7 DAYS GROUP HOLDINGS LIMITED(ADR) 
By
-- Third quarter 2012 adjusted EBITDA increased 34.2% year-over-year to
RMB182.6 million. Third quarter 2012 net income attributable to the
Company's ordinary shareholders increased 43.7% year-over-year to
RMB63.6 million.
-- Third quarter income from operations increased 69.4% year-over-year to
RMB89.6 million.
-- Total transaction value(1), a measure of total room revenue generated
from all hotels, reached RMB1,538.9 million, an increase of 45.6%
year-over-year.
-- 104 net hotels added in the third quarter 2012 to a total of 1,236
hotels in operation.
GUANGZHOU, China, Nov. 7, 2012 /PRNewswire-FirstCall/ -- 7 Days Group Holdings Limited ("7 Days Group" or the "Company") (NYSE: SVN), a leading and fast growing national economy hotel chain based in China, today announced its unaudited financial results for the third quarter 2012.
Third Quarter 2012 Financial Highlights
-- Total net revenues for the third quarter 2012 increased by 26.6%
year-over-year to RMB683.4 million (US$108.7 million)(2).
-- Income from operations for the third quarter 2012 was RMB89.6 million
(US$14.3 million), a 69.4% year-over-year increase compared to RMB52.9
million in the third quarter 2011. Non-GAAP income from operations for
the quarter was RMB96.8 million (US$15.4 million), compared to RMB65.0
million for the same period in 2011.
-- EBITDA for the third quarter 2012 was RMB175.4 million (US$27.9
million), an increase of 41.4% year-over-year from RMB124.0 million for
the same period in 2011. Adjusted EBITDA for the quarter was RMB182.6
million (US$29.1 million), an increase of 34.2% year-over-year. EBITDA
margin was 25.7% compared to 23.0% in the same period in 2011. Adjusted
EBITDA margin was 26.7%, compared to 25.2% in the prior year period.
-- Net income attributable to the Company's ordinary shareholders was
RMB63.6 million (US$10.1 million), a 43.7% year-over-year increase
compared to RMB44.3 million for the same period in 2011. Non-GAAP net
income attributable to the Company's ordinary shareholders was RMB70.8
million (US$11.3 million), representing a year-over-year increase of
25.7%.
-- Basic and diluted earnings per ADS(3) were RMB1.29 (US$0.21) and RMB1.29
(US$0.20), respectively. Non-GAAP basic and diluted earnings per ADS
were RMB1.44 (US$0.23) and RMB1.43 (US$0.23), respectively.
-- Net operating cash inflow was RMB134.8 million (US$21.4 million),
compared to RMB121.1 million in the same period in 2011.
(1) Definition of Total transaction
value: total room revenue from
leased-and-operated hotels and
managed hotels. The metric is
highlighted as an indicator of the
scale and reach of 7 Days' brands.
(2) The Company's reporting
currency is Renminbi ("RMB"). The
translation of amounts from RMB to
United States Dollars is solely
for the convenience of the reader.
RMB amounts included in this press
release have been translated into
U.S. dollars at the exchange rate
of September 30, 2012 as set forth
in the H.10 statistical release of
the Federal Reserve Board, which
was US$1.00 = RMB6.2848. No
representation is made that RMB
amounts could have been, or could
be, converted into U.S. Dollars at
that rate or at any other rate on
September 30, 2012.
(3) Each ADS represents 3 of the
Company's ordinary shares.
Third Quarter 2012 Operational Highlights
-- Added 104 net hotels, comprising 25 net leased-and-operated hotels and
79 net managed hotels in the third quarter 2012.
-- As of September 30, 2012, 7 Days Group had 1,236 hotels in operation,
consisting of 460 leased-and-operated hotels and 776 managed hotels,
representing a total of 123,080 rooms covering 191 cities.
-- As of September 30, 2012, there were a total of 228 hotels in the
pipeline, including 43 leased-and-operated hotels under conversion and
185 managed hotels contracted but not yet opened.
-- For the third quarter 2012, occupancy rates for leased-and-operated
hotels, managed hotels and all hotels were 86.1%, 84.3% and 85.0%,
respectively, compared to 88.3%, 83.0% and 85.5%, respectively, in the
third quarter 2011. The year-over-year decrease in occupancy rates was
mainly due to the broader geographic coverage of the new hotels compared
to the prior year period.
-- RevPAR(1) for leased-and-operated hotels was RMB145.9 in the third
quarter 2012, compared to RMB153.1 in the same period in 2011. RevPAR
for managed hotels for the period was RMB137.5 in the third quarter
2012, compared to RMB135.9 for the same period in 2011.
-- As of September 30, 2012, the number of 7 Days Club members was
approximately 48.5 million, a 74.8% increase from 27.7 million as of
September 30, 2011.
(1) RevPAR represents
revenue per available room
Recent Business Developments:
Mr. Yuezhou Lin, 7 Days Group's Chief Executive Officer and Director, commented, "We are pleased to report strong results for the third quarter, with revenue growth near the high end of our guidance range and robust profit growth. Our results were driven by a healthy performance from our existing hotels and new hotel openings. In-line with our asset-light strategy, we continue to expand our hotel portfolio with a greater focus on managed hotels, which now account for over sixty percent of our hotels in operation and the majority of hotels in our pipeline. By placing a greater emphasis on managed hotels, we are seeking to take advantage of the lower risk, less capital intensive and more profitable nature of the managed hotel business model. We believe that the merits of our strategy have been proven based on the increasing profitability and free cash flow that we generated in the third quarter. With a healthy pipeline and continued demand from both guests and managed hotel partners, we remain confident in our ability to further expand our hotel portfolio and deliver profitable growth going forward."
Third Quarter 2012 Unaudited Financial Results
Gross revenues. Gross revenues for the third quarter of 2012 were RMB724.3 million (US$115.2 million), representing a year-over-year increase of 26.2% from RMB574.0 million in the third quarter 2011.
Gross revenues from leased-and-operated hotels. Gross revenues from leased-and-operated hotels for the third quarter 2012 amounted to RMB646.3 million (US$102.8 million), representing a 25.3% increase from RMB516.0 million in the third quarter 2011.
Gross revenues from managed hotels. Gross revenues from managed hotels for the third quarter of 2012 increased by 34.3% to RMB77.9 million (US$12.4 million) from RMB58.0 million in the same period in 2011. During the third quarter 2012, 79 net managed hotels were opened.
Total net revenues. Total net revenues for the third quarter of 2012 totaled RMB683.4 million (US$108.7 million), representing a year-over-year increase of 26.6% from RMB540.0 million in third quarter 2011, primarily resulting from the continued growth in the number of hotels in operation.
Hotel operating costs. Hotel operating costs for the third quarter of 2012 were RMB517.1 million (US$82.3 million), or 75.7% of total net revenues, compared with 78.9% of total net revenues in the third quarter 2011 and 77.3% of total net revenues in the second quarter 2012. Pre-opening expenses for the third quarter 2012 were RMB17.9 million (US$2.9 million), compared to RMB15.1 million in the second quarter of 2012.
Sales and marketing expenses. Sales and marketing expenses for the third quarter of 2012 were RMB19.1 million (US$3.0 million), or 2.8% of total net revenues, compared with 1.9% of total net revenues in the same period of 2011 and 3.0% in the second quarter 2012.
General and administrative expenses. General and administrative expenses for the third quarter 2012 were RMB57.6 million (US$9.2 million), or 8.4% of total net revenues, compared to RMB50.7 million, or 9.4% of total net revenues in the same period of 2011, and RMB48.3 million, or 7.6% of total net revenues in the second quarter of 2012.
Accordingly, total operating costs and expenses amounted to RMB593.8 million (US$94.5 million), representing 86.9% of total net revenues, compared to 90.2% of total net revenues in the same period of 2011 and 88.0% in the second quarter 2012.
Income from operations. Income from operations for the third quarter 2012 was RMB89.6 million (US$14.3 million), compared to RMB52.9 million in the third quarter 2011 and RMB76.2 million in the second quarter 2012. Non-GAAP income from operations was RMB96.8 million (US$15.4 million), compared to RMB65.0 million for the same period of 2011 and RMB82.1 million in the second quarter 2012.
EBITDA. EBITDA for the third quarter 2012 was RMB175.4 million (US$27.9 million), an increase of 41.4% year-over-year from RMB124.0 million for the same period in 2011. Adjusted EBITDA for the quarter was RMB182.6 million (US$29.1 million) an increase of 34.2% year-over-year. EBITDA margin was 25.7% compared to 23.0% in the same period in 2011. Adjusted EBITDA margin was 26.7% compared to 25.2% in the prior year period.
Interest expense. Interest expense for the third quarter 2012 was RMB5.2 million (US$0.8 million), compared to RMB2.0 million for the same period of 2011 and RMB7.0 million in the second quarter 2012.
Income tax expense. Income tax expense for the third quarter 2012 was RMB25.0 million (US$4.0 million), compared to RMB14.8 million in the same period of 2011 and RMB21.3 million in the second quarter 2012.
Net income attributable to 7 Days Group Holdings Limited ordinary shareholders. Net income attributable to 7 Days Group Holdings Limited ordinary shareholders was RMB63.6 million (US$10.1 million) in the third quarter 2012, compared to RMB44.3 million in the third quarter 2011 and RMB55.6 million in the second quarter 2012.
Non-GAAP net income. Non-GAAP net income was RMB70.8 million (US$11.3 million), compared to Non-GAAP net income of RMB56.4 million for the third quarter 2011 and Non-GAAP net income of RMB61.4 million in the second quarter 2012.
Basic and diluted earnings per ADS. Basic and diluted earnings per ADS were RMB1.29 (US$0.21) and RMB1.29 (US$0.20), respectively, for the third quarter 2012, compared to basic and diluted earnings per ADS of RMB0.89 and RMB0.88, respectively, in the third quarter 2011 and basic and diluted earnings per ADS of RMB1.11 in the second quarter 2012. Non-GAAP basic and diluted earnings per ADS were RMB1.44 (US$0.23) and RMB1.43 (US$0.23), respectively, for the third quarter 2012, compared to non-GAAP basic and diluted earnings per ADS of RMB1.13 and RMB1.12, respectively, in the same period of 2011and basic and diluted earnings per ADS of RMB1.23 and RMB1.22, respectively, in the second quarter2012.
Cash and pledged bank deposits. As of September 30, 2012, the Company had cash and pledged bank deposits of RMB388.6 million (US$61.8 million), representing a year-over-year decrease of 2.2% from RMB397.3 million as of September 30, 2011.
Operating cash flow. Net operating cash inflow for the third quarter 2012 was RMB134.8 million (US$21.4 million), representing an increase of 11.4% from RMB121.1 million in the third quarter 2011.
Guidance
The Company expects to generate total net revenues in the range of RMB670 million to RMB685 million in the fourth quarter 2012. These forecasts reflect the Company's current and preliminary view, which is subject to change.
Conference Call
7 Days Group Holdings Limited senior management will host a conference call at 9:00 pm (Eastern) / 6:00 pm (Pacific) Wednesday, November 7, 2012, which is 10:00 am (Beijing) on Thursday, November 8, 2012 to discuss its third quarter 2012 financial results and recent business activity. The conference call may be accessed by calling the following numbers:
China: 800 8190 121
Hong Kong Toll Free: 800 930 346
Hong Kong: 852 2475 0994
US Toll Free: 1 866 519 4004
US New York: 1 718 354 1231
International: 65 6723 9381
Passcode: 7Days
A live webcast of the conference call and replay will be available on the investor relations page of 7 Days Group's website at http://en.7daysinn.cn/.
A telephone replay will be available shortly after the call. The dial-in details are as follows:
US: 1 866 214 5335
International: 61 2 8235 5000
Conference ID number: 42341347
About 7 Days Group Holdings Limited
7 Days Group is a leading and fast growing national economy hotel chain based in China. It converts and operates limited service economy hotels across major metropolitan areas in China under its award-winning "7 Days Inn" brand. The Company strives to offer consistent and high-quality accommodations and services primarily to the growing population of value conscious business and leisure travelers who demand affordable, clean, comfortable, convenient and safe lodging, and to respond to its guests' needs.
Use of Non-GAAP Financial Measures
To supplement 7 Days Group's unaudited financial results presented in accordance with U.S. GAAP, the Company has used the following non-GAAP measures defined as non-GAAP financial measures by the Securities and Exchange Commission (the "SEC") to report its financial results:
-- Non-GAAP income from operations represents income from operations
reported in accordance with GAAP, excluding share-based compensation
expense.
-- Non-GAAP net income represents net income reported in accordance with
GAAP, excluding share-based compensation expense.
-- Non-GAAP earnings per ADS represents non-GAAP net income divided by the
number of ADS used in computing basic and diluted earnings per ADS.
-- EBITDA represents net income reported in accordance with GAAP, adjusted
for the effects of interest income and expense, provision for income
tax, depreciation and amortization.
-- Adjusted EBITDA represents EBITDA, excluding share-based compensation
expense.
The Company believes EBITDA is a useful financial metric to assess its operating and financial performance before the impact of investing and financing transactions, if any, and income taxes. In addition, 7 Days Group believes that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of its financial performance. Given the significant investments that 7 Days Group has made in the past in property and equipment, depreciation and amortization expense comprises a meaningful portion of its cost structure. 7 Days Group 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 the Company's future results will be unaffected by other charges and gains the Company considers to be outside the ordinary course of its business. 7 Days Group also calculates Adjusted EBITDA excluding share-based compensation expense. The Company prepares its financial statements in accordance with GAAP and, accordingly, expenses its employee share options. Since share-based compensation expenses are non-cash expenses, the Company believes excluding them from its calculation of EBITDA allows it to provide investors with a more useful tool for assessing its operating and financial performance.
The use of EBITDA and Adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets, such as property and equipment, income tax expense, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Each of these items should also be considered in the overall evaluation of its results. Additionally, EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of the Company's liquidity. The Company compensates for these limitations by providing the relevant disclosure of its depreciation and amortization, interest expense and interest income, income tax expense, capital expenditures, share-based compensation expense and other relevant items both in its reconciliations to the GAAP financial measures and in its consolidated financial statements, all of which should be considered when evaluating the Company's performance. The terms EBITDA and Adjusted EBITDA are not defined under GAAP, and EBITDA and Adjusted EBITDA are not measures of net income, operating income, operating performance or liquidity presented in accordance with GAAP. When assessing the Company's operating and financial performance, investors should not consider this data in isolation or as a substitute for the Company's net income, operating income or any other operating performance measure that is calculated in accordance with GAAP. In addition, the Company's EBITDA and Adjusted EBITDA may not be comparable to EBITDA or Adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA and Adjusted EBITDA in the same manner as the Company does.
For reasons same to the use of EBITDA and Adjusted EBITDA described above, the Company has also reported net income, basic and diluted earnings per ADS and income (loss) from operations on a non-GAAP basis, excluding share-based compensation expenses in the relevant period. These non-GAAP operating measures are useful for understanding and assessing the Company's underlying business performance and operating trends and the Company expects to report net income, basic and diluted earnings per ADS and income from operations on a non-GAAP basis using a consistent method on a quarterly basis going forward.
7 Days Group believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing 7 Days Group's financial performance and liquidity and when planning and forecasting future periods. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results for the periods set forth in the tables at the end of this release.
Safe Harbor Statement
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the 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 and including, among other things, 7 Days Group's revenue guidance for the fourth quarter 2012 and business forecast for 2012, including the Company's hotel expansion plan, an increased focus on its portfolio of asset-light, profit-oriented managed hotels, its ability to offer consistent and high-quality accommodations and services at an affordable price, its ability to leverage the economies of scale and its ability to achieve strict cost controls and to deliver continued growth. These forward-looking statements are not historical facts but instead represent only the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. The Company's actual results and financial condition and other circumstances may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. In particular, the Company's operating results for any period are impacted significantly by the mix of leased-and-operated hotels and managed hotels in its chain, causing the Company's operating results to fluctuate and making them difficult to predict.
Other factors that could cause forward-looking statements to differ materially from actual future events or results include risks and uncertainties related to: uncertainties associated with factors typically affecting the lodging industry, including changes in economic conditions, adverse weather conditions, natural disasters or outbreaks of serious contagious diseases in markets where the Company has a presence; uncertainties regarding the Company's ability to respond to competitive pressures; uncertainties regarding the Company's ability to manage its expected growth; uncertainties regarding the Company's ability to continue its growth and achieve profitability; risks associated with the Company's limited operating history and historical operating losses; uncertainties regarding the Company's ability to fund its working capital needs; uncertainties regarding its ability to successfully and timely identify, secure or operate additional hotel properties. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2011 Annual Report on Form 20-F filed with the SEC on April 26, 2012, which is available on the SEC's website at www.sec.gov. For a discussion of other important factors that could adversely affect the Company's business, financial condition, results of operations and prospects, see "Risk Factors" beginning on page 8 of the Company's 2011 Annual Report on Form 20-F. The Company's results of operations for the third quarter 2012 are not necessarily indicative of its operating results for any future periods. Any projections in this release are based on limited information currently available to the Company, which is subject to change. Although such projections and the factors influencing them will likely be changed, the Company will not necessarily update the information. Such information speaks only as of the date of this release.
Statement Regarding Unaudited Financial Information
The financial information set forth above is unaudited and subject to adjustments. Adjustments to the financial statements may be identified when the annual financial statements are prepared and audit work is performed for the year end audit, which could result in significant differences from this unaudited financial information.
Contacts:
Investor Contact:
Vivian Chen, Investor Relations Director
7 Days Group Holdings Limited
+86-20-8922-5858
IR@7daysinn.cn
Investor Relations (HK):
Mahmoud Siddig, Managing Director
Taylor Rafferty
Tel: +852 3196-3712
7DaysInn@taylor-rafferty.com
Investor Relations (US):
Marc Raybin, Director
Taylor Rafferty
+1 (212) 889-4350
7DaysInn@taylor-rafferty.com
-- FINANCIAL AND OPERATIONAL TABLES FOLLOW --
7 Days Group Holdings Limited
Unaudited Consolidated Balance Sheet Information
Quarter Ended
-------------
30/Sep/11 30/Jun/12 30/Sep/12
RMB' 000 RMB' 000 RMB' 000 US$'000
-------- -------- -------- -------
ASSETS
Current assets:
Cash 394,404 614,588 385,070 61,270
Pledged bank deposits 2,938 989 3,484 554
Short-term investment - - - -
Accounts receivable 8,289 9,983 16,870 2,684
Prepaid rent 133,295 138,537 173,112 27,545
Other prepaid expenses and current assets 86,103 57,017 69,433 11,048
Hotel supplies 42,655 46,141 51,904 8,259
Amounts due from related parties - 71 87 14
Deferred tax assets 24,799 22,177 19,144 3,046
------ ------ ------ -----
Total current assets 692,483 889,503 719,104 114,420
Property and equipment, net 1,573,101 1,731,410 1,851,653 294,624
Rental deposits 66,130 85,012 90,731 14,437
Land use right 24,198 23,735 23,581 3,752
Prepaid rent 65,289 65,491 63,822 10,155
Intangible assets, net 842 28,323 27,272 4,339
Goodwill 694 61,041 61,041 9,712
Other non-current assets 70,000 500 - -
Deferred tax assets 28,507 57,086 62,615 9,963
------ ------ ------ -----
Total assets 2,521,244 2,942,101 2,899,819 461,402
========= ========= ========= =======
LIABILITIES ANDEQUITY
Current liabilities:
Accounts payable 216,475 225,338 247,871 39,440
Bills payable 9,463 3,295 13,182 2,097
Short-term bank loans 184,993 284,301 71,000 11,297
Accrued expenses and other payables 378,683 437,120 477,603 75,993
Amounts due to related parties - 2,085 1,850 294
Income taxes payable 33,367 33,763 36,947 5,879
------ ------ ------ -----
Total current liabilities 822,981 985,902 848,453 135,000
Long-term bank borrowings - 106,388 178,975 28,477
Accrued lease payments 189,644 229,024 238,642 37,971
Unfavorable lease contract liability - 7,474 7,305 1,162
Refundable deposits 16,450 15,250 15,050 2,395
Deferred revenue 1,276 660 608 97
Deferred rebate income 6,218 6,175 5,984 952
Borrowings from related parties 1,511 1,112 892 142
Income taxes payable - 6,644 6,644 1,057
Deferred tax liabilities 2,876 3,128 2,935 467
----- ----- ----- ---
Total liabilities 1,040,956 1,361,757 1,305,488 207,720
========= ========= ========= =======
Equity:
Ordinary shares 141,070 141,113 141,133 22,456
Treasury stock - (13,134) (67,137) (10,682)
Additional paid-in capital 1,615,090 1,638,440 1,638,948 260,780
Accumulated other comprehensive income 3,191 656 1,136 181
Accumulated deficit (273,567) (163,812) (100,203) (15,943)
-------- -------- -------- -------
Total Equity attributable to 7 Days Group Holdings Limited 1,485,784 1,603,263 1,613,877 256,792
Noncontrolling interests (5,496) (22,919) (19,546) (3,110)
------ ------- ------- ------
Total equity 1,480,288 1,580,344 1,594,331 253,682
--------- --------- --------- -------
Total liabilities and equity 2,521,244 2,942,101 2,899,819 461,402
========= ========= ========= =======
7 Days Group Holdings Limited
Unaudited Consolidated Statements of Operations Information
Quarter Ended
-------------
Sep 30 Jun 30 Sep 30
2011 2012 2012
RMB'000 RMB'000 RMB'000 US$'000
------- ------- ------- -------
Total Revenues 573,990 671,080 724,252 115,238
Leased-and-operated hotels 515,972 595,589 646,330 102,840
Managed hotels 58,018 75,491 77,922 12,398
Less: Business tax and surcharges (34,021) (38,350) (40,854) (6,500)
Net revenues 539,969 632,730 683,398 108,738
Operating costs and expenses
Hotel operating costs (426,058) (489,262) (517,129) (82,282)
Rental expenses (148,240) (172,143) (179,513) (28,563)
Staff cost (81,835) (102,425) (100,887) (16,053)
Depreciation and amortization (62,765) (75,776) (80,602) (12,825)
Hotel supplies (24,455) (34,405) (35,800) (5,696)
Utilities (36,889) (37,959) (47,744) (7,597)
Other (71,874) (66,554) (72,583) (11,549)
Sales and marketing expenses (10,330) (18,896) (19,059) (3,033)
General and administrative expenses (50,677) (48,335) (57,596) (9,164)
Total operating costs and expenses (487,065) (556,493) (593,784) (94,479)
-------- -------- -------- -------
Income from operations 52,904 76,237 89,614 14,259
Other income (expense)
Interest income 1,161 3,262 1,716 273
Interest expense (1,969) (6,978) (5,221) (831)
Equity in income of an affiliate - - - -
--- --- --- ---
Income before income taxes 52,096 72,521 86,109 13,701
Income tax expense (14,765) (21,344) (25,011) (3,980)
------- ------- ------- ------
Net income 37,331 51,177 61,098 9,721
Net income attributable to noncontrolling interest 6,940 4,390 2,511 400
----- ----- ----- ---
Net income attributable to 7 Days Group 44,271 55,567 63,609 10,121
Holdings Limited ordinary shareholders
Basic earnings per ordinary share 0.30 0.37 0.43 0.07
==== ==== ==== ====
Diluted earnings per ordinary share 0.29 0.37 0.43 0.07
==== ==== ==== ====
Net income 37,331 51,177 61,098 9,721
Other comprehensive income (loss)
Foreign currency translation adjustment, net of nil income tax - 1,131 480 76
Comprehensive income - 52,308 61,578 9,797
Less: comprehensive income attributable to noncontrolling interest - (4,390) (2,511) (400)
--- ------ ------ ----
Comprehensive income attributable to 7 Days Group - 56,698 64,089 10, 197
Holdings Limited ordinary shareholders
7 Days Group Holdings Limited
Reconciliation of GAAP and Non-GAAP Results
EBITDA(non-GAAP)
Quarter Ended
-------------
Sep 30 Jun 30 Sep 30
2011 2012 2012
RMB'000 RMB'000 RMB'000 US$'000
------- ------- ------- -------
Net income attributable
to 7 Days Group
Holdings Limited
ordinary shareholders 44,271 55,567 63,609 10,121
Interest income (1,161) (3,262) (1,716) (273)
Interest expense 1,969 6,978 5,221 831
Income tax expenses 14,765 21,344 25,011 3,980
Depreciation and
amortization 64,146 78,290 83,237 13,244
------ ------ ------ ------
EBITDA (non-GAAP) 123,990 158,917 175,362 27,903
------- ------- ------- ------
EBITDA% 23.0% 25.1% 25.7% 25.7%
Share-based
compensation expenses 12,085 5,845 7,227 1,150
------ ----- ----- -----
Adjusted EBITDA (non-
GAAP) excluding share-
based compensation
expenses 136,075 164,762 182,589 29,053
------- ------- ------- ------
Adjusted EBITDA% 25.2% 26.0% 26.7% 26.7%
Non-GAAP net income attributable to 7 Days Group Holdings Limited ordinary shareholders
Quarter Ended
-------------
Sep 30 Jun 30 Sep 30
2011 2012 2012
RMB'000 RMB'000 RMB'000 US$'000
------- ------- ------- -------
Net income attributable to 7 Days Group Holdings Limited ordinary shareholders
(GAAP) 44,271 55,567 63,609 10,121
Share-based compensation expenses 12,085 5,845 7,227 1,150
------ ----- ----- -----
Net income attributable to ordinary shareholders excluding share-based
compensation expenses (Non GAAP net income) 56,356 61,412 70,836 11,271
------ ------ ------ ------
Earnings per share
Quarter Ended
-------------
Sep 30 Jun 30 Sep 30
2011 2012 2012
RMB RMB RMB USD
--- --- --- ---
Basic earnings per ordinary share (GAAP) 0.30 0.37 0.43 0.07
Diluted earnings per ordinary share (GAAP) 0.29 0.37 0.43 0.07
Basic earnings per ordinary share(Non-GAAP), excluding share-based
compensation expenses 0.38 0.41 0.48 0.08
Diluted earnings per ordinary share(Non-GAAP), excluding share-based
compensation expenses 0.37 0.41 0.48 0.08
Denominator:
Basic weighted average number of ordinary shares 149,889,728 149,914,680 147, 769,286
Diluted weighted average number of ordinary shares 151,322,024 150,456,381 148,164,932
----------- ----------- -----------
Quarter Ended
-------------
30-Sep-11 30-Jun-12 30-Sep-12
RMB '000 RMB '000 RMB'000 USD'000
-------- -------- ------- -------
Hotel operating cost
GAAP Result (426,058) (489,262) (517,129) (82,282)
% of Total net revenue 78.90% 77.33% 75.67% 75.67%
Share-based Compensation 672 273 582 93
% of Total net revenue 0.12% 0.04% 0.09% 0.09%
Non-GAAP Result (425,386) (488,989) (516,547) (82,189)
% of Total net revenue 78.78% 77.28% 75.58% 75.58%
------ ----- ----- -----
Sales and marketing expenses
GAAP Result (10,330) (18,896) (19,059) (3,033)
% of Total net revenue 1.91% 2.99% 2.79% 2.79%
Share-based Compensation 410 614 703 112
% of Total net revenue 0.08% 0.10% 0.10% 0.10%
Non-GAAP Result (9,920) (18,282) (18,356) (2,921)
% of Total net revenue 1.84% 2.89% 2.69% 2.69%
----- ---- ---- ----
General and administrative expenses
GAAP Result (50,677) (48,335) (57,596) (9,164)
% of Total net revenue 9.39% 7.64% 8.43% 8.43%
Share-based Compensation 11,003 4,958 5,942 945
% of Total net revenue 2.04% 0.78% 0.87% 0.87%
Non-GAAP Result (39,674) (43,377) (51,654) (8,219)
% of Total net revenue 7.35% 6.86% 7.56% 7.56%
----- ---- ---- ----
Total operating cost and expenses
GAAP Result (487,065) (556,493) (593,784) (94,479)
% of Total net revenue 90.20% 87.95% 86.89% 86. 89%
Share-based Compensation 12,085 5,845 7,227 1,150
% of Total net revenue 2.24% 0.92% 1.06% 1.06%
Non-GAAP Result (474,980) (550,648) (586,557) (93,329)
% of Total net revenue 87.96% 87.03% 85.83% 85.83%
------ ----- ----- -----
Income from operations
GAAP Result 52,904 76,237 89,614 14,259
% of Total net revenue 9.80% 12.05% 13.11% 13.11%
Share-based Compensation 12,085 5,845 7,227 1,150
% of Total net revenue 2.24% 0.92% 1.06% 1.06%
Non-GAAP Result 64,989 82,082 96,841 15,409
% of Total net revenue 12.04% 12.97% 14.17% 14.17%
------ ----- ----- -----
7 Days Group Holdings Limited
Operating Data
As of and for
the Quarter Ended
Sep 30 Jun 30 Sep 30
2011 2012 2012
Hotels in operation 838 1,132 1,236
Leased-and-operated hotels 364 435 460
Managed hotels 474 697 776
Hotels under conversion 251 226 228
Leased-and-operated hotels 43 50 43
Managed hotels 208 176 185
Total hotel rooms for hotels in operation 83,487 112,631 123,080
Leased-and-operated hotels 37,458 45,701 48,380
Managed hotels 46,029 66,930 74,700
Total hotel rooms for hotels under conversion 24,365 21,961 21,674
Number of cities covered for hotels in operation 127 168 191
Average occupancy rate 85.5% 84.6% 85.0%
Leased-and-operated hotels 88.3% 86.8% 86.1%
Managed hotels 83.0% 83.0% 84.3%
Average daily rate (in RMB) 168.4 161.7 165.6
Leased-and-operated hotels 173.3 167.2 169.5
Managed hotels 163.8 157.7 163.0
RevPAR (in RMB) 143.9 136.8 140.9
Leased-and-operated hotels 153.1 145.1 145.9
Managed hotels 135.9 130.9 137.5
SOURCE 7 Days Group Holdings Limited
