SHANGHAI, August 11, 2011 /PRNewswire-Asia/ -- Home Inns & Hotels Management Inc. (NASDAQ: HMIN), a leading economy hotel chain in China, today announced its unaudited financial results for the second quarter ended June 30, 2011.
Second Quarter 2011 Financial Highlights
* Total revenue for the second quarter was RMB 905.2 million (US$140.1 million) representing a 12.2% year-over-year increase. During the quarter, Home Inns proactively implemented more stringent than customary public safety measures in its hotel portfolio, and during implementation, a number of guest rooms were temporarily made unavailable for guest stay. In addition, Home Inns experienced lengthened hotel business license granting process which led to delayed openings in new hotels previously scheduled to be opened earlier in the second quarter. These two unfavorable impacts on total revenues were partially offset by better than expected revenue performance and positive RevPAR increase achieved by mature hotels outside of Shanghai.
* Net income attributable to Home Inns' shareholders for the quarter was RMB 122.1 million (US$18.9 million). Net income was reduced by share-based compensation expenses of RMB 19.9 million (US$3.1 million), foreign exchange loss of RMB 0.3 million (US$0.05 million), one-time corporate spending of RMB 4.6 million (US$0.7 million), and increased by gain on buy-back of convertible bonds of RMB 1.5 million (US$0.2 million) and gain from fair value change of convertible notes of RMB 26.3 million (US$4.1 million). This compared to a net income attributable to Home Inns' shareholders of RMB 135.8 million in the second quarter of 2010, which was reduced by share-based compensation expenses of RMB 14.0 million, foreign exchange loss of RMB 0.5 million, and increased by gain on buy-back of convertible bonds of RMB 2.0 million.
* Income from operations for the quarter was RMB 134.3 million (US$20.8 million), compared to that of RMB 173.9 million in the same period of 2010. Income from operations excluding share-based compensation expenses (non-GAAP) was RMB 154.2 million (US$23.9 million) for the quarter, compared to RMB 188.0 million in the same period of 2010. Lower revenues due to delayed new hotels opening, absence of the one-time benefit from the Shanghai World Expo last year, higher pre-opening costs for hotels under construction and a higher portfolio mix with new hotels in operation resulted in unfavorable comparison in income from operations year over year.
* EBITDA (non-GAAP) for the quarter was RMB 250.4 million (US$38.7 million). Excluding any share-based compensation expenses, foreign exchange loss, gain on buy-back of convertible bonds and gain from fair value change of convertible notes, adjusted EBITDA (non-GAAP) for the quarter was RMB 242.9 million (US$37.6 million), compared to RMB 274.2 million for the same period of 2010.
* Diluted earnings per ADS for the quarter were RMB 1.71 (US$0.26); adjusted diluted earnings per ADS (non-GAAP) for the quarter were RMB 2.48 (US$0.38).
This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.4635 to US$1.00, the noon buying rate as of June 30, 2011 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.
Because of the anti-dilutive impact, diluted earnings per ADS exclude foreign exchange gain from convertible notes issued in December 2010, and gain from fair value change of convertible notes. Adjusted diluted earnings per ADS (non-GAAP) exclude foreign exchange loss, share-based compensation expenses, gain on buy-back of convertible bonds and gain from fair value change of convertible notes. Please refer to "Reconciliations of GAAP and Non-GAAP Results" at the end of this press release.
"We achieved our revenue targets despite lower than expected revenue contribution from new hotels as well as temporary closure of a number of rooms during the quarter. We further strengthened our development pipeline and had a total of 203 new hotel projects under development by the end of the quarter. Our newly opened hotels are ramping up according to expectations, and our matured hotels outside of Shanghai delivered overall operational improvements," said Mr. David Sun, Home Inns' Chief Executive Officer. "Through effective pricing management and diligent cost control at the hotel level, we maintained a healthy level of profitability even with lower revenue base, higher pre-opening costs, higher new hotel portfolio mix, increasing inflationary pressure and an unfavorable comparison without the one-time benefit from Shanghai World Expo."
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