjusted diluted earnings per ADS versus US
GAAP figures is included at the end of the press release.
Full Year Financial 2007 Highlights
-- Total revenues for the year increased 71.5% year-over-year to RMB
1,009.3 million (US$ 138.4 million). Excluding the impact of the
acquisition of Top Star, total revenues for the year increased 68.1%
year-over-year to RMB 989.5 million (US$ 135.7 million).
-- Net income for the year, reported under GAAP, was RMB 35.8 million (US$
4.9 million). Net income was reduced by the recently acquired Top Star
hotels of RMB 13.1 million (US$ 1.8 million). It was further reduced by
foreign exchange losses of RMB 53.2 million (US$ 7.3 million), share-
based compensation of RMB15.1 million (US$ 2.1 million), and non-
recurring charge for re-measurement of net deferred tax assets of RMB
6.1 million (US$ 0.8 million).
-- Income from operations was RMB 106.7 million (US$ 14.6 million), an
increase of 43% year-over-year. Income from operations excluding share-
based compensation expenses and restructuring cost related to our
acquisition of Top Star increased 39.1% to RMB126.4 million (US$ 17.3
million). Excluding the impact of Top Star, income from operations
excluding share-based compensation expenses increased 48.4% to RMB134.8
million (US$ 18.5 million).
-- EBITDA (non-GAAP) decreased 26.0% to RMB 144.3 million (US$ 19.8
million), year-over-year. Excluding the impact of the acquisition of
Top Star, foreign exchange losses and share-based compensation
expenses, adjusted EBITDA (non-GAAP) was RMB 222.5 million (US$ 30.5
million), up 61.6% year-over-year.
-- Diluted earnings per ADS were RMB 0.93 (US$ 0.13). Non-GAAP adjusted
diluted earnings per ADS were RMB 2.99 (US$ 0.41). Excluding the impact
of Top Star, diluted earnings per ADS were RMB1.27 (US$ 0.17), while
non-GAAP adjusted diluted earnings per ADS were RMB 3.21 (US$ 0.44).
Please refer to the table at the end of the press release for
reconciliation between adjusted diluted earnings per ADS versus US GAAP
reported figures.
"I am pleased with the strong results demonstrated by our core business during the year," remarked Mr. David Sun, Home Inn's Chief Executive Officer. "This performance validates our strategy for consistent growth and demonstrates that we are able to continue our nationwide expansion, and we look forward to our recently acquired Top Star hotels achieving higher occupancy rates and RevPAR in the coming quarters as we continue the integration process."
Operational Highlights
-- The occupancy rate for the Home Inns hotel chain was 88.3% in the
fourth quarter of 2007 and 91.1% in 2007, impacted by the lower
occupancy rate of the Top Star hotels. Excluding Top Star, the
occupancy rate was 91.6% in the fourth quarter of 2007 and 92.2% in the
full year, compared with 90.0% in the fourth quarter of 2006 and 92.8%
for the year 2006.
-- RevPAR, defined as revenue per available room, was RMB155 in the fourth
quarter of 2007 and RMB 163 for 2007. RevPAR excluding Top Star was
RMB164 in the fourth quarter of 2007, compared with RMB165 in the same
period in 2006 and RMB174 in the previous quarter, while for the 2007
year, RevPAR excluding Top Star was RMB 166, compared to RMB169
in 2006.
-- During the fourth quarter of 2007, Home Inns opened 40 new hotels and
acquired 25 hotels in operation from Top Star. During 2007, Home Inns
opened 107 new hotels, compared with 66 in 2006, not including the 25
Top Star hotels acquired in the fourth quarter. As of December 31,
2007, the Home Inns hotel chain consisted of 266 hotels in operation
with an average of 123 rooms per hotel in operation. Our hotels in
operation cover 66 cities in China and consist of 195 leased-and-
operated hotels and 71 franchised-and-managed hotels.
-- As of December 31, 2007, Home Inns had an additional 78 leased-and-
operated hotels and 37 franchised-and-managed hotels under development.
-- The integration of Top Star continued as planned, with systems
integration, personnel realignment and training, and facilities
resignage completed. However, although these initiatives are expected
to create comparable metrics to Home Inns' existing hotels within a 6-9
month timeframe, there was a negative impact on the consolidated fourth
quarter and full year 2007 results during the initial integration
process. For the fourth quarter of 2007, our Top Star hotels had
revenues of RMB 19.8 million and a loss from operations of RMB 13.1
million, including RMB 4.6 million one time charges.
-- Effective January 1st 2008, Mr. Jason Zong, the former Senior Vice
President of Operations assumed a new role of Chief Operating Officer
(COO). Mr. Zong has more than 10 years of consumer industry
experience, recently serving as Vice President of operations for B&Q
(China) Ltd., a subsidiary of Kingfisher plc, the third largest home
improvement retail group in the world. The Company's previous COO,
Ms. Liang Rixin, assumed a new role of Chief Branding Officer (CBO),
focusing on the improvement and development of Home Inn's brand and
products.
"We made considerable progress during 2007 by doubling the number of hotels and rooms available, maintaining stable room rates and occupancy levels within our Home Inns branded hotels, while at the same time remaining on track with regards to integrating the Top Star hotels into our portfolio of hotels over the coming quarters," continued Mr. Sun. "Going forward, we will continue to expand our hotel network, both organically and potentially through acquisitions, in order to provide a comfortable and consistent lodging experience to China's rapidly growing number of business and leisure travelers."
Fourth Quarter and Full Year 2007 Financial Results
For the fourth quarter of 2007, Home Inns had total revenues of RMB 327.6 million (US$ 44.9 million), representing an 82.9% increase year-over-year and a 23.0% increase sequentially. Excluding the impact of Top Star, total revenues were RMB307.8 million (US$ 42.2 million), representing a 71.9% increase year-over-year and a 15.6% increase sequentially.
For the full year of 2007, Home Inns had total revenues of RMB 1,009.3 million (US$ 138.4 million), representing a 71.5% increase year-over-year. Excluding Top Star, total revenues were RMB 989.5 million (US$ 135.7 million), representing a 68.1% increase year-over-year.
Total revenues from leased-and-operated hotels for the fourth quarter of 2007 were RMB 312.4 million (US$ 42.8 million), representing an 82.2% increase year-over-year and a 22.9% increase sequentially. Excluding the impact of Top Star, total revenues from leased-and-operated hotels for the fourth quarter of 2007 were RMB 292.7million (US$ 40.1 million), representing a 70.7% increase year-over-year and a 15.1% increase sequentially. Home Inns opened 27 new leased-and-operated hotels and acquired 25 leased-and operated hotels in operation during the fourth quarter of 2007.
For the year 2007, total revenues from leased-and-operated hotels were RMB 963.1 million (US$ 132.0 million), representing a 69.6% increase year-over-year. Excluding the impact of Top Star, total revenues from leased-and-operated hotels were RMB 943.3 million (US$ 129.3 million) for the year, representing a 66.1% increase year-over-year. Home Inns opened 76 new lease-and-operated hotels and acquired 25 during the year.
Total revenues from franchised-and-managed hotels for the fourth quarter of 2007 were RMB 15.2 million (US$ 2.1 million), representing a 98.4% increase year-over-year and a 24.5% increase sequentially. Home Inns opened 13 new franchised-and-managed hotels during the fourth quarter of 2007.
For the year 2007, total revenues from franchised-and-managed hotels were RMB 46.3 million (US$ 6.3 million), representing a 124.5% increase year-over-year. Home Inns opened 31 new franchised-and-managed hotels during the year 2007.
Occupancy rate for the entire Home Inns hotel chain was 88.3% in the fourth quarter of 2007. RevPAR, or revenue per available room, in the fourth quarter of 2007 was RMB155. Excluding the impact of Top Star, the occupancy rate for the Home Inns hotel chain was 91.6% for the quarter, compared with 90.0% in the same period in 2006 and 95.4% in the previous quarter, and RevPAR for the quarter was RMB164, compared with RevPAR of RMB165 in the same period in 2006 and RMB174 in the previous quarter. The decline in occupancy rate compared with the previous quarter was due to the 40 new hotels opened during the quarter, and also, of the 30 hotels opened in the third quarter, 25 of them were opened in September, which continued to ramp up in the fourth quarter.
Occupancy rate for the entire Home Inns hotel chain was 91.1% in 2007. RevPAR was RMB163 in 2007. Excluding the impact of Top Star, occupancy rate for the Home Inns hotel chain was 92.2% in 2007, compared with 92.8% in 2006, and RevPAR was RMB166 in 2007, compared with RMB169 in 2006.
Total operating costs and expenses for the fourth quarter of 2007 were RMB 293.3 million (US$ 40.2 million). Total operating costs and expenses excluding share-based compensation expenses and restructuring costs related to the acquisition of Top Star (non-GAAP) for the quarter were RMB 284.1 million (US$ 38.9 million), or 86.7% of total revenues. Excluding the impact of Top Star, total operating costs and expenses for the quarter were RMB261.4 million (US$ 35.8 million). Excluding the impact of Top Star, total operating costs and expenses excluding share-based compensation expenses (non-GAAP) for the quarter were RMB256.8 million (US$ 35.2 million), or 83.4% of total revenues, compared to 81.4% in the same quarter 2006 and 77.7% in the previous quarter.
Total operating expenses for 2007 were RMB 842.4 million (US$ 115.5 million). Total operating expenses excluding share-based compensation expenses and restructuring cost related to the acquisition of Top Star (non-GAAP) were RMB 822.7 million (US$ 112.8 million) or 81.5% of total revenues. Excluding the impact of Top Star, total operating expenses for 2007 were RMB 810.5 million (US$ 111.1 million), and total operating expenses excluding share-based compensation expenses (non-GAAP) were RMB 795.4 million (US$ 109.0 million) or 80.4% of total revenues, compared with 78.8% in the previous year. Further analysis of operating expense items is included in the paragraphs below.
Total leased-and-operated hotel costs for the fourth quarter of 2007 were RMB 251.7 million (US$ 34.5 million), representing 80.5% of the leased-and-operated hotel revenues. Excluding the impact of Top Star, total leased-and-operated hotel costs were RMB226.5 million (US$ 31.1 million), representing 77.4% of the leased-and-operated hotel revenues. Total leased-and-operated hotel costs represented 74.2% of the leased-and-operated hotel revenues for the same quarter in 2006 and 71.2% for the previous quarter. The increase in percentage compared to the previous quarter was primarily due to the lower occupancy rate compared with the previous quarter as stated above. The large number of hotels under construction led to higher rents and utilities as well as personnel and certain other costs to be a higher percentage of leased-and-operated hotel revenue both for the quarter and for the year. Typically, once construction starts on a site, we begin to incur these costs, though we will not see revenue until the hotel is in operation.
For the year 2007, total leased-and-operated hotel costs were RMB 723.7 million (US$ 99.2 million). Excluding the impact of Top Star, total leased-and-operated hotel costs for the year were RMB698.5million (US$ 95.8 million). Leased-and-operated hotel costs as percentage of leased-and-operated hotel revenues was 75.1% compared with 71.1% in 2006. The increase was due to the same reasons as stated in the paragraph above.
Sales and marketing expenses for the fourth quarter were RMB 4.8 million (US$ 0.7 million), an increase of 11.8% year-over-year and a decrease of 23.3% sequentially. Excluding the impact of Top Star, sales and marketing expenses were RMB 4.6 million (US$ 0.6 million), an increase of 5.7% year-over-year and a decrease of 27.4% sequentially.
Sales and marketing expenses for 2007 were RMB 19.6 million (US$ 2.7 million), representing 1.9% of total revenue, compared with 2.0% in 2006. Excluding the impact of Top Star, sales and marketing expenses for 2007 were RMB 19.4 million (US$ 2.7 million), representing 2.0% of total revenue, compared with 2.0% in 2006.
General and administrative expenses for the fourth quarter were RMB 36.8 million (US$ 5.1 million). General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB 32.2 million (US$ 4.4 million), or 9.8% of the total revenues. Excluding the impact of Top Star, general and administrative expenses were RMB30.4 million (US$ 4.2 million). General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB25.8 million (US$ 3.5 million), or 8.4% of the total revenues, compared with 8.0% of the total revenues in the same period of 2006 and 7.4% in the previous quarter. General and administrative expenses included RMB 1.3 million (US$ 0.2 million) related to our issuance of convertible bonds. An additional RMB 15.9 million and RMB 14.6 million in expenses related to our issuance of convertible bonds will be recognized in 2008 and 2009 respectively.
General and administrative expenses for the year were RMB 99.0 million (US$ 13.6 million). General and administrative expenses excluding share-based compensation (non-GAAP) were RMB 84.0 million (US$ 11.5 million) or 8.3% of total revenues. Excluding the impact of Top Star, general and administrative expenses including share-based compensation expenses for the year were RMB 92.6 million (US$ 12.7 million). General and administrative expenses excluding share-based compensation (non-GAAP) were RMB 77.5 million (US$ 10.6 million) or 7.8% of total revenues, compared with 8.2% in 2006. The decrease in percentage this year versus the same period last year resulted from our operating leverage as our revenues grew.
Income from operations for the quarter was RMB 13.9 million (US$ 1.9 million). Income from operations excluding share-based compensation expenses and restructuring cost related to our acquisition of Top Star (non-GAAP) was RMB 23.2 million (US$ 3.2 million) or 7.1% of total revenues. Excluding the impact of Top Star, income from operations for the quarter was RMB27.1 million (US$ 3.7 million), and income from operations excluding share-based compensation expenses (non-GAAP) was RMB31.7 million (US$ 4.3 million) or 10.3% of total revenues, compared to 12.1 % in the same period of 2006 and 16.4% in the previous quarter.
Income from operations for 2007 was RMB 106.7 million (US$ 14.6 million). Income from operations excluding share-based compensation and restructuring cost related to our acquisition of Top Star (non-GAAP) was RMB 126.4 million (US$ 17.3 million), or 12.5% of total revenues. Excluding the impact of Top Star, income from operations for 2007 was RMB119.8 million (US$ 16.4 million), and income from operations excluding share-based compensation (non-GAAP) was RMB134.9 million (US$ 18.5 million), or 13.6% of total revenues, compared to 15.4% in year 2006. The decrease in operating margin from the same period last year was caused by higher leased-and-operated hotel costs as a percentage of leased-and-operated hotel revenues as described above.
EBITDA (non-GAAP) for the fourth quarter of 2007 was RMB 22.0 million (US$ 3.0 million), a decrease of 19.6% year-over-year and a decrease of 57.8% sequentially. Excluding foreign exchange losses, share-based compensation expenses and restructuring cost related to our acquisition of Top Star, adjusted EBITDA (non-GAAP) was RMB 55.3 million (US$ 7.6 million), up 58.1% year-over-year and down 16.9% from the previous quarter. Excluding the impact of Top Star, EBITDA (non-GAAP) for the quarter was RMB 32.0 million (US$ 4.4 million), up 16.9% year-over-year and down 38.6% sequentially. Excluding the impact of Top Star, foreign exchange losses and share-based compensation expenses, adjusted EBITDA (non-GAAP) was RMB 60.7 million (US$ 8.3 million), up 73.4% year-over-year and down 8.9% from the previous quarter.
EBITDA (non-GAAP) for the year was RMB 144.3 million (US$ 19.8 million). EBITDA excluding the impact of foreign exchange losses, share-based compensation and restructuring cost related to our acquisition of Top Star increased 57.7% year-over-year. Excluding the impact of Top Star, EBITDA (non-GAAP) for the year was RMB 154.2 million (US$ 21.1 million). EBITDA was reduced by foreign exchange losses of RMB 53.2 million (US$ 7.3 million), share-based compensation of RMB 15.1 million (US$ 2.1 million) and restructuring cost for Top Star of RMB 4.6 million (US$ 0.6 million). EBITDA excluding the impact of Top Star, foreign exchange losses and share-based compensation increased 61.6% year-over-year.
Excluding foreign exchange losses, share-based compensation expenses and restructuring cost related to our acquisition of Top Star, adjusted net income (non-GAAP) for the fourth quarter of 2007 was RMB 18.1 million (US$ 2.5 million), a decrease of 6.5% year-over-year. Net loss for the quarter was RMB 15.2 million (US$ 2.1 million). Excluding the impact of Top Star, foreign exchange losses and share-based compensation expenses, adjusted net income (non-GAAP) was RMB 26.6 million (US$ 3.7 million), up 37.5% year-over-year. Excluding Top Star, net loss for the quarter was RMB 2.0 million (US$ 0.3 million).
For the full year of 2007, net income was RMB 35.8 million (US$ 4.9 million). Net income available to ordinary shareholders was RMB 35.8 million (US$ 4.9 million). Excluding the impact of Top Star, for the full year of 2007, net income was RMB 48.9 million (US$ 6.7 million). Net income available to ordinary shareholders was RMB 48.9 million (US$ 6.7 million). Full year 2007 net income was reduced by foreign exchange losses of RMB 53.2 million (US$ 7.3 million), share based compensation of RMB 15.1 million (US$ 2.1 million),
non-recurring provision for deferred tax assets of RMB 6.1 million (US$ 0.8 million) and restructuring costs related to our acquisition of Top Star of RMB 4.6 million (US$ 0.6 million).
For fourth quarter of 2007, excluding foreign exchange losses, share-based compensation expenses and restructuring costs, adjusted basic and diluted earnings per share (non-GAAP) were RMB 0.26 (US$0.04) and RMB 0.23 (US$0.03), respectively, and adjusted basic and diluted earnings per ADS (non-GAAP) were RMB 0.52 (US$0.07) and RMB 0.46 (US$0.06), respectively. Basic and diluted earnings per share were RMB -0.22 (US$ -0.03) and RMB -0.22 (US$ -0.03) respectively, and basic and diluted earnings per ADS were RMB -0.43 (US$ -0.06) and RMB -0.43 (US$ -0.06) respectively. For the fourth quarter of 2007, excluding the impact of Top Star, foreign exchange losses and share-based compensation expenses, adjusted basic and diluted earnings per share (non-GAAP) were RMB 0.38 (US$0.05) and RMB 0.34 (US$0.05), respectively, and adjusted basic and diluted earnings per ADS (non-GAAP) were RMB 0.76 (US$0.10) and RMB 0.68 (US$0.09), respectively.
For the full year of 2007, basic and diluted earnings per share amounted to RMB 0.52 (US$0.07) and RMB 0.47 (US$0.06), respectively, and basic and diluted earnings per ADS were RMB 1.05 (US$0.14) and RMB 0.93 (US$0.13), respectively. Excluding the impact of Top Star, basic and diluted earnings per share amounted to RMB 0.72 (US$0.10) and RMB 0.64 (US$0.09), respectively, and basic and diluted earnings per ADS were RMB 1.43 (US$0.20) and RMB 1.27 (US$0.17), respectively. For the full year 2007, excluding foreign exchange losses, share-based compensation expenses, non-recurring provision for deferred tax assets and restructuring cost for the acquisition of Top Star, adjusted basic and diluted earnings per share (non-GAAP) were RMB 1.68 (US$ 0.23) and RMB 1.49 (US$ 0.20), respectively, and adjusted basic and diluted earnings per ADS (non-GAAP) were RMB 3.36 (US$ 0.46) and RMB 2.99 (US$ 0.41), respectively. For the full year 2007, excluding the impact of Top Star, foreign exchange losses, share-based compensation expenses and non-recurring provision for deferred tax assets, adjusted basic and diluted earnings per share (non-GAAP) were RMB 1.80 (US$ 0.25) and RMB 1.60 (US$ 0.22), respectively, and adjusted basic and diluted earnings per ADS (non-GAAP) were RMB 3.61 (US$ 0.49) and RMB 3.21 (US$ 0.44), respectively.
Net operating cash flow for the fourth quarter of 2007 was RMB 48.1 million (US$ 6.6 million). Capital expenditures for the quarter were RMB 252.1 million (US$ 79.7 million).
Net operating cash flow for the full year of 2007 was RMB 215.0 million (US$ 29.5 million). Capital expenditures for full year of 2007 were RMB 581.6 million (US$ 34.4 million).
As of December 31, 2007, Home Inns had cash and cash equivalents of RMB 1,562.6 million (US$ 214.2 million). We had convertible bonds outstanding of RMB 1.1 billion (US$ 152.2 million) including principal and accrued interest. These are zero coupon bonds with a maturity on or around December 10th, 2012, with a yield of 0.50% per annum. The bonds can be converted into 5,650,780 Home Inns' ordinary shares at the option of the holder. The bonds have a non-call and non-put period of three years from the issuance date.
"While we delivered strong overall financial results for 2007, we did experience increased costs as well as some negative margin pressure during the fourth quarter due to our acquisition of Top Star and our expansion into lower tier cities," remarked May Wu, Chief Financial Officer of Home Inns. "Although we anticipate Top Star's metrics to improve in the coming quarters as the integration continues, we may continue to experience slight margin pressure given the lower rooms rates within these new markets, as well as our initial efforts to speed up our new hotel development. We will continue to make efforts to more effectively manage costs as this effort continues."
Outlook for First Quarter and Full Year 2008
Home Inns expects its total revenues in the first quarter of 2008 to be in the range of RMB 330 million (US$ 45 million) to RMB 350 million (US$ 48 million). For the full year of 2008, Home Inns' total revenues are currently expected to grow 70% to 80% over 2007. This forecast reflects Home Inns' current and preliminary view, which is subject to change.
Conference Call Information
Home Inns' management will hold an earnings conference call at 8 PM on March 3rd, 2008 U.S. Eastern Standard Time (9 AM on March 4th, 2008 Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows:
China Mainland (toll free): 10.800.130.0399
Hong Kong: +852.3002.1672
U.S. and International: +1.617.213.8835
Pass code for all regions: Home Inns
A replay of the conference call may be accessed by phone at the following number until 9 PM on March 10, 2007 U.S. Eastern Standard Time.
International: +1.617.801.6888
Pass code: 70163095
Additionally, a live and archived webcast of this conference call will be available at http://english.homeinns.com .
About Home Inns
Home Inns is a leading economy hotel chain in China based on the number of hotels and hotel rooms, as well as the geographic coverage of the hotel chain. Since Home Inns commenced operations in 2002, it has become one of the best-known economy hotel brands in China. Home Inns offers a consistent product and high-quality services to primarily serve the fast growing population of value-conscious individual business and leisure travelers who demand clean, comfortable and convenient lodging. Home Inns' ADSs, each of which represents two ordinary shares, are currently trading on the NASDAQ Global Market under the symbol "HMIN." For more information about Home Inns, please visit http://english.homeinns.com .
Safe Harbor
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the outlook for the first quarter of 2008 and quotations from management in this announcement, as well as Home Inns' strategic and operational plans, contain forward-looking statements. Home Inns may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to first parties. Statements that are not historical facts, including statements about Home Inns' beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our anticipated growth strategies; our future business development, results of operations and financial condition; expected changes in our revenues and certain cost or expense items; our ability to attract customers and leverage our brand; trends and competition in the lodging industry; our ability to hire, train and retain qualified managerial and other employees; our ability to develop new hotels at desirable locations in a timely and cost-effective manner; the expected growth of the Chinese economy hotel market; and Chinese governmental policies relating to private managers and operators of hotels and applicable tax rates.
Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. Home Inns does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of March 4th, 2008, and Home Inns undertakes no duty to update such information, except as required under applicable law.
Non-GAAP Financial Measures
To supplement Home Inns' un-audited consolidated financial results presented in accordance with U.S. GAAP, Home Inns uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC: total operating expenses excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, income from operations excluding share-based expenses, adjusted net income excluding foreign exchange losses and share-based compensation, adjusted basic and diluted earnings and ADS per share excluding foreign exchange losses and share-based compensation, EBITDA and adjusted EBITDA excluding foreign exchange losses and share-based compensation. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this release.
Home Inns believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective and by excluding foreign exchange losses which may not be indicative of its operating performance. Home Inns believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Home Inns' historical performance and liquidity. Home Inns computes its non-GAAP financial measures using the same consistent method from quarter to quarter. Home Inns believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in our business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
Home Inns' management also believes that EBITDA, defined as earnings before interest, income tax expense, depreciation and amortization is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions and income taxes. In addition, Home Inns' management believes that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of our financial performance. Given the significant investments that Home Inns has made in property, plant and equipment, depreciation and amortization expense comprises a meaningful portion of our cost structure. Home Inns' management believes that EBITDA will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. The presentation of EBITDA should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business.
The use of EBITDA and adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets, income tax expense, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Further, foreign exchange losses and share-based compensation expenses have been and will be incurred and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our financial results. Additionally, EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. Home Inns compensates for these limitations by providing the relevant disclosure of our depreciation and amortization, interest expense and interest income, income tax expense, capital expenditures and other relevant items both in our reconciliations to the U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance. The term EBITDA or adjusted EBITDA is not defined under U.S. GAAP, and EBITDA or adjusted EBITDA is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider this data in isolation or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our EBITDA and adjusted EDITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as we do.
Reconciliations of Home Inns' non-GAAP financial measures, including EBITDA and adjusted EBITDA, to consolidated statement of operations information are included at the end of this press release.
Home Inns & Hotels Management Inc.
Consolidated Balance Sheet Information
December 31, 2006 December 31, 2007
RMB RMB US$
(audited) (unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents 758,003,839 1,562,600,475 214,213,319
Restricted cash - 173,849,480 23,832,627
Accounts receivable 8,902,565 16,913,361 2,318,614
Receivables from related parties 197,788 1,372,000 188,084
Consumables 12,131,304 18,991,558 2,603,509
Prepayments and other current
assets 10,529,624 61,926,482 8,489,360
Deferred tax assets, current 5,670,939 16,573,837 2,272,069
Total current assets 795,436,059 1,852,227,193 253,917,582
Property and equipment, net 458,058,608 1,147,681,463 157,333,022
Goodwill 32,906,112 397,777,954 54,530,468
Intangible assets, net 3,021,795 46,739,393 6,407,396
Other assets 4,175,804 68,088,285 9,334,067
Deferred tax assets, non-current 26,420,799 49,023,794 6,720,560
Total assets 1,320,019,177 3,561,538,082 488,243,095
LIABILITIES
Current liabilities:
Accounts payable 8,919,148 13,007,122 1,783,117
Payables to related parties 7,389,990 6,650,636 911,720
Short-term borrowings 124,000,000 269,000,000 36,876,594
Current portion of long-term
loan from a related party 10,000,000 - -
Salaries and welfare payable 22,496,135 48,260,351 6,615,901
Income tax payable 18,399,704 43,082,914 5,906,138
Other taxes payable 4,548,918 8,901,421 1,220,275
Deferred revenues 18,612,207 23,806,650 3,263,599
Provisions for customer
reward program 2,743,366 5,438,922 745,609
Other unpaid and accruals 22,501,485 36,570,169 5,013,319
Other payables 83,618,354 349,539,256 47,917,536
Dividend payable - 664,587 91,107
Total current liabilities 323,229,307 804,922,028 110,344,915
Deferred rental 44,103,281 94,225,813 12,917,201
Deferred revenues, non-current - 14,030,657 1,923,431
Long-term loan - 18,036,135 2,472,532
Long-term loan from a
related party 50,000,000 - -
Unfavorable lease liability - 19,894,416 2,727,280
Convertible bond - 1,110,308,333 152,209,625
Deferred tax liability,
non-current 165,074 13,636,670 1,869,420
Total liabilities 417,497,662 2,075,054,052 284,464,404
Minority interest 12,782,963 11,086,574 1,519,833
Commitments and contingencies
Shareholders' equity
Ordinary shares (US$0.005 par
value; 177,075,114 and
200,000,000 shares authorized,
65,712,839 and 70,487,385
shares issued and outstanding
as of December 31, 2006 and
December 31, 2007, respectively) 2,690,943 2,873,597 393,935
- -
Additional paid-in capital 813,222,265 1,362,942,486 186,842,663
Statutory reserves 23,414,541 41,333,600 5,666,329
Retained earnings 50,410,803 68,247,773 9,355,931
Total shareholders' equity 889,738,552 1,475,397,456 202,258,858
Total liabilities and
shareholders' equity 1,320,019,177 3,561,538,082 488,243,095
- - -
Note 1: The conversion of Renminbi ("RMB") into United States dollars
("US$") is based on the noon buying rate of US$1.00=RMB7.2946 on
December 31, 2007 in The City of New York for cable transfers of RMB as
certified for customs purpose by Federal Reserve Bank of New York.
Home Inns & Hotels Management Inc.
Consolidated Statement of Operations Information
Quarter Ended
December September December 31, 2007
31, 2006 30, 2007
RMB RMB RMB US$
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Leased-and-
operated
hotels 171,447,065 254,182,195 312,428,219 42,830,069
Franchised-
and-managed
hotels 7,641,832 12,179,199 15,157,744 2,077,940
Total revenues 179,088,897 266,361,394 327,585,963 44,908,009
Less: Business
tax and
related
surcharges (11,545,980) (15,617,991) (20,348,221) (2,789,491)
Net revenues 167,542,917 250,743,403 307,237,742 42,118,518
Operating costs
and expenses:
Leased-and-
operated
hotel costs -
Rents and
utilities (52,347,055) (73,728,804) (105,658,585) (14,484,493)
Personnel
costs* (28,069,548) (39,683,303) (51,425,760) (7,049,840)
Depreciation
and
amortization (13,569,820) (20,827,363) (29,691,998) (4,070,408)
Consumables,
food
and beverage (14,593,337) (21,258,758) (30,347,899) (4,160,324)
Others (18,649,549) (25,441,722) (34,532,744) (4,734,015)
Total leased-
and-operated
hotel costs (127,229,309) (180,939,950) (251,656,986) (34,499,080)
Sales and
marketing
expenses (4,329,343) (6,306,364) (4,839,358) (663,416)
General and
administrative
expenses* (15,843,119) (24,001,642) (36,809,121) (5,046,078)
Total operating
costs and
expenses (147,401,771) (211,247,956) (293,305,465) (40,208,574)
Income from
operations 20,141,146 39,495,446 13,932,277 1,909,944
Interest income 6,031,112 8,610,214 5,552,104 761,125
Interest expense (1,778,676) (1,274,235) (1,112,421) (152,499)
Other non-
operating
income 343,262 2,315,197 2,767,410 379,378
Foreign exchange
gain or loss,
net (6,063,602) (10,238,784) (24,083,307) (3,301,525)
Income before
income tax
expense,
minority
interests and
share of income
of affiliated
companies 18,673,242 38,907,839 (2,943,937) (403,577)
Income tax
expense (5,652,998) (12,517,776) (10,760,344) (1,475,111)
Minority
interests (1,276,740) (1,122,246) (1,507,184) (206,616)
Net income 11,743,504 25,267,817 (15,211,465) (2,085,304)
Amount
allocated to
participating
preference
shareholders (1,170,707) - - -
Net income
available to
ordinary
shareholders 10,572,797 25,267,817 (15,211,465) (2,085,304)
Earnings
per share
- Basic 0.19 0.36 -0.22 -0.03
- Diluted 0.18 0.35 -0.22 -0.03
Weighted
average
ordinary
shares
outstanding
- Basic 56,260,181 69,294,348 70,168,875 70,168,875
- Diluted 59,229,417 72,165,704 70,168,875 70,168,875
* Share-based
compensation
expense was
included in
the statement
of operations
as follows:
Leased-and-
operated hotel
costs - Personnel
costs 2,948 2,756 2,525 346
General and
administrative
expenses 1,561,741 4,269,891 4,604,258 631,187
Quarter Ended Year Ended
December 31, 2007 December 31, 2006
RMB RMB RMB
(unaudited) (unaudited) (audited)
Top Star excluding
Top Star
Revenues:
Leased-and-
operated
hotels 19,774,873 292,653,346 567,894,885
Franchised-
and-managed
hotels - 15,157,744 20,604,785
Total revenues 19,774,873 307,811,090 588,499,670
Less: Business
tax and
related
surcharges (1,036,803) (19,311,418) (33,976,564)
Net revenues 18,738,070 288,499,672 554,523,106
Operating costs
and expenses:
Leased-and-
operated
hotel costs -
Rents and
utilities (12,935,481) (92,723,104) (171,576,396)
Personnel
costs* (3,127,982) (48,297,778) (87,980,536)
Depreciation
and
amortization (2,827,977) (26,864,021) (44,619,561)
Consumables,
food
and beverage (3,836,525) (26,511,374) (43,481,710)
Others (2,430,434) (32,102,310) (56,018,938)
Total leased-
and-operated
hotel costs (25,158,399) (226,498,587) (403,677,141)
Sales and
marketing
expenses (263,900) (4,575,458) (11,487,529)
General and
administrative
expenses* (6,449,876) (30,359,245) (64,792,672)
Total operating
costs and
expenses (31,872,175) (261,433,290) (479,957,342)
Income from
operations (13,134,105) 27,066,382 74,565,764
Interest income 11,898 5,540,206 6,577,804
Interest expense (365,744) (746,677) (6,142,593)
Other non-
operating
income 323,853 2,443,557 5,308,611
Foreign exchange
gain or loss,
net - (24,083,307) (6,990,362)
Income before
income tax
expense,
minority
interests and
share of income
of affiliated
companies (13,164,098) 10,220,161 73,319,224
Income tax
expense - (10,760,344) (21,390,611)
Minority
interests - (1,507,184) (5,034,255)
Net income (13,164,098) (2,047,367) 46,894,358
Amount
allocated to
participating
preference
shareholders - (16,173,962)
Net income
available to
ordinary
shareholders (13,164,098) (2,047,367) 30,720,396
Earnings
per share
- Basic -0.03 0.86
- Diluted -0.03 0.82
Weighted
average
ordinary
shares
outstanding
- Basic 70,168,875 35,550,114
- Diluted 70,168,875 37,530,332
* Share-based
compensation
expense was
included in
the statement
of operations
as follows:
Leased-and-
operated hotel
costs - Personnel
costs 2,525 11,980
General and
administrative
expenses 4,604,258 16,283,344
Year Ended
December 31, 2007
RMB US$ RMB RMB
(unaudited) (unaudited) (unaudited) (unaudited)
Top Star excluding
Top Star
Revenues:
Leased-and-
operated
hotels 963,050,569 132,022,396 19,774,873 943,275,696
Franchised-
and-managed
hotels 46,265,583 6,342,443 - 46,265,583
Total revenues 1,009,316,152 138,364,839 19,774,873 989,541,279
Less: Business
tax and
related
surcharges (60,302,441) (8,266,723) (1,036,803) (59,265,638)
Net revenues 949,013,711 130,098,116 18,738,070 930,275,641
Operating costs
and expenses:
Leased-and-
operated
hotel costs -
Rents and
utilities (299,791,891) (41,097,783) (12,935,481) (286,856,410)
Personnel
costs* (155,611,203) (21,332,383) (3,127,982) (152,483,221)
Depreciation
and
amortization (85,600,192) (11,734,734) (2,827,977) (82,772,215)
Consumables,
food
and beverage (84,053,059) (11,522,641) (3,836,525) (80,216,534)
Others (98,643,735) (13,522,844) (2,430,434) (96,213,301)
Total leased-
and-operated
hotel costs (723,700,080) (99,210,385) (25,158,399) (698,541,681)
Sales and
marketing
expenses (19,631,772) (2,691,275) (263,900) (19,367,872)
General and
administrative
expenses* (99,025,878) (13,575,231) (6,449,876) (92,576,002)
Total operating
costs and
expenses (842,357,730) (115,476,891) (31,872,175) (810,485,555)
Income from
operations 106,655,981 14,621,225 (13,134,105) 119,790,086
Interest income 31,717,134 4,348,029 11,898 31,705,236
Interest expense (7,168,401) (982,700) (365,744) (6,802,657)
Other non-
operating
income 8,434,516 1,156,268 323,853 8,110,663
Foreign exchange
gain or loss,
net (53,220,796) (7,295,917) - (53,220,796)
Income before
income tax
expense,
minority
interests and
share of income
of affiliated
companies 86,418,434 11,846,905 (13,164,098) 99,582,532
Income tax
expense (45,035,530) (6,173,818) - (45,035,530)
Minority
interests (5,626,894) (771,378) - (5,626,894)
Net income 35,756,010 4,901,709 (13,164,098) 48,920,108
Amount
allocated to
participating
preference
shareholders - - - -
Net income
available to
ordinary
shareholders 35,756,010 4,901,709 (13,164,098) 48,920,108
Earnings
per share
- Basic 0.52 0.07 - 0.72
- Diluted 0.47 0.06 - 0.64
Weighted
average
ordinary
shares
outstanding
- Basic 68,323,370 68,323,370 - 68,323,370
- Diluted 76,883,995 76,883,995 - 76,883,995
* Share-based
compensation
expense was
included in
the statement
of operations
as follows:
Leased-and-
operated hotel
costs - Personnel
costs 11,031 1,512 - 11,031
General and
administrative
expenses 15,060,077 2,064,551 - 15,060,077
Note 1: The conversion of Renminbi ("RMB") into United States dollars
("US$") is based on the noon buying rate of US$1.00=RMB7.2946
on December 31, 2007 in The City of New York for cable transfers of RMB as
certified for customs purpose by Federal Reserve Bank of New York.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results
Quarter Ended December 31, 2007
Share-
% of based Restru- % of Non- % of
GAAP Total Compen- cturing Total GAAP Total
Result Revenue sation costs Revenue Result Revenue
RMB RMB RMB RMB
Leased-
and-
operated
hotel
costs (251,656,986) 76.8% 2,525 549,661 0.2% (251,104,800) 76.7%
Sales and
marketing
expenses (4,839,358) 1.5% - 0.0% (4,839,358) 1.5%
General
and
admini-
strative
expenses (36,809,121) 11.2% 4,604,258 4,076,209 2.6% (28,128,654) 8.6%
Total
operating
costs
and
expenses (293,305,465) 89.5% 4,606,783 4,625,870 2.8% (284,072,812) 86.7%
Income
from
operations 13,932,277 4.3% 4,606,783 4,625,870 2.8% 23,164,930 7.1%
Quarter Ended December 31, 2007 (excluding Top Star)
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
RMB RMB RMB
Leased-
and-
operated
hotel
costs (226,498,587) 73.6% 2,525 0.0% (226,496,062) 73.6%
Sales
and
marketing
expenses (4,575,458) 1.5% - 0.0% (4,575,458) 1.5%
General
and
admini-
strative
expenses (30,359,245) 9.9% 4,604,258 1.5% (25,754,987) 8.4%
Total
operating
costs
and
expenses (261,433,290) 84.9% 4,606,783 1.5% (256,826,507) 83.4%
Income
from
operations 27,066,382 8.8% 4,606,783 1.5% 31,673,165 10.3%
Quarter Ended December 31, 2007
Share-
% of based Restru- % of Non- % of
GAAP Total Compen- cturing Total GAAP Total
Result Revenue sation costs Revenue Result Revenue
US$ US$ US$ US$
Leased-
and-
operated
hotel
costs (34,499,080) 76.8% 346 75,352 0.2% (34,423,382) 76.7%
Sales
and
marketing
expenses (663,416) 1.5% - - 0.0% (663,416) 1.5%
General
and
admini-
strative
expenses (5,046,078) 11.2% 631,187 558,798 2.6% (3,856,093) 8.6%
Total
operating
costs
and
expenses (40,208,574) 89.5% 631,533 634,150 2.8% (38,942,891) 86.7%
Income
from
operations 1,909,944 4.3% 631,533 634,150 2.8% 3,175,627 7.1%
Quarter Ended December 31, 2007 (excluding Top Star)
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
US$ US$ US$
Leased-
and-
operated
hotel
costs (31,050,172) 73.6% 346 0.0% (31,049,826) 73.6%
Sales
and
marketing
expenses (627,239) 1.5% - 0.0% (627,239) 1.5%
General
and
admini-
strative
expenses (4,161,879) 9.9% 631,187 1.5% (3,530,692) 8.4%
Total
operating
costs
and
expenses (35,839,290) 84.9% 631,533 1.5% (35,207,757) 83.4%
Income
from
operations 3,710,468 8.8% 631,533 1.5% 4,342,001 10.3%
Quarter Ended September 30, 2007
Share-
% of based Restru- % of Non- % of
GAAP Total Compen- cturing Total GAAP Total
Result Revenue sation costs Revenue Result Revenue
RMB RMB RMB RMB
Leased-
and-
operated
hotel
costs (180,939,950) 67.9% 2,756 - 0.0% (180,937,194) 67.9%
Sales
and
marketing
expenses (6,306,364) 2.4% - - 0.0% (6,306,364) 2.4%
General
and
admini-
strative
expenses (24,001,642) 9.0% 4,269,891 - 1.6% (19,731,751) 7.4%
Total
operating
costs
and
expenses (211,247,956) 79.3% 4,272,647 - 1.6% (206,975,309) 77.7%
Income
from
oper-
ations 39,495,446 14.8% 4,272,647 - 1.6% 43,768,093 16.4%
Quarter Ended December 31, 2006
Share-
% of based Restru- % of Non- % of
GAAP Total Compen- cturing Total GAAP Total
Result Revenue sation costs Revenue Result Revenue
RMB RMB RMB RMB
Leased-
and-
operated
hotel
costs (127,229,309) 71.0% 2,948 - 0.0% (127,226,361) 71.0%
Sales
and
marketing
expenses (4,329,343) 2.4% - - 0.0% (4,329,343) 2.4%
General
and
admini-
strative
expenses (15,843,119) 8.8% 1,561,741 - 0.9% (14,281,378) 8.0%
Total
operating
costs
and
expenses (147,401,771) 82.3% 1,564,689 - 0.9% (145,837,082) 81.4%
Income
from
operations 20,141,146 11.2% 1,564,689 - 0.9% 21,705,835 12.1%
Year Ended December 31, 2007
Share-
% of based Restru- % of Non- % of
GAAP Total Compen- cturing Total GAAP Total
Result Revenue sation costs Revenue Result Revenue
RMB RMB RMB RMB
Leased-
and-
operated
hotel
costs (723,700,080) 71.7% 11,031 549,661 0.1% (723,139,388) 71.6%
Sales
and
marketing
expenses (19,631,772) 1.9% - 0.0% (19,631,772) 1.9%
General
and
admini-
strative
expenses (99,025,878) 9.8% 15,060,077 4,076,209 1.9% (79,889,592) 7.9%
Total
operating
costs
and
expenses (842,357,730) 83.5% 15,071,108 4,625,870 2.0%(822,660,752) 81.5%
Income
from
oper-
ations 106,655,981 10.6% 15,071,108 4,625,870 2.0% 126,352,959 12.5%
Year Ended December 31, 2007 (excluding Top Star)
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
RMB RMB RMB
Leased-
and-
operated
hotel
costs (698,541,681) 70.6% 11,031 0.0% (698,530,650) 70.6%
Sales
and
marketing
expenses (19,367,872) 2.0% - 0.0% (19,367,872) 2.0%
General
and
admini-
strative
expenses (92,576,002) 9.4% 15,060,077 1.5% (77,515,925) 7.8%
Total
operating
costs
and
expenses (810,485,555) 81.9% 15,071,108 1.5% (795,414,447) 80.4%
Income
from
operations 119,790,086 12.1% 15,071,108 1.5% 134,861,194 13.6%
Year Ended December 31, 2007
Share-
% of based Restru- % of Non- % of
GAAP Total Compen- cturing Total GAAP Total
Result Revenue sation costs Revenue Result Revenue
US$ US$ US$ US$
Leased-
and-
operated
hotel
costs (99,210,386) 71.7% 1,512 75,352 0.1% (99,133,522) 71.6%
Sales
and
marketing
expenses (2,691,275) 1.9% - - 0.0% (2,691,275) 1.9%
General
and
admini-
strative
expenses (13,575,231) 9.8% 2,064,551 558,798 1.9% (10,951,882) 7.9%
Total
operating
costs
and
expenses(115,476,892) 83.5% 2,066,063 634,150 2.0% (112,776,679) 81.5%
Income
from
oper-
ations 14,621,224 10.6% 2,066,063 634,150 2.0% 17,321,437 12.5%
Year Ended December 31, 2007 (excluding Top Star)
Share-
% of based % of Non- % of
GAAP Total Compen- Total GAAP Total
Result Revenue sation Revenue Result Revenue
US$ US$ US$
Leased-
and-
operated
hotel
costs (95,761,478) 70.6% 1,512 0.0% (95,759,966) 70.6%
Sales
and
marketing
expenses (2,655,097) 2.0% - 0.0% (2,655,097) 2.0%
General
and
admini-
strative
expenses (12,691,032) 9.4% 2,064,551 1.5% (10,626,481) 7.8%
Total
operating
costs
and
expenses (111,107,607) 81.9% 2,066,063 1.5% (109,041,544) 80.4%
Income
from
operations 16,421,748 12.1% 2,066,063 1.5% 18,487,811 13.6%
Year Ended December 31, 2006
Share-
% of based Restru- % of Non- % of
GAAP Total Compen- cturing Total GAAP Total
Result Revenue sation costs Revenue Result Revenue
RMB RMB RMB RMB
Leased-
and-
operated
hotel
costs (403,677,141) 68.6% 11,980 - 0.0% (403,665,161) 68.6%
Sales
and
marketing
expenses (11,487,529) 2.0% - - 0.0% (11,487,529) 2.0%
General
and
admini-
strative
expenses (64,792,672) 11.0% 16,283,344 - 2.8% (48,509,328) 8.2%
Total
operating
costs
and
expenses (479,957,342) 81.6% 16,295,324 - 2.8% (463,662,018) 78.8%
Income
from
operations 74,565,764 12.7% 16,295,324 - 2.8% 90,861,088 15.4%
Note 1: The conversion of Renminbi ("RMB") into United States dollars
("US$") is based on the noon buying rate of US$1.00=RMB7.2946
on December 31, 2007 in The City of New York for cable transfers of RMB
as certified for customs purpose by Federal Reserve Bank of New York.
Home Inns & Hotels Management Inc.
Reconciliation of GAAP and Non-GAAP Results (continued)
Quarter Ended
December 31, September 30, December 31, 2007
2006 2007
RMB RMB RMB US$ RMB(excluding
(unaudited) (unaudited) (unaudited) (unaudited) Top Star)
(unaudited)
Net income
(GAAP) 11,743,504 25,267,817 (15,211,465) (2,085,304) (2,047,367)
Interest
income (6,031,112) (8,610,214) (5,552,104) (761,125) (5,540,206)
Interest
expenses 1,778,676 1,274,235 1,112,421 152,499 746,677
Income tax
expense 5,652,998 12,517,776 10,760,344 1,475,111 10,760,344
Depreciation
and
amorti-
zation 14,209,255 21,622,771 30,880,178 4,233,293 28,052,201
EBITDA
(Non-GAAP) 27,353,321 52,072,385 21,989,374 3,014,474 31,971,649
Foreign
exchange
losses
(gains),
net 6,063,602 10,238,784 24,083,307 3,301,525 24,083,307
Share-based
compensa-
tion 1,564,689 4,272,647 4,606,783 631,533 4,606,783
Restruc-
turing
costs 4,625,870 634,150
EBITDA
excluding
foreign
exchange
losses,
share-
based
compensa-
tion &
restruc-
turing
costs 34,981,612 66,583,816 55,305,334 7,581,682 60,661,739
%of total
revenue 19.5% 25.0% 16.9% 16.9% 19.7%
Year Ended
December 31, December 31, 2007
2006
RMB RMB US$ RMB(excluding Top Star)
(audited) (unaudited) (unaudited) (unaudited)
Net income
(GAAP) 46,894,358 35,756,010 4,901,709 48,920,108
Interest
income (6,577,804) (31,717,134) (4,348,029) (31,705,236)
Interest
expenses 6,142,593 7,168,401 982,700 6,802,657
Income
tax
expense 21,390,611 45,035,530 6,173,818 45,035,530
Depreciation
and
amorti-
zation 46,602,636 88,010,818 12,065,201 85,182,841
EBITDA
(Non-GAAP) 114,452,394 144,253,625 19,775,399 154,235,900
Foreign
exchange
losses
(gains),
net 6,990,362 53,220,796 7,295,917 53,220,796
Share-
based
compensa-
tion 16,295,324 15,071,108 2,066,063 15,071,108
Restru-
cturing
costs 4,625,870 634,150
EBITDA
excluding
foreign
exchange
losses,
share-
based
compensa-
tion &
restru-
cturing
costs 137,738,080 217,171,399 29,771,529 222,527,804
%of total
revenue 23.4% 21.5% 21.5% 22.5%
Quarter Ended
December September December 31, 2007
31, 2006 30, 2007
RMB RMB RMB US$ RMB(excluding
Top Star)
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Net
income
(GAAP) 11,743,504 25,267,817 (15,211,465) (2,085,304) (2,047,367)
Foreign
exchange
losses
(gains),
net 6,063,602 10,238,784 24,083,307 3,301,525 24,083,307
Share-
based
compen-
sation 1,564,689 4,272,647 4,606,783 631,533 4,606,783
Non-recurring
charge for
re-measurement
of net
deferred tax
assets (Note2)
Restru-
cturing
costs 4,625,870 634,150
Adjusted net income
excluding foreign
exchange losses,
share-based compensation,
non-recurring provision
for deferred tax
assets and
restru-
cturing
costs 19,371,795 39,779,248 18,104,495 2,481,904 26,642,723
Quarter Ended
December September December 31, 2007
31, 2006 30, 2007
RMB RMB RMB US$ RMB(excluding
Top Star)
(unaudited) (unaudited) (unaudited) (unaudited)(unaudited)
Earnings
per
share
(GAAP)
- Basic 0.21 0.36 -0.22 -0.03 -0.03
- Diluted 0.20 0.35 -0.22 -0.03 -0.03
Earnings per
share
excluding
foreign
exchange
losses,
share-based
compensation,
non-recurring
provision
for deferred
tax assets
and restru-
cturing costs
- Basic 0.34 0.57 0.26 0.04 0.38
- Diluted 0.33 0.55 0.23 0.03 0.34
Weighted average
ordinary shares
outstanding
- Basic 56,260,181 69,294,348 70,168,875 70,168,875 70,168,875
- Diluted 59,229,417 72,165,704 78,504,282 78,504,282 78,504,282
Year Ended
December 31, December 31, 2007
2006
RMB RMB US$ RMB(excluding
Top Star)
(unaudited) (unaudited) (unaudited) (unaudited)
Net
income
(GAAP) 46,894,358 35,756,010 4,901,709 48,920,108
Foreign
exchange
losses
(gains),
net 6,990,362 53,220,796 7,295,917 53,220,796
Share-
based
compen-
sation 16,295,324 15,071,108 2,066,063 15,071,108
Non-recurring
charge for
re-measurement
of net
deferred tax
assets (Note2) 6,096,529 6,096,529
Restru-
cturing
costs 4,625,870 634,150
Adjusted net income
excluding foreign
exchange losses,
share-based compensation,
non-recurring provision
for deferred tax
assets and
restru-
cturing
costs 70,180,044 114,770,313 14,897,839 123,308,541
Year Ended
December December 31, 2007
31, 2006
RMB RMB US$ RMB(excluding Top Star)
(unaudited) (unaudited) (unaudited) (unaudited)
Earnings
per
share
(GAAP)
- Basic 1.32 0.52 0.07 0.72
- Diluted 1.25 0.47 0.06 0.64
Earnings per
share
excluding
foreign
exchange
losses,
share-based
compensation,
non-recurring
provision
for deferred
tax assets
and restru-
cturing costs
- Basic 1.97 1.68 0.23 1.80
- Diluted 1.87 1.49 0.20 1.60
Weighted average
ordinary shares
outstanding
- Basic 35,550,114 68,323,370 68,323,370 68,323,370
- Diluted 37,530,332 76,883,995 76,883,995 76,883,995
Note 1: The conversion of Renminbi ("RMB") into United States dollars
("US$") is based on the noon buying rate of US$1.00=RMB7.2946 on September
30, 2007 in The City of New York for cable transfers of RMB as certified
for customs purpose by Federal Reserve Bank of New York.
Note 2: For the year ended December 31, 2007, income tax expenses included
a non-recurring charge of RMB6,096,529 (US$789,379) for re-measurement of
net deferred tax assets recognised before January 1, 2007, which was
resulted from the change of income tax rates for most Chinese enterprises
from 33% at the present to 25% effective on January 1, 2008. (for the
year ended December 31, 2006: Nil)
Home Inns & Hotels Management Inc.
Operating Data
As of and for the quarter ended
December September December 31, 2007
31, 2006 30, 2007 excluding
Top Star Top Star
Total Hotels
in operation:
Lease-and
operated hotels 94 143 195 25 170
Franchised-
and-managed
hotels 40 58 71 71
Total rooms 16,162 23,954 32,726 4,047 28,679
Occupancy rate
(as a percentage) 90.0% 95.4% 88.3% 56.4% 91.6%
Average daily rate
(in RMB) 182 182 176 128 179
RevPAR (in RMB) 165 174 155 72 164
For investor and media inquiries, please contact:
Angela Li
Home Inns & Hotels Management Inc.
Tel: +86-21-3218-9988 x2004
Email: xlli@homeinns.com
FD Beijing
Julian Wilson
Tel: +86-10-8591-1951
Email: julian.wilson@fd.com
Peter Schmidt
Tel: +86-10-8591-1953
Email: peter.schmidt@fd.com
