omniture

GreenTree Hospitality Group Ltd. Reports Fourth Quarter and Fiscal Year 2019 Financial Results

2020-04-14 19:51 9665
  • A total of 3,957 hotels with 290,026 hotel rooms were in operation as of December 31, 2019, compared to 3,102 hotels and 245,705 hotel rooms as of September 30, 2019, and compared to 2,757 hotels and 221,529 hotel rooms as of December 31, 2018.
  • Total revenues increased 20.4% to RMB289.4 million (US$41.6 million) [1] for the fourth quarter of 2019. Total revenues increased 20.6% to RMB1,091.8 million (US$156.8 million)[2] for the full year 2019.
  • Adjusted EBITDA (non-GAAP) increased 11.4% to RMB162.3million (US$23.3 million) [1] for the fourth quarter of 2019. Adjusted EBITDA (non-GAAP) increased 12.1% to RMB594.1 million (US$85.3 million)[1] for the full year 2019.
  • Net income increased 48.9% to RMB74.5 million (US$10.7 million)[1] for the fourth quarter of 2019. Net income increased 17.9% to RMB437.8 million (US$62.9 million)[1] for the full year 2019.
  • Core net income (non-GAAP) increased 15.8% to RMB129.9 million (US$18.7 million)[1] for the fourth quarter of 2019. Core net income (non-GAAP) increased 16.7% to RMB482.7 million (US$69.3 million)[1] for the full year 2019.
  • Net income per ADS (basic and diluted) totaled RMB0.75 (US$0.11)[1] for the fourth quarter of 2019. Net income per ADS (basic and diluted) totaled RMB4.34 (US$0.62)[1] for the full year 2019.
  • Core net income per ADS (basic and diluted) (non-GAAP) of the Company totaled RMB1.27 (US$0.18)[1] for the fourth quarter of 2019. Core net income per ADS (basic and diluted) (non-GAAP) totaled RMB4.73 (US$0.68)[1] for the full year 2019.
  • The Company expects total revenue for the full year 2020 to decline 10%-15% from 2019, with consideration of COVID-19.

SHANGHAI, April 14, 2020 /PRNewswire/ -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree", the "Company", "we", "us" and "our"), a leading hospitality management group in China, today announced its unaudited financial results for the fourth quarter and fiscal year of 2019.

Fourth Quarter of 2019 Operational Highlights

  • As of December 31, 2019, the Company had 34 leased-and-operated ("L&O") hotels and 3,923 franchised-and-managed ("F&M") hotels in operation in 339 cities across China, compared to 29 L&O hotels and 2,728 F&M hotels in operation in 290 cities as of December 31, 2018. The geographic coverage increased by 16.9% year over year.
  • During the fourth quarter of 2019, the Company opened 190 hotels, a decrease of 34 comparing to 224 hotels in the fourth quarter of 2018. Among the hotels opened, 29 were in the mid-to-up-scale segment, 81 in the mid-scale segment, and 80 in the economy segment. Geographically speaking, 14 hotels were in Tier 1 cities[2], 37 were in Tier 2 cities and the remaining 139 were in Tier 3 and other cities in China. During this quarter, the Company closed 41 hotels, 9 due to brand upgrade, and 20 due to their non-compliance with the Company's brand and operating standards. The remaining 12 were closed for property related issues. The Company added a net opening of 149 hotels to its portfolio.
  • As of December 31, 2019, the Company had a pipeline with a total of 949 hotels contracted for or under development, among which 54 hotels were in the luxury hotel segment, 181 in the mid-to-up-scale segment, 364 in the mid-scale segment, and 350 in the economy segment.
  • The average daily room rate, or ADR, for all hotels in operation, was RMB170 in the fourth quarter of 2019, an increase of 3.6% year-over-year.
  • The occupancy rate, or OCC for all hotels in operation was 78.2% in the fourth quarter of 2019, compared with 80.4% in the fourth quarter of 2018.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB133 in the fourth quarter of 2019, representing a 0.9% year-over-year increase.
  • As of December 31, 2019, the Company's loyalty program had more than 44 million individual members and over 1,510,000 corporate members, compared to approximately 39 million and over 1,450,000 corporate members as of September 30, 2019. The Company had approximately 93.0% of room nights sold directly.

2019 Full Year Operational Highlights

  • For the full year 2019, the Company opened 607 hotels, an increase of 9.6% comparing to 554 newly opened hotels in the full year 2018. Among the hotels opened, 4 were in the luxury hotel segment, 84 in the mid-to-up-scale segment, 287 in the mid-scale segment, and 232 in the economy segment. Geographically speaking, 43 hotels were in Tier 1 cities, 129 were in Tier 2 cities and the remaining 435 were in Tier 3 and other cities in China. During this year, the Company closed 140 hotels, 34 due to brand upgrade, and 75 due to their non-compliance with the Company's brand and operating standards. The remaining 31 were closed for property related issues. The Company added a net opening of 467 hotels to its portfolio.
  • The average daily room rate, or ADR, for all hotels in operation, was RMB170 in the full year 2019, an increase of 3.6% year-over-year.
  • The occupancy rate, or OCC for all hotels in operation was 80.9% in the full year 2019, compared with 82.1% in the full year 2018.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB137 in the full year 2019, representing a 2.0% year-over-year increase.
  • The Company had approximately 93.5% of room nights sold directly in the full year 2019
  • The Company has completed the consolidation of Argyle Hotel Management Group (Australia) Pty Ltd ("Argyle") in the second quarter of 2019 and of Urban Hotel Group ("Urban") in the fourth quarter of 2019.
  • With the introduction of branded restaurant to hotels, the Company's Food and Beverage services can bring additional revenue and attract more guests to hotels.
  • The Company have been working with several major banks in joint marketing activities to cross promote each other's membership programs.

"Last year we completed a number of strategic investments which resulted in a number of joint venture investments for our Company," said Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree. "In Q4, we completed the merger of Urban Hotels in December, and restructured our development team. By year end, our pipeline growth had increased by 120% over 2018. During the first quarter of 2020, we have taken further initiatives to improve our technology for our users, to improve the health and safety of our hotels for our guests and employees, to refine our sales and marketing focus, and to provide flexible franchise terms and support. With these combined efforts, our hotels should be able to continue to outperform in 2020.

"No words can express our gratitude and appreciation for the sacrifices and hard work made by our employees and our franchisees during the COVID-19 crisis. We owe our deepest thanks to our employees, guests, medical professionals, police, firefighters, and community leaders for their heroic support during the crisis. Thanks to all of them, our operations are recovering rapidly. 

"Our mission has always been to support our franchisees and employees, and to create value for our shareholders. With almost 4,000 hotels in operation and almost 1,000 under construction, our foundation is stronger, our pipeline is bigger, our teams are more focused, and we are better positioned to grow, in spite of the current crisis. We are confident that we will deliver another year of outstanding services to our guests and strong performance to our franchisees and shareholders."

 

Fourth Quarter of 2019 Financial Results








 December 31, 2018


 December 31, 2019


 December 31, 2019


RMB


RMB


US$

Revenues






Leased-and-operated hotels

56,721,973


68,553,356


9,847,074

Franchised-and-managed hotels

183,656,189


220,879,070


31,727,293

Total revenues

240,378,162


289,432,426


41,574,367




 Year Ended


 December 31, 2018


 December 31, 2019


 December 31, 2019


RMB


RMB


US$

Revenues






Leased-and-operated hotels

212,671,930


253,420,676


36,401,602

Franchised-and-managed hotels

692,942,739


838,372,459


120,424,669

Total revenues

905,614,669


1,091,793,135


156,826,271

 

Total revenues for the fourth quarter of 2019 were RMB289.4 million (US$41.6 million)[1], representing a 20.4% year-over-year increase. The increase was primarily due to four factors: the opening of 190 F&M hotels, improved RevPAR, growth in our loyalty membership program, and the consolidation of Urban and Argyle into our financial statements. Growth was partially offset by the renovation of 6 L&O hotels. Total revenues for the full year 2019 were RMB1,091.8 million (US$156.8 million)[1], representing a 20.6% increase.

  • Total revenues from leased-and-operated hotels for the fourth quarter of 2019 were RMB68.6 million (US$9.8 million)[1], representing a 20.9% year-over-year increase. The increase was primarily attributable to the 5 L&O hotels net addition to our network from consolidation of Urban, moderate, sublease, revenue growth, and was partially offset by the renovation of 6 L&O hotels during the quarter. Total revenues from L&O hotels for the full year 2019 were RMB253.4 million (US$36.4 million)[1], representing a 19.2% % increase.
  • Total revenues from franchised-and-managed hotels for the fourth quarter of 2019 were RMB220.9 million (US$31.7 million)[1], representing a 20.3% year-over-year increase. Initial franchise fees increased by 2.9% year-over-year in the fourth quarter of 2019. The 21.6% increase from the fourth quarter of 2018 in recurring franchisee management fees and others was primarily due to the new openings, RevPAR growth of 0.9% as well as growth in central reservation system ("CRS") usage fees, annual IT and hotel manager fees, which in turn resulted from the increased number of hotels and hotel rooms in operation. Total revenues from F&M hotels for the full year 2019 were RMB838.4 million (US$120.4 million)[1], representing a 21.0% increase.

 


Quarter Ended


 December 31, 2018


 December 31, 2019


 December 31, 2019


RMB


RMB


US$

Initial franchise fee

13,276,035


13,655,873


1,961,543

Recurring franchise
management fee and others

170,380,154


207,223,197


29,765,750

Revenues from franchised-
and-managed hotels

183,656,189


220,879,070


31,727,293








 Year  Ended


 December 31, 2018


 December 31, 2019


 December 31, 2019


RMB


RMB


US$

Initial franchise fee

42,806,330


54,930,266


7,890,239

Recurring franchise
management fee and others

650,136,409


783,442,193


112,534,430

Revenues from franchised-
and-managed hotels

692,942,739


838,372,459


120,424,669



Total operating costs and expenses



Quarter Ended


 December 31, 2018


 December 31, 2019


 December 31, 2019


RMB


RMB


US$

Operating costs and expenses






Hotel operating costs

71,959,069


92,609,618


13,302,539

Selling and marketing expenses

13,873,291


23,155,218


3,326,039

General and administrative expenses

25,479,401


79,597,392


11,433,450

Other operating expenses

5,667,699


3,124,942


448,870

Total operating costs and expenses

116,979,460


198,487,170


28,510,898








 Year Ended


 December 31, 2018


 December 31, 2019


 December 31, 2019


RMB


RMB


US$

Operating costs and expenses






Hotel operating costs

274,419,263


338,826,479


48,669,378

Selling and marketing expenses

47,397,767


84,970,401


12,205,234

General and administrative expenses

95,261,152


184,989,324


26,572,054

Other operating expenses

5,946,226


3,286,652


472,098

Total operating costs and expenses

423,024,408


612,072,856


87,918,764

 

Hotel operating costs for the fourth quarter of 2019 were RMB92.6 million (US$13.3 million)[1], representing a 28.7% increase from the fourth quarter of 2018. The increase was mainly attributable to the increased number and increased salary of general managers, other staff costs associated with the expansion of our net work,higher depreciation and amortization, one-time renovation costs related to the renovation of 6 L&O, as well as the operation costs of Argyle and Urban. Excluding the impact from newly consolidated entities, hotel operating costs of this quarter, increased 13.2%. For the full year 2019, hotel operating costs were RMB338.8 million (US$48.7 million)[1] , representing a 23.5% increase.

 


Quarter Ended


December 31,


December 31,


December 31,

2018


2019


2019


RMB


RMB


US$

Rental

20,804,644


22,270,218


3,198,917

Utilities

3,672,738


3,842,009


551,870

Personnel cost

8,323,820


10,069,427


1,446,383

Depreciation and amortization

7,025,697


15,401,030


2,212,220

Consumable, food and beverage

5,196,402


6,136,477


881,450

Costs of general managers of
franchised-and-operated hotels

20,032,682


23,458,837


3,369,651

Other costs of franchised-and-
operated hotels

6,532,685


7,799,192


1,120,284

Others

370,401


3,632,428


521,763.64

Hotel Operating Costs

71,959,069


92,609,618


13,302,539








 Year Ended


December 31,


December 31,


December 31,

2018


2019


2019


RMB


RMB


US$

Rental

76,055,484


79,597,408


11,433,452

Utilities

19,264,487


19,119,300


2,746,316

Personnel cost

33,715,007


38,277,298


5,498,190

Depreciation and amortization

21,313,405


34,727,153


4,988,243

Consumable, food and beverage

19,275,688


27,666,436


3,974,035

Costs of general managers of
franchised-and-operated hotels

70,480,306


96,565,044


 

13,870,701

Other costs of franchised-and-
operated hotels

24,004,513


29,192,923


 

4,193,301

Others

10,310,373


13,680,917


1,965,142

Hotel Operating Costs

274,419,263


338,826,479


48,669,378

 

Selling and marketing expenses for the fourth quarter of 2019 were RMB23.2 million (US$3.3 million)[1], representing a 66.9% year-over-year increase. The increase was mainly made up of incentive bonuses, and marketing and other costs associated with brands promotion and with Argyle and Urban. Excluding Argyle's and Urban's expenses and extraordinary costs, selling and marketing expenses in this quarter increased 12.2%.  For the full year 2019, selling and marketing expenses were RMB85.0 million (US$12.2 million) [1] , representing a 79.3% increase.

General and administrative expenses for the fourth quarter of 2019 were RMB79.6 million (US$11.4 million) [1] , representing a 212.4% year-over-year increase. The increase was primarily attributable to increased IT Research and development cost, legal, DD, M&A and other consulting fee, as well as the G&A expense of Argyle and Urban. Additionally, bad debt provision of investment in Yuzhenglong was accrued in the fourth quarter. Considering that Yuzhenglong focus on providing fast-food to travelers in the railway-stations and its business was seriously impacted by the traffic restriction in the COVID-19.  Also due to the outbreak of COVID-19 and a bad debt provision of rental income from sublease was accrued. Excluding the bad debt provision,G&A from Argyle and Urban, and one-time fees, G&A expenses increased by 21.1%. General and administrative expenses for the full year 2019 were RMB185.0 million (US$26.6 million) [1] , representing a 94.2% year-over-year increase.

Gross profit for the fourth quarter of 2019 was RMB196.8 million (US$28.3 million)[1], representing an increase of 16.9% from the fourth quarter of 2018. Gross margin in this quarter was 68.0%, compared to 70.1% a year ago. Gross profit for the full year 2019 was RMB753.0 million (US$108.2 million)[1], representing a 19.3% year-over-year increase.

Income from operations for the fourth quarter of 2019 totaled RMB98.8 million (US$14.2 million)[1] , representing a year-over-year decrease of 16.3%.The decrease was mainly due to increased costs and expenses of newly consolidated entities, bad debt provisions accrued in the fourth quarter as well as extraordinary fees. The operating margin, defined as income from operations as percentage of total revenues, for the fourth quarter of 2019 was 34.1%, compared to 49.1% a year ago. Income from operations for the full year 2019 totaled RMB504.6 million (US$72.5 million)[1], representing a year-over-year decrease of 0.1%.

Adjusted EBITDA (non-GAAP) for the fourth quarter of 2019 was RMB162.3million (US$23.3 million)[1], representing a year-over-year increase of 11.4%. The adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 56.1% in the fourth quarter of 2019, compared to 60.6% in the fourth quarter of 2018. Adjusted EBITDA (non-GAAP) for the full year 2019 was RMB594.1 million (US$85.3 million)[1], representing a year-over-year increase of 12.1%.

Net income for the fourth quarter of 2019 was RMB74.5 million (US$10.7 million) [1] , representing a year-over-year increase of 48.9%. Net margin in the fourth quarter was 25.8%, compared to 20.8% a year ago. The year-over-year increase in revenues and gains from investments in equity securities and partially offset by interest in total costs and expenses. Net income for the full year 2019 was RMB437.8 million (US$62.9 million) [1] , representing a year-over-year increase of 17.9%.

Core net income (non-GAAP) for the fourth quarter of 2019 was RMB129.9 million (US$18.7 million)[1], representing a year-over-year increase of 15.8%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 44.9% in the fourth quarter of 2019, compared to 46.7% one year ago. Core net income (non-GAAP) for the full year 2019 was RMB482.7 million (US$69.3 million)[1], representing a year-over-year increase of 16.7%.

Earnings per ADS (basic and diluted) for the fourth quarter of 2019 was RMB0.75 (US$0.11) [1]. , up from RMB0.49 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.27 (US$0.18) [1] for the fourth quarter of 2019 improved from 1.10 in the fourth quarter of 2018. Earnings per ADS (basic and diluted) for the full year 2019 was RMB4.34 (US$0.62) [1] up from 3.75 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB4.73 (US$0.68) [1] for the full year 2019, increased from 4.17 of 2018.

Cash flow. Operating cash inflow for the fourth quarter of 2019 was RMB118.5 million (US$17.0 million)[1], primarily due to improved operating performance across our hotel portfolio. Operating cash inflow for the full year 2019 was RMB513.9 million (US$73.8 million)[1]. Investing cash outflow for the fourth quarter of 2019 was RMB203.5 million (US$29.2 million)[1], which was primarily attributable to short-term investments, investment of property, loans to franchisees and partially offset by proceeds from disposal of investments in equity securities. Investing cash outflow for the full year 2019 was RMB1,220.0 million (US$175.2 million)[1]. Financing cash outflow for the fourth quarter of 2019 was RMB17.0 million (US$2.4 million)[1] , financing cash outflow for the full year 2019 was RMB212.2 million (US$30.5 million)[1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities[3] and time deposit[4]. As of December 31, 2019, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposit of RMB1,809.3 million (US$259.9 million)[1], as compared to RMB2,060.5 million as of September 30, 2019, primarily due to cash outflow of distribution to shareholders, loans to franchisees and cash outflow for acquisitions.

COVID-19 Updates

Thanks to the Chinese government's efforts to contain the spread of COVID-19, the outbreak is coming under control in China.  But the measures that had to be taken, including the lock-down of cities, business closures, and restrictions on travel, disrupted the operations of the Company's hotels.  Some were forced to close, and a number of hotels were required to house medical staff, volunteers, and quarantined travelers.   

During this crisis, GreenTree's priority has been to keep every guest and staff safe and healthy.  The Company took a number of substantial operational and financial measures including rigorous health, safety and hygiene protocols and practices, franchise fee waivers and financial support for its franchisees,  self-quarantine rooms for employees and guests, and free COVID-19 health insurance for its members.  The Company has actively participated in providing support for medical workers and police officers. 

Thanks to the various policies and financial assistance from central and local governments and the abovementioned support measures from GreenTree, most franchisees were ready to resume business operations when shelter-in-place was lifted.  As a result, as of March 31, 2020, 93.01% of the Company's hotels were back in operation, and achieved an overall occupancy of 51.6%, up substantially from the low of 21.5% on January 31, 2020.   

Guidance

Due to the impact of COVID-19, the Company expects a decline in total revenues in the first quarter of 2020 of 30%-35% year-over-year (37-39% excluding the impact of newly consolidated companies), and a decline in total revenues of 10%-15% for the full year 2020, compared to 2019.

The guidance set forth above reflects the Company's current and preliminary view based on our recovery speed and may not be indicative of the final financial results for future interim periods and the full year.

Conference Call

GreenTree's management will hold an earnings conference call at 8:00 AM U.S. Eastern Time on April 14, 2020 (8:00 PM Beijing/Hong Kong Time on April 14, 2020).

Dial-in numbers for the live conference call are as follows:

International            

1-412-902-4272 

Mainland China

4001-201-203 

US 

1-888-346-8982 

Hong Kong 

800-905-945 or 852-3018-4992 

Singapore

800-120-6157 

Participants should ask to join the GreenTree call, please dial in approximately 10 minutes before the scheduled time of the call.

A telephone replay of the call will be available after the conclusion of the conference call until April 21, 2020.

Dial-in numbers for the replay are as follows:

International Dial-in 

1-412-317-0088

U.S. Toll Free 

1-877-344-7529

Canada Toll Free

855-669-9658

Passcode:

10138725

Additionally, a live and archived webcast of this conference call will be available at http://ir.998.com.

Use of Non-GAAP Financial Measures

We believe that Adjusted EBITDA and core net income, as we present it, is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions, income taxes and certain non-core and non-recurring items in our financial statements.  

The presentation of Adjusted EBITDA and core net income 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 Adjusted EBITDA and core net income has certain limitations because it does not reflect all items of income and expenses that affect our operations. Items excluded from Adjusted EBITDA and core net income are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization expense for various long-term assets, income tax and share-based compensation 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 results. Additionally, Adjusted EBITDA and core net income does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest expense/income, gains/losses from investments in equity securities, income tax expenses, share-based compensation, share of loss in equity investees, government subsidies and other relevant items both in our reconciliations to the corresponding U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

The term Adjusted EBITDA and core net income is not defined under U.S. GAAP, and Adjusted EBITDA and core net income 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 Adjusted EBITDA and core net income may not be comparable to Adjusted EBITDA and core net income or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA and core net income in the same manner as we do.

Reconciliations of the Company's non-GAAP financial measures, including Adjusted EBITDA and core net income, to the consolidated statement of operations information are included at the end of this press release.

About GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company") (NYSE: GHG) is a leading hospitality management group in China. As of December 31, 2019, GreenTree had a total number of 3,957 hotels. In 2018, GreenTree ranked among the Top 12 worldwide in terms of number of hotels in "World's Largest Hotel Companies: HOTELS' 325", published by HOTELS magazine, and was as well the fourth largest hospitality company in China in 2018 based on the statistics issued by the China Hospitality Association.

GreenTree has built a strong suite of brands including its flagship "GreenTree Inns" brand as a result of its long-standing dedication to the hospitality industry in China and consistent quality of its services, signature hotel designs, broad geographic coverage and convenient locations. GreenTree has further expanded its brand portfolio into mid-to-up-scale and luxury segments through a series of strategic investments. By offering diverse brands, through its strong membership base, expansive booking network, superior system management with moderate charges, and fully supported by its operating departments including Decoration, Engineering, Purchasing, Operation, IT and Finance, GreenTree aims to keep closer relationships with all of its clients and partners by providing a brand portfolio that features comfort, style and value.

For more information on GreenTree, please visit http://ir.998.com

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995.  In some cases, these forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," "confident," "future," or other similar expressions. GreenTree may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, 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 third parties. Any statements that are not historical facts, including statements about or based on GreenTree's current beliefs, expectations, assumptions, estimates and projections about us and our industry, are forward-looking statements that involve known and unknown factors, risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such factors and risks include, but not limited to the following: GreenTree's goals and growth strategies; its future business development, financial condition and results of operations; trends in the hospitality industry in China and globally; competition in our industry; fluctuations in general economic and business conditions in China and other regions where we operate; the regulatory environment in which we and our franchisees operate; and assumptions underlying or related to any of the foregoing. You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made, in this press release are current as of the date of the press release. Except as required by law, GreenTree undertakes no obligation to update any such information or forward-looking statements to reflect events or circumstances after the date on which the information is provided or statements are made, or to reflect the occurrence of unanticipated events.

Notes:


[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.9618 on December 31, 2019 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20200106 


[2] Tier 1 Cities refers to Beijing, Shanghai, Shenzhen and Guangzhou; Tier 2 Cities refers to the 32 major cities, other than Tier 1 Cities, including provincial capitals, administrative capitals of autonomous regions, direct-controlled municipalities and other major cities designated as municipalities with independent planning by the State Council.


[3] Investments in equity securities include securities and investment in Gingko and New Century which is recorded in Long-term investments account.  


[4] Time deposits are the time deposit certificates last over three months.  

- Financial Tables and Operational Data Follow -

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets








December 31,


December 31,


December 31,

2018


2019


2019


RMB


RMB


US$

ASSETS






Current assets:






Cash and cash equivalents

1,264,025,785


319,847,701


45,943,248

Short-term investment

685,512,063


437,279,026


62,811,202

Investments in equity securities

307,693,782


207,007,926


29,734,828

Accounts receivable, net of allowance for doubtful accounts

64,864,184


99,701,226


14,321,185

Amounts due from related parties

228,600


31,739,731


4,559,127

Prepaid rent

4,478,413


18,794,665


2,699,685

Inventories

2,547,729


2,537,717


364,520

Other current assets

53,969,039


66,004,017


9,480,884

Loans receivable, net

67,196,568


82,312,201


11,823,407

Total current assets

2,450,516,163


1,265,224,210


181,738,086







Non-current assets:






Restricted cash

3,300,000


22,312,522


3,204,993

Long-term time deposits

60,000,000


560,000,000


80,438,967

Loan receivable, net

39,352,863


121,563,742


17,461,539

Property and equipment, net

222,389,573


614,936,505


88,330,102

Intangible assets, net

27,213,391


496,280,316


71,286,207

Goodwill

5,787,068


100,078,236


14,375,339

Long-term investments

112,219,460


398,637,701


57,260,723

Other assets

25,701,523


76,957,992


11,054,324

Deferred tax assets

133,300,966


160,488,193


23,052,687

 TOTAL ASSETS

3,079,781,007


3,816,479,417


548,202,967













LIABILITIES AND EQUITY






Current liabilities:






Short-term bank loans

60,000,000


60,000,000


8,618,461

Accounts payable

9,182,058


15,296,042


2,197,139

Advance from customers

36,370,325


40,105,627


5,760,813

Amounts due to related parties

285,578


3,518,031


505,334

Salary and welfare payable

42,767,219


42,650,527


6,126,365

Deferred rent

4,421,427


5,179,664


744,012

Deferred revenue

210,585,604


231,925,272


33,313,981

Accrued expenses and other current liabilities

241,407,979


366,104,072


52,587,560

Income tax payable

104,988,638


93,909,177


13,489,208

Total current liabilities

710,008,828


858,688,412


123,342,873







Deferred rent

20,519,682


17,821,686


2,559,925

Deferred revenue

380,173,585


410,807,248


59,008,769

Other long-term liabilities

96,573,810


118,112,511


16,965,801

Deferred tax liabilities

43,538,624


195,303,547


28,053,599

Unrecognized tax benefits

169,619,409


261,641,717


37,582,481

 TOTAL LIABILITIES

1,420,433,938


1,862,375,121


267,513,448







Shareholders' equity:






Class A ordinary shares

217,421,867


219,526,699


31,533,037

Class B ordinary shares

115,534,210


115,534,210


16,595,451

Additional paid-in capital

1,003,026,803


1,088,452,506


156,346,420

Retained earnings

252,617,450


308,698,533


44,341,770

Accumulated other comprehensive income

62,367,692


65,300,854


9,379,881

Total GreenTree Hospitality Group Ltd. shareholders' equity

1,650,968,022


1,797,512,802


258,196,559







Non-controlling interests

8,379,047


156,591,494


22,492,960

Total shareholders' equity

1,659,347,069


1,954,104,296


280,689,519







TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

3,079,781,007


3,816,479,417


548,202,967

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income



Quarter Ended


 Year Ended


 December 31,
2018


 December 31,
2019


 December 31,
2019


 December 31,
2018


 December 31,
2019


 December 31,
2019


RMB


RMB


US$


RMB


RMB


US$

Revenues












Leased-and-operated hotels

56,721,973


68,553,356


9,847,074


212,671,930


253,420,676


36,401,603

Franchised-and-managed hotels

183,656,189


220,879,070


31,727,293


692,942,739


838,372,459


120,424,669

Total revenues

240,378,162


289,432,426


41,574,367


905,614,669


1,091,793,135


156,826,271













Operating costs and expenses












Hotel operating costs

(71,959,069)


(92,609,618)


(13,302,540)


(274,419,263)


(338,826,479)


(48,669,378)

Selling and marketing expenses

(13,873,291)


(23,155,218)


(3,326,039)


(47,397,767)


(84,970,401)


(12,205,234)

General and administrative expenses

(25,479,401)


(79,597,392)


(11,433,450)


(95,261,152)


(184,989,324)


(26,572,054)

Other operating expenses

(5,667,699)


(3,124,942)


(448,870)


(5,946,226)


(3,286,652)


(472,098)

Total operating costs and expenses

(116,979,460)


(198,487,170)


(28,510,898)


(423,024,408)


(612,072,856)


(87,918,764)













Other operating (expenses) income

(5,362,471)


7,836,584


1,125,655


22,570,806


24,832,269


3,566,932

Income from operations

118,036,231


98,781,840


14,189,124


505,161,067


504,552,548


72,474,439













Interest income and other, net

18,544,966


13,804,787


1,982,934


49,659,928


66,088,425


9,493,008

Interest expense

(541,876)


(384,502)


(55,230)


(541,876)


(2,505,904)


(359,951)

(Losses) gains from investment in equity
    securities

(29,829,668)


1,213,137


174,256


(57,774,952)


55,253,744


7,936,704

Other (expenses)/ income

(987,674)


-


-


35,735,374


2,690,742


386,501

Income before income taxes

105,221,979


113,415,262


16,291,084


532,239,541


626,079,555


89,930,701













Income tax expense

(47,805,199)


(39,356,563)


(5,653,217)


(152,718,668)


(189,567,817)


(27,229,713)

Income before share of loss in equity
    method investments

57,416,780


74,058,699


10,637,867


379,520,873


436,511,738


62,700,988













Share of (losses)/ gains in equity investees,
    net of tax

(7,352,226)


483,062


69,388


(8,300,584)


1,262,431


181,337

Net income

50,064,554


74,541,761


10,707,255


371,220,289


437,774,169


62,882,325













Net loss attributable to non-controlling interests

106,099


1,672,204


240,197


490,930


4,944,094


710,175

Net income attributable to ordinary
    shareholders

50,170,653


76,213,965


10,947,452


371,711,219


442,718,263


63,592,500













Net earnings per share












Class A ordinary share-basic and diluted

0.49


0.75


0.11


3.75


4.34


0.62

Class B ordinary share-basic and diluted

0.49


0.75


0.11


3.75


4.34


0.62













Net earnings per ADS












Class A ordinary share-basic and diluted

0.49


0.75


0.11


3.75


4.34


0.62

Class B ordinary share-basic and diluted

0.49


0.75


0.11


3.75


4.34


0.62













Weighted average shares outstanding












Class A ordinary share-basic and diluted

66,789,300


67,416,046


67,416,046


62,860,578


67,241,760


67,241,760

Class B ordinary share-basic and diluted

34,762,909


34,762,909


34,762,909


36,288,343


34,762,909


34,762,909













Other comprehensive income, net of tax












Foreign currency translation adjustments

68,095,749


(12,891,247)


(1,851,712)


66,453,841


2,933,162


421,322

Comprehensive income, net of tax

118,160,303


61,650,514


8,855,542


437,674,130


440,707,331


63,303,647










-



Comprehensive loss attributable to
    non-controlling interests

106,099


1,672,204


240,197


490,930


4,944,094


710,175

Comprehensive income attributable to
    ordinary shareholders

118,266,402


63,322,718


9,095,739


438,165,060


445,651,425


64,013,822

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows



 Quarter Ended


 Year Ended


 December 31,
2018


 December 31,
2019


 December 31,
2019


 December 31,
2018


 December 31,
2019


 December 31,
2019


RMB


RMB


US$


RMB


RMB


US$

Operating activities:












Net income

50,064,554


74,541,761


10,707,254


371,220,289


437,774,169


62,882,325













Adjustments to reconcile net income 
    to net cash provided by operating
    activities:












Depreciation and amortization

8,144,953


13,476,011


1,935,708


25,549,965


40,366,299


5,798,256

Share of (gain)/loss in equity method
    investments

7,352,226


329,356


47,309


8,300,584


(140,564)


(20,191)

Gains from disposal of a long-term investment

-


(788,341)


(113,238)


(36,723,048)


(1,097,790)


(157,688)

Interest income

(518,655)


(20,997,598)


(3,016,116)


(20,447,590)


(35,659,822)


(5,122,213)

Bad debt expense

656,201


32,759,437


4,705,599


1,978,374


38,423,347


5,519,168

(Gains) loss from investments in equity
    securities

29,829,668


(1,213,137)


(174,256)


57,774,952


(55,253,744)


(7,936,704)

(Gains) loss on disposal of property and
    equipment

(267,849)


860,000


123,531


(267,849)


860,000


123,531

Foreign exchange losses (gains)

4,605,147


(1,494,388)


(214,655)


430,430


(1,408,437)


(202,309)

Share-based compensation

8,540,392


7,857,619


1,128,676


16,108,950


26,490,395


3,805,107

Income tax expenses related to dividend
    distribution or retained profits

23,345,894


7,905,075


1,135,493


23,345,894


19,845,708


2,850,658

(Gains) from the acquisition of long-term
    investment

-


-


-


(1,344,212)




-

Impairment of fixed assets

5,008,677


-


-


5,008,677




-













Changes in operating assets and
    liabilities:












Accounts receivable

61,532


(21,803,246)


(3,131,840)


(12,368,310)


(52,263,625)


(7,507,200)

Prepaid rent

(336,797)


(12,957,495)


(1,861,228)


(185,941)


(14,316,252)


(2,056,401)

Inventories

(605,810)


(761,786)


(109,424)


621,293


351,518


50,492

Amounts due from related parties

23,399


(1,232,146)


(176,987)


1,694,216


(3,228,596)


(463,759)

Other current assets

13,126,250


6,019,451


864,640


(13,933,400)


10,990,176


1,578,640

Other assets

(1,964,823)


(14,762,172)


(2,120,453)


(1,964,823)


(22,637,263)


(3,251,639)

Accounts payable

913,846


1,511,893


217,170


1,183,032


4,814,800


691,603

Amounts due to related parties

(816,797)


2,476,922


355,788


(187,440)


3,232,453


464,313

Salary and welfare payable

2,827,062


3,473,761


498,975


(2,203,639)


(2,047,293)


(294,075)

Deferred revenue

288,968


8,470,702


1,216,740


78,439,349


18,973,331


2,725,348

Advance from customers

67,464


2,886,080


414,559


2,707,962


3,735,302


536,543

Accrued expenses and other current liabilities

(4,130,578)


(4,113,920)


(590,928)


(7,472,169)


27,198,083


3,906,760

Income tax payable

9,223,838


3,404,824


489,072


4,328,055


(12,476,008)


(1,792,066)

Unrecognized tax benefits

11,905,554


55,445,186


7,964,203


56,319,776


92,022,308


13,218,177

Deferred rent

(5,860,659)


592,980


85,176


(1,025,731)


(1,939,759)


(278,629)

Other long-term liabilities

4,777,553


9,489,162


1,363,033


22,636,533


21,538,701


3,093,841

Deferred taxes

(13,617,640)


(32,907,584)


(4,726,879)


(24,574,536)


(30,207,540)


(4,339,042)

Net cash provided by operating activities

152,643,570


118,468,407


17,016,922


554,949,643


513,939,897


73,822,847













Investing activities:












Purchases of property and equipment

(23,915,352)


(50,493,636)


(7,252,957)


(138,471,216)


(97,712,464)


(14,035,517)

Purchases of intangible assets

(246,468)


(2,240,298)


(321,799)


(3,491,958)


(2,240,298)


(321,799)

Proceeds from disposal of property and
    equipment

126,301


(1,561,844)


(224,345)


126,301


(261,844)


(37,612)

Acquisitions, net of cash received

-


(76,037,135)


(10,922,051)


(13,302,894)


(325,016,059)


(46,685,636)

Proceeds from disposal of a long-term
    investment

-


-


-


89,182,803


-


-

Advances for acquisitions of equity investees

(12,121,700)


20,242,049


2,907,588


(18,121,700)


(38,869,400)


(5,583,240)

Purchases of short-term investments

(25,100,964)


(205,357,454)


(29,497,753)


(772,540,145)


(823,183,360)


(118,242,891)

Proceeds from short-term investments

241,270,939


345,997,436


49,699,422


889,325,672


1,107,076,219


159,021,549

Increase in long-term investments



-


-


-60,000,000


-


-

Purchases of equity securities

(83,421,433)


-


-


(88,258,150)


(80,772,222)


(11,602,204)

Purchases of long term investments

-


-


-


-


(247,456,740)


(35,544,937)

Proceeds from disposal of equity securities

5,656,574


431,653


62,003


30,544,376


222,015,253


31,890,496

Proceeds from disposal of an equity method
    investee

-


1,671,092


240,037


-


1,671,092


240,037

Increase of long-term time deposits

-60,000,000


-


-


-


(500,000,000)


(71,820,506)

Repayment from a related party

-


121,472,780


17,448,473


-


458,752,530


65,895,678

Loan to related parties

-


(288,771,163)


(41,479,382)


(4,300,000)


(634,638,425)


(91,160,106)

Repayment of loan from a related party



-


-


-


-


-

Loan to third parties

-


(65,615,000)


(9,425,005)


(166,819,164)


(332,625,219)


(47,778,623)

Repayment of loan from third parties

118,380,000


18,047,360


2,592,341


118,380,000


133,251,817


19,140,426

Loan to franchisees

(8,100,000)


(24,500,000)


(3,519,205)


(54,060,267)


(69,961,151)


(10,049,291)

Repayment from a franchisee

930,000


3,237,956


465,103


10,050,000


10,013,876


1,438,403

Net cash (used in) provided by investing
    activities

153,457,897


(203,476,204)


(29,227,528)


(181,756,342)


(1,219,956,395)


(175,235,772)













Financing activities:












Distribution to the shareholders

-


(18,925,422)


(2,718,467)


(200,532,021)


(226,951,236)


(32,599,505)

Income tax paid related to the above
    distribution

-


-


-


(3,000,000)


-


-

Proceeds from short-term borrowings

60,000,000


-


-


60,000,000


-


-

Proceeds from NCI

-


1,959,481


281,462


-


14,719,481


2,114,321

Proceeds from IPO, net of capitalized expenses

-


-


-


837,505,007


-


-

Payment for initial public offering costs

(1,437,170)


-


-


(30,827,578)


-


-

Net cash provided by (used in) financing
    activities

58,562,830


(16,965,941)


(2,437,005)


663,145,408


(212,231,755)


(30,485,184)













Effect of exchange rate changes on cash and
    cash equivalents and restricted cash*

60,504,482


(6,852,606)


(984,315)


66,023,411


(6,917,309)


(993,609)

Net increase (decrease) in cash and cash

    equivalents and restricted cash*

425,168,779


(108,826,344)


(15,631,926)


1,102,362,120


(925,165,562)


(132,891,718)

Cash and cash equivalents and restricted cash*
    at the beginning of the period

842,157,006


450,986,567


64,780,167


164,963,665


1,267,325,785


182,039,959

Cash and cash equivalents and restricted
    cash* at the end of the period

1,267,325,785


342,160,223


49,148,241


1,267,325,785


342,160,223


49,148,241

 

 

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results



Quarter Ended


 Year Ended


 December 31,
2018


 December 31,
2019


 December 31,
2019


 December 31,
2018


 December 31,
2019


 December 31,
2019


RMB


RMB


US$


RMB


RMB


US$

Net income

50,064,554


74,541,761


10,707,254


371,220,289


437,774,169


62,882,325













Deduct:












Other operating income

(5,362,471)


7,836,584


1,125,655


22,570,806


24,832,269


3,566,932

Interest income and other, net

18,544,966


13,804,787


1,982,934


49,659,928


66,088,425


9,493,008

Gains from investments
    in equity securities

-


1,213,137


174,256


3,091,278


77,050,188


11,067,567

Share of gain in equity investees,
    net of tax

-


483,062


69,388


141,666


1,550,228


222,676

Other income, net

-


-


-


36,723,048


2,690,742


386,501













Add:












Other operating expenses

5,667,699


3,124,942


448,870


5,946,226


3,286,652


472,098

Income tax expense

47,805,199


39,356,563


5,653,217


152,718,668


189,567,817


27,229,713

Share of loss in equity investees,
    net of tax

7,352,226


-


-


8,442,250


287,797


41,339

Interest expense

541,876


384,502


55,230


541,876


2,505,904


359,951

Share-based compensation

8,540,392


7,857,619


1,128,676


16,108,950


27,676,666


3,975,504

Depreciation and amortization

8,144,953


17,372,785


2,495,444


25,549,965


40,366,299


5,798,256

Losses from investments in equity
    securities

29,829,668


-


-


60,866,230


21,796,444


3,130,863

one-time fees and expenses

-


10,288,367


1,477,831


-


10,288,367


1,477,831

Asset impariment

-


32,759,437


4,705,599


-


32,759,437


4,705,599

Other expense, net

987,674


-


-


987,674


-


-

Adjusted EBITDA (Non-GAAP)

145,751,746


162,348,406


23,319,889


530,195,402


594,097,700


85,336,795














Quarter Ended


 Year Ended


 December 31,
2018


 December 31,
2019


 December 31,
2019


 December 31,
2018


 December 31,
2019


 December 31,
2019


RMB


RMB


US$


RMB


RMB


US$

Net income

50,064,554


74,541,761


10,707,254


371,220,289


437,774,169


62,882,325













Deduct:












Government subsidies (net of 25%
    tax)

-


-


-


11,362,580


5,048,981


725,241

Gains from investments in equity
    securities (net of 25% tax)

-


909,853


130,692


2,318,459


57,787,642


8,300,675

Reimbursement related to the ADS
    program

-


-


-


9,271,648


-


-

Other income (net of 25% tax)

-


-


-


27,542,286


2,018,057


289,876













Add:












Share-based compensation

8,540,392


7,857,619


1,128,676


16,108,950


27,676,666


3,975,504

Losses from investments in equity
    securities  (net of  25% tax)

22,372,251


-


-


45,649,672


16,347,333


2,348,147

Other expense (net of 25% tax)

740,756


-


-


740,756


-


-

one-off selling expense(net of 25%
    tax)

-


-


-


-


4,306,969


618,657

One-time attorney fees for M&A(net
    of 25% tax)

-


-


-


-


1,153,650


165,711

one-time fees and expenses (net

    of 25% tax)

-


7,716,275


1,108,374


-


7,716,275


1,108,374

Asset impariment

-


32,759,437


4,705,599


-


32,759,437


4,705,599

Income tax expenses related to
    dividend distribution outside PRC

23,345,894


7,905,075


1,135,493


23,345,894


19,845,708


2,850,658

Losses from joint venture closure

7,098,197


-


-


7,098,197


-


-

Core net income (Non-GAAP)

112,162,044


129,870,314


18,654,703


413,668,785


482,725,527


69,339,183

























Core net income per ADS (Non-GAAP)












Class A ordinary share-basic and diluted

1.10


1.27


0.18


4.17


4.73


0.68

Class B ordinary share-basic and diluted

1.10


1.27


0.18


4.17


4.73


0.68

 

 

Operational Data



As of
December 31, 2018

As of
December 31, 2019

 Total hotels in operation:

2,757

3,957

 Leased-and-owned hotels

29

34

 Franchised hotels

2,728

3,923

 Total hotel rooms in operation

221,529

290,026

 Leased-and-owned hotels

3,734

4,290

 Franchised hotels

217,795

285,736

 Number of cities

290

339








Quarter Ended

As of
December 31, 2018

As of
December 31, 2019

 Occupancy rate (as a percentage)



 Leased-and-owned hotels

64.5%

66.6%

 Franchised hotels

80.7%

78.4%

 Blended

80.4%

78.2%

 Average daily rate (in RMB)



 Leased-and-owned hotels

212

203

 Franchised hotels

163

169

 Blended

164

170

RevPAR (in RMB)



 Leased-and-owned hotels

137

135

 Franchised hotels

132

133

 Blended

132

133








Year Ended

2018

2019

 Occupancy rate (as a percentage)



 Leased-and-owned hotels

68.0%

66.1%

 Franchised hotels

82.3%

81.1%

 Blended

82.1%

80.9%

 Average daily rate (in RMB)



 Leased-and-owned hotels

205

211

 Franchised hotels

163

169

 Blended

164

170

RevPAR (in RMB)



 Leased-and-owned hotels

139

140

 Franchised hotels

134

137

 Blended

135

137

 


Number of Hotels in Operation

Number of Hotel Rooms in Operation


As of
December 31, 2018

As of
December 31, 2019

As of
December 31, 2018

As of
December 31, 2019

Luxury

/

20

/

4,556

Argyle

/

20

/

4,556

 Mid-to-up-scale

109

264

11,422

23,816

GreenTree Eastern

87

105

9,487

11,263

Deepsleep Hotel (无眠酒店)

1

2

62

161

 Gem

9

27

841

2,397

Gya

1

26

63

2,167

Vx

11

22

969

1,816

Ausotel

/

10

/

1,183

Urban Garden Hotel

/

69

/

4,557

Unistar Group

/

3

/

272

 Mid-scale

2,300

2,563

195,125

209,966

GreenTree Inn

1,881

2,013

162,844

171,414

 GT Alliance

302

314

23,607

24,141

GreenTree Apartment

/

7

0

333

Vatica 

117

121

8,674

8,907

City 118 Selected

/

87

0

4,489

City Mini Selected

/

21

0

682

 Economy hotels

348

1,110

14,982

51,688

Shell

348

541

14,982

23,617

City 118

/

501

/

25,404

Youth Mini Hotel

/

49

/

1,827

Monochrome

/

8

/

278

My Zone Hotel

/

11

/

562

Total

2,757

3,957

221,529

290,026

 

For more information, please contact:

GreenTree
Ms. Selina Yang
Phone: +86-21-3617-4886 ext. 7999
E-mail: ir@998.com

Mr. Nicky Zheng
Phone: +86-21-3617-4886 ext. 6708
E-mail: ir@998.com

Christensen
In Shanghai
Ms. Constance Zhang
Phone: +86-138-1645-1798
E-mail: czhang@christensenIR.com

In Hong Kong 
Ms. Karen Hui 
Phone: +852-9266-4140 
E-mail: khui@christensenIR.com

In US 
Ms. Linda Bergkamp 
Phone: +1-480-614-3004
E-mail: lbergkamp@ChristensenIR.com

Cision View original content:http://www.prnewswire.com/news-releases/greentree-hospitality-group-ltd-reports-fourth-quarter-and-fiscal-year-2019-financial-results-301040088.html

Source: GreenTree Hospitality Group Ltd.
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