7 Days Group Holdings Limited Announces Unaudited 2011 Fourth Quarter and Full Year Financial Results
Fourth quarter net revenue rose 24.3% year-over-year to RMB545.6 million, exceeding guidance.

GUANGZHOU, China, March 8, 2012 /PRNewswire-Asia-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 fourth quarter and full year 2011.

Fourth Quarter 2011 Financial Highlights

  • Total net revenues for the fourth quarter 2011 increased by 24.3% year-over-year to RMB545.6 million (US$86.7 million)(1).
  • Income from operations for the fourth quarter 2011 was RMB34.9 million (US$5.5 million), compared to RMB32.1 million in the fourth quarter 2010. Non-GAAP income from operations for the quarter was RMB44.5 million (US$7.1 million), compared to RMB41.1 million for the same period in 2010. 
  • EBITDA for the fourth quarter was RMB108.4 million (US$17.2 million), an increase of 27.9% year-over-year from RMB84.7 million for the same period in 2010. Adjusted EBITDA for the quarter was RMB118.0 million (US$18.7 million), an increase of 25.9% year-over-year. EBITDA margin was 19.9% compared to 19.3% in the same period in 2010. Adjusted EBITDA margin was 21.6%, compared to 21.3% in the prior year period. 
  • Net income attributable to the Company's ordinary shareholders for the quarter was RMB35.2 million (US$5.6 million), compared to RMB22.0 million for the same period in 2010. Non-GAAP net income attributable to the Company's ordinary shareholders for the quarter was RMB44.8 million (US$7.1 million), representing a year-over-year increase of 44.6%.
  • Basic and diluted earnings per ADS(2) were RMB0.70 (US$0.11) and RMB0.70 (US$0.11) respectively. Non-GAAP basic and diluted earnings per ADS were RMB0.90 (US$0.14) and RMB0.89 (US$0.14), respectively.
  • Net operating cash inflow was RMB106.1 million (US$16.9 million), compared to RMB97.8 million in the same period in 2010.

Full Year 2011 Financial Highlights

  • Total net revenues for the full year 2011 increased by 33.7% year-over-year to RMB2,003.4 million (US$318.3 million).
  • Income from operations for 2011 was RMB151.1 million (US$24.0 million), compared to RMB154.1 million in 2010. Non-GAAP income from operations increased by 14.8% to RMB194.6 million (US$30.9 million) from RMB169.6 million in 2010. 
  • EBITDA for the full year 2011 was RMB412.1 million (US$65.5 million), an increase of 23.7% year-over-year from RMB333.3 million in 2010. Adjusted EBITDA was RMB455.6 million (US$72.4 million), an increase of 30.6% year-over-year compared to RMB348.8 million in 2010. EBITDA margin was 20.6% compared to 22.2% in 2010. Adjusted EBITDA margin was 22.7% compared to 23.3% in 2010. 
  • Net income attributable to the Company's ordinary shareholders for 2011 was RMB128.9 million (US$20.5 million), compared to RMB117.7 million in the previous year. Non-GAAP net income attributable to the Company's ordinary shareholders was RMB172.4 million (US$27.4 million), representing a year-over-year increase of 29.4%.
  • Basic and diluted earnings per ADS were RMB2.58 (US$0.41) and RMB2.56 (US$0.41), respectively. Non-GAAP basic and diluted earnings per ADS were RMB3.45 (US$0.55) and RMB3.43 (US$0.54), respectively.
  • Net operating cash inflow was RMB457.5 million (US$72.7 million), compared to RMB335.3 million in 2010.

Fourth Quarter and Full Year 2011 Operational Highlights

  • Added 106 net hotels, comprising 47 net leased-and-operated hotels and 59 net managed hotels in the fourth quarter 2011.
  • Added 376 net hotels, comprising 90 net leased-and-operated hotels and 286 net managed hotels in the full year 2011.
  • As of December 31, 2011, 7 Days Group had 944 hotels in operation, consisting of 411 leased-and-operated hotels and 533 managed hotels, representing a total of 94,684 rooms covering 141 cities.
  • As of December 31, 2011, there were a total of 234 hotels in the pipeline, including 32 leased-and-operated hotels under conversion and 202 managed hotels contracted but not yet opened.
  • For the fourth quarter 2011, occupancy rates for leased-and-operated hotels, managed hotels and all hotels were 86.4%, 80.0% and 82.8%, respectively, compared to 86.2%, 80.4% and 83.9%, respectively, in the fourth quarter 2010.
  • For the full year 2011, the occupancy rates for leased-and-operated hotels, managed hotels and overall occupancy rates were 87.9%, 81.5% and 84.6%, respectively, compared to 91.0%, 84.0% and 88.7%, respectively, in 2010. The year-over-year decrease in occupancy rates in the full year 2011 was primarily a result of the large number of hotels in the ramp-up period in 2011 as well as the impact of the 2010 Shanghai Expo held from May 1 to Oct 31, 2010, as occupancy rates in Shanghai and surrounding areas benefitted from the traffic driven by the Expo.
  • RevPAR(3) for leased-and-operated hotels in the fourth quarter of 2011 was RMB143.3, compared to RMB143.4 in the same period in 2010. RevPAR for managed hotels for the period was RMB123.5, compared to RMB124.9 for the same period in 2010.  For the full year 2011, RevPAR for all hotels decreased to RMB136.2 from RMB143.9 in 2010; while RevPAR for leased-and-operated hotels and managed hotels was RMB146.0 and RMB127.0, respectively, compared to RMB150.0 and RMB131.6, respectively, in the full year 2010.
  • As of December 31, 2011, the number of 7 Days Club members was approximately 33.8 million, a 105% increase from 16.5 million as of December 31, 2010.

(1) 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 December 31, 2011 as set forth in the H.10 statistical release of the Federal Reserve Board, which was US$1.00 = RMB6.2939. 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 December 31, 2011.

(2) Each ADS represents 3 of the Company's ordinary shares.

(3) RevPAR represents revenue per available room.

Recent Business Developments:

Mr. Alex Nanyan Zheng, 7 Days Group's Chief Executive Officer commented, "We are pleased to report a strong fourth quarter with financial results exceeding our guidance, concluding a solid year of steady strategic and operational progress. With our healthy pipeline and increasing economies of scale, we expect to keep our fast expansion pace in 2012, which we believe will further solidify our position as the market leader in the economy hotel industry."

Fourth Quarter 2011 Unaudited Financial Results

Gross revenues. Gross revenues for the fourth quarter of 2011 were RMB578.5 million (US$91.9 million), representing a year-over-year increase of 24.4% from RMB465.0 million in the fourth quarter 2010and an increase of 0.8% 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 fourth quarter 2011 amounted to RMB527.6 million (US$83.8 million), representing a 25.5% increase from RMB420.5 million in the fourth quarter 2010 and an increase of 2.3% from RMB516.0 million in the third quarter 2011. 

Gross revenues from managed hotels. Gross revenues from managed hotels for the fourth quarter of 2011 increased by 14.2% to RMB50.9 million (US$8.1 million) from RMB44.5 million in the same period in 2010, and decreased by 12.3% from RMB58.0 million in the third quarter 2011. During the fourth quarter 2011, the Company opened 59 net managed hotels.  

Total net revenues. Total net revenues for the fourth quarter of 2011 totaled RMB545.6 million (US$86.7 million), representing a year-over-year increase of 24.3% from RMB439.1 million in fourth quarter 2010 and a quarter-over-quarter increase of 1.0% from RMB540.0 million in the third quarter 2011, primarily resulting from the continued growth in the number of hotels in operation.

Hotel operating costs. Hotel operating costs for the fourth quarter of 2011 were RMB422.9 million (US$67.2 million), or 77.5% of total net revenues, compared with 78.7% of total net revenues in the fourth quarter 2010 and 78.9% of total net revenues in the third quarter  2011.

Sales and marketing expenses. Sales and marketing expenses for the fourth quarter of 2011 were RMB18.3 million (US$2.9 million), or 3.4% of total net revenues, compared with 3.8% of total net revenues in the same period of 2010 and 1.9% in the third quarter 2011. The quarter-over-quarter increase in sales and marketing expenses was due to business development activities associated with the managed hotel business at the year end and slightly increased sales commissions during the fourth quarter 2011.  

General and administrative expenses. General and administrative expenses for the fourth quarter 2011 were RMB69.5 million (US$11.1 million), or 12.7% of total net revenues, compared to RMB44.8 million, or 10.2% of total net revenues in the same period of 2010, and RMB50.7 million, or 9.4% of total net revenues in the third quarter of 2011. The year-over-year increase in general and administrative expenses was primarily due to the additional provisions booked for bad debt as well as the loss from the disposal of certain fixed asset items in the fourth quarter 2011.

Accordingly, total operating costs and expenses amounted to RMB510.8 million (US$81.2 million), representing 93.6% of total net revenues, compared to 92.7% of total net revenues in the same period of 2010 and 90.2% in the third quarter 2011.

Income from operations. Income from operations for the fourth quarter 2011 was RMB34.9 million (US$5.5 million), compared to RMB32.1 million in the fourth quarter 2010 and RMB52.9 million in the third quarter 2011. Non-GAAP income from operations was RMB44.5 million (US$7.1 million), compared to RMB41.1 million for the same period of 2010 and RMB65.0 million in the third quarter 2011.

EBITDA. EBITDA for the fourth quarter was RMB108.4 million (US$17.2 million), an increase of 27.9% year-over-year from RMB84.7 million for the same period in 2010. Adjusted EBITDA for the quarter was RMB118.0 million (US$18.7 million) an increase of 25.9% year-over-year. EBITDA margin was 19.9% compared to 19.3% in the same period in 2010. Adjusted EBITDA margin was 21.6% compared to 21.3% in the prior year period.

Interest expense. Interest expense for the fourth quarter 2011 was RMB4.63 million, (US$0.7 million) compared to RMB0.3 million for the same period of 2010 and RMB2.0 million in the third quarter 2011.

Income tax expense. Income tax expense for the fourth quarter 2011 was RMB2.5 million (US$0.4 million), compared to RMB10.9 million in the same period of 2010 and RMB14.8 million in the third quarter 2011.

Net income attributable to 7 Days Group Holdings Limited ordinary shareholders. Net income attributable to 7 Days Group Holdings Limited ordinary shareholders was RMB35.2 million (US$5.6 million) in the fourth quarter 2011, compared to RMB22.0 million in the fourth quarter 2010 and RMB44.3 million in the third quarter 2011.

Non-GAAP net income. Non-GAAP net income was RMB44.8 million (US$7.1 million), compared to Non-GAAP net income of RMB31.0 million for the fourth quarter 2010 and Non-GAAP net income of RMB56.4 million in the third quarter 2011.

Basic and diluted earnings per ADS. Basic and diluted earnings per ADS were RMB0.70 (US$0.11) and RMB0.70 (US$0.11), respectively, for the fourth quarter2011, compared to basic and diluted earnings per ADS of RMB0.45 in the fourth quarter 2010 and basic and diluted earnings per ADS of RMB0.89 and RMB0.88, respectively, in the third quarter 2011. Non-GAAP basic and diluted earnings per ADS were RMB0.90 (US$0.14) and RMB0.89 (US$0.14), respectively, for the fourth quarter 2011, compared to non-GAAP basic and diluted earnings per ADS of RMB0.61 and RMB0.60, respectively, in the same period of 2010 and basic and diluted earnings per ADS of RMB1.13 and RMB1.12, respectively, in the third quarter2011.

Cash and pledged bank deposits. As of December 31, 2011, the Company had cash and pledged bank deposits of RMB513.1 million (US$81.5 million), representing a quarter-over-quarter increase of 29.1% from RMB397.3 million as of September 30, 2011 and a year-over-year increase of 30.4% from RMB393.5 million as of December 31, 2010, respectively.

Operating cash flow. Net operating cash inflow for the fourth quarter 2011 was RMB106.1 million (US$16.9 million), representing an increase of 8.5% from RMB97.8 million in the fourth quarter 2010.

Full Year 2011 Unaudited Financial Results

Gross revenues . Gross revenues for the full year 2011 were RMB2,127.9 million (US$338.1 million), representing a year-over-year increase of 34.1% from RMB1,587.0 million in the full year 2010.

Gross revenues from leased-and-operated hotels. Gross revenues from leased-and-operated hotels for 2011 amounted to RMB1,927.5 million (US$306.3 million), representing a 29.3% increase from RMB1,491.0 million in 2010. During 2011, the Company opened 90 net leased-and-operated hotels.

Gross revenues from managed hotels. Gross revenues from managed hotels for 2011 increased by 108.7% to RMB200.4 million (US$31.8 million) from RMB96.0 million in 2010. During 2011, the Company opened 286 net managed hotels.

Total net revenues. Total net revenues for 2011 were RMB2,003.4 million (US$318.3 million), representing a year-over-year increase of 33.7% from RMB1,498.9 million in the full year 2010, primarily resulting from the continued growth in the number of hotels in operation.

Hotel operating costs. Hotel operating costs for 2011 were RMB1,593.3 million (US$253.1 million), or 79.5% of total net revenues, compared with 78.9% of total net revenues in 2010.

Sales and marketing expenses. Sales and marketing expenses for 2011 totaled RMB49.2 million (US$7.8 million), or 2.5% of total net revenues, compared with 2.6% of total net revenues in 2010.

General and administrative expenses. General and administrative expenses for 2011 were RMB209.8 million (US$33.3 million), or 10.5% of total net revenues, compared to RMB122.4 million, or 8.2% of total net revenues in 2010. The year-over-year increase in general and administrative expenses was a result of increased share-based compensation expenses and impairment expenses.

Accordingly, total operating costs and expenses were RMB1,852.3 million (US$294.3 million), representing 92.5% of total net revenues, compared to 89.7% of total net revenues in 2010.

Income from operations. Income from operations for 2011 was RMB151.1 million (US$24.0 million), compared to RMB154.1 million in 2010. Non-GAAP income from operations was RMB194.6 million (US$30.9 million), compared to RMB169.6 million for 2010.

EBITDA. EBITDA was RMB412.1 million (US$65.5 million), an increase of 23.7% year-over-year from RMB333.3 million in 2010. Adjusted EBITDA was RMB455.6 million (US$72.4 million) an increase of 30.6% year-over-year. EBITDA margin was 20.6% compared to 22.2% in 2010. Adjusted EBITDA margin was 22.7% compared to 23.3% in 2010.

Interest expense. Interest expense for the full year 2011 was RMB7.2 million, (US$1.1 million) compared to RMB2.1 million for 2010.

Income tax expense. Income tax expense for 2011 was RMB36.3 million (US$5.8 million), compared to RMB35.8 million in the full year 2010.

Net income attributable to 7 Days Group Holdings Limited ordinary shareholders. Net income attributable to 7 Days Group Holdings Limited ordinary shareholders was RMB128.9 million (US$20.5 million) in the full year 2011, compared to RMB117.7 million in 2010.

Non-GAAP net income. Non-GAAP net income was RMB172.4 million (US$27.4 million), compared to Non-GAAP net income of RMB133.2 million in 2010.

Basic and diluted earnings per ADS. Basic and diluted earnings per ADS were RMB2.58 (US$0.41) and RMB2.56 (US$0.41), respectively, for the full year 2011, compared to basic and diluted earnings per ADS of RMB2.37 and RMB2.34 for 2010, respectively. Non-GAAP basic and diluted earnings per ADS were RMB3.45 (US$0.55) and RMB3.43 (US$0.54), respectively, for the full year 2011, compared to non-GAAP basic and diluted earnings per ADS of RMB2.68 and RMB 2.66 in the full year 2010.

Operating cash flow. Net operating cash inflow for the full year 2011 was RMB457.5 million (US$72.7 million), representing an increase of 36.4% from RMB335.3 million in 2010.

Guidance

The Company expects the total net revenues to grow 28% to 30% year-over-year in the first quarter 2012 and full year 2012 total net revenues to grow 28% to 32% over the full year 2011. For the full year 2012, the Company expects to open 360 new hotels, including 120 leased-and-operated hotels and 240 managed hotels. 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 8:00 pm (Eastern) / 5:00 pm (Pacific) Thursday, March 8, 2012, which is 9:00 am (Beijing) on Friday, March 9, 2012 to discuss its fourth quarter and full year 2011 financial results and recent business activity. The conference call may be accessed by calling the following numbers:

China: 

800 8190 121

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: 

50937240

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 taxes, 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 first quarter and the full year 2012 and business forecast for 2012 including the expected number of hotel to be opened (including the breakdown of expected new leased-and-operated hotels and new managed hotels), Company's business strategies, its ability to offer consistent and high-quality accommodations and services at an affordable price, its ability to leverage 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 2010 Annual Report on Form 20-F filed with the SEC on May 4, 2011, 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 7 of the Company's 2010 Annual Report on Form 20-F. The Company's results of operations for the fourth quarter and the full year of 2011 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 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):
Kelly Gawlik, Director
Taylor Rafferty
+1 (212) 889-4350
7DaysInn@taylor-rafferty.com

 

7 Days Group Holdings Limited

Consolidated balance sheet information

 

 

 

Quarter Ended

 

31/Dec/10

 

30/Sep/11

 

31/Dec/11

 

RMB' 000

 

RMB' 000

 

RMB' 000

US$'000

 ASSETS

 

 

 

 

 

 

 Current assets:

 

 

 

 

 

 

 Cash

388,795

 

394,404

 

493,256

78,371

 Pledged bank deposits

4,718

 

2,938

 

19,852

3,154

 Short-term investment

 

 

 

 

10,000

1,589

 Accounts receivable

6,805

 

8,289

 

7,881

1,254

 Prepaid rent

130,522

 

133,295

 

152,629

24,250

 Other prepaid expenses and current assets

42,127

 

86,103

 

52,550

8,349

Hotel supplies

38,246

 

42,655

 

47,371

7,526

 Deferred tax assets

23,001

 

24,799

 

23,119

3,673

Total current assets

634,214

 

692,483

 

806,658

128,166

 Property and equipment, net

1,355,554

 

1,573,101

 

1,701,431

270,330

 Rental deposits

53,718

 

66,130

 

69,861

11,100

 Investment in and advances to an affiliate

1,588

 

-

 

-

-

Land use right

24,662

 

24,198

 

24,044

3,820

 Prepaid rent

19,630

 

65,289

 

73,419

11,665

Intangible assets, net

-

 

842

 

30,426

4,834

Goodwill

-

 

694

 

58,803

9,343

Other assets

1,000

 

70,000

 

500

79

 Deferred tax assets

12,876

 

28,507

 

43,446

6,903

 Total assets

2,103,242

 

2,521,244

 

2,808,588

446,240

 LIABILITIES ANDEQUITY

 

 

 

 

 

 

 Current liabilities:

 

 

 

 

 

 

 Accounts payable

233,770

 

216,475

 

249,592

39,656

 Bills payable

11,692

 

9,463

 

16,009

2,544

 Short-term bank borrowings

-

 

184,993

 

334,686

53,176

 Accrued expenses and other payables

281,050

 

378,683

 

418,641

66,516

 Amounts due to related parties

-

 

-

 

-

-

 Income taxes payable

19,603

 

33,367

 

32,151

5,108

 Total current liabilities

546,115

 

822,981

 

1,051,079

167,000

 Accrued lease payment

153,206

 

189,644

 

206,113

32,748

Unfavorable lease contract liability

 

 

 

 

7,812

1,241

 Refundable deposits

17,950

 

16,450

 

15,823

2,514

 Deferred revenue

1,944

 

1,276

 

770

122

Deferred rebate income

6,446

 

6,218

 

6,663

1,059

 Borrowings from related parties

4,279

 

1,511

 

1,388

221

   Deferred tax liability

-

 

2,876

 

2,956

470

 Total liabilities

729,940

 

1,040,956

 

1,292,604

205,375

 Equity:

 

 

 

 

 

 

 Ordinary shares

140,857

 

141,070

 

141,080

22,415

 Additional paid-in capital

1,579,391

 

1,615,090

 

1,623,275

257,912

 Accumulated other comprehensive income

15,649

 

3,191

 

330

52

 Accumulated deficit

(367,234)

 

(273,567)

 

(238,348)

(37,869)

Total 7 Days Group Holdings Limited share holders' equity

1,368,663

 

1,485,784

 

1, 526,337

242,510

Non-controlling interests

4,639

 

(5,496)

 

(10,353)

(1,645)

Total equity

1,373,302

 

1,480,288

 

1,515, 984

240,865

Total liabilities and equity

2,103,242

 

2,521,244

 

2,808,588

446,240


 

7 Days Group Holdings Limited

Unaudited Consolidated Statements of Operations Information

 

 

 

 

 

Quarter Ended

 

Year Ended

 

Dec 31

 

Sep 30

 

Dec 31

 

Dec 31

 

Dec 31

 

2010

 

2011

 

2011

 

2010

 

2011

 

RMB'000

 

RMB'000

 

RMB'000

US$'000

 

RMB'000

 

RMB'000

US$'000

 Total Revenues

465,008

 

573,990

 

578,481

91,912

 

1,587,033

 

2,127,938

338,096

 Leased-and-operated hotels

420,462

 

515,972

 

527,609

83,829

 

1,491,022

 

1,927,537

306,255

 Managed hotels

44,546

 

58,018

 

50,872

8,083

 

96,011

 

200,401

31,841

 Less: Business tax and surcharges

(25,945)

 

(34,021)

 

(32,852)

(5,220)

 

(88,124)

 

(124,560)

(19,791)

 Net revenues

439,063

 

539,969

 

545,629

86,692

 

1,498,909

 

2,003,378

318,305

 

 

 

 

 

 

 

 

 

 

 

 

 Operating costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 Hotel operating costs

(345,540)

 

(426,058)

 

(422,878)

(67,189)

 

(1,182,927)

 

(1,593,260)

(253,144)

Rental expenses

(125,814)

 

(148,240)

 

(152,923)

(24,297)

 

(441,797)

 

(571,351)

(90,779)

Staff cost

(68,350)

 

(81,835)

 

(88,794)

(14,108)

 

(233,170)

 

(317,374)

(50,426)

Depreciation and amortization

(52,132)

 

(62,765)

 

(66,961)

(10,639)

 

(178,279)

 

(241,020)

(38,294)

Hotel supplies

(21,548)

 

(24,455)

 

(25,967)

(4,126)

 

(64,060)

 

(97,452)

(15,484)

Utilities

(26,934)

 

(36,889)

 

(35,618)

(5,659)

 

(106,594)

 

(145,468)

(23,113)

Other

(50,762)

 

(71,874)

 

(52,615)

(8,360)

 

(159,027)

 

(220,595)

(35,049)

 Sales and marketing expenses

(16,644)

 

(10,330)

 

(18,336)

(2,913)

 

(39,557)

 

(49,222)

(7,821)

 General and administrative expenses 

(44,794)

 

(50,677)

 

(69,545)

(11,050)

 

(122,371)

 

(209,789)

(33,332)

 

 

 

 

 

 

 

 

 

 

 

 

 Total operating costs and expenses

(406,978)

 

(487,065)

 

(510,759)

(81,152)

 

(1,344,855)

 

(1,852,271)

(294,297)

 Income from operations

32,085

 

52,904

 

34,870

5,540

 

154,054

 

151,107

24,008

 

 

 

 

 

 

 

 

 

 

 

 

 Other income (expenses)

 

 

 

 

 

 

 

 

 

 

 

 Interest income

1,319

 

1,161

 

2,350

373

 

3,127

 

6,224

989

 Interest expense

(256)

 

(1,969)

 

(4,627)

(735)

 

(2,082)

 

(7,212)

(1,146)

Equity income (loss) of an affiliate

(17)

 

-

 

-

-

 

(18)

 

120

19

Income before income tax 

33,131

 

52,096

 

32,593

5,178

 

155,081

 

150,239

23,870

   Income tax expenses

(10,904)

 

(14,765)

 

(2,507)

(398)

 

(35,833)

 

(36,259)

(5,761)

 Net income

22,227

 

37,331

 

30,086

4,780

 

119,248

 

113,980

18,109

 Net income (loss) attributable to non-controlling interest

(244)

 

6,940

 

5,131

815

 

(1,557)

 

14,903

2,368

 Net income attributable to 7 Days Group Holdings Limited ordinary shareholders

21,983

 

44,271

 

35,217

5,595

 

117,691

 

128,883

20,477

 

 

 

 

 

 

 

 

 

 

 

 

 Basic earnings per ordinary share

0.15

 

0.30

 

0.23

0.04

 

0.79

 

0. 86

0.14

 Diluted earnings per ordinary share

0.15

 

0.29

 

0.23

0.04

 

0.78

 

0.85

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

7 Days Group Holdings Limited

Reconciliation of GAAP and Non-GAAP Results

EBITDA (non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

Dec 31

 

Sep 30

 

Dec 31

 

Dec 31

 

Dec 31

 

 

2010

 

2011

 

2011

 

2010

 

2011

 

 

RMB'000

 

RMB'000

 

RMB'000

US$'000

 

RMB'000

 

RMB'000

US$'000

Net income attributable to 7 Days Group Holdings Limited ordinary shareholders

 

21,983

 

44,271

 

35,217

5,595

 

117,691

 

128,883

20,477

Interest income

 

(1,319)

 

(1,161)

 

(2,350)

(373)

 

(3,127)

 

(6,224)

(989)

Interest expense

 

256

 

1,969

 

4,627

735

 

2,082

 

7,212

1,146

Income tax expenses

 

10,904

 

14,765

 

2,507

398

 

35,833

 

36,259

5,761

Depreciation and amortization

 

52,891

 

64,146

 

68,382

10,865

 

180,814

 

246,007

39,087

EBITDA (non-GAAP)

 

84,715

 

123,990

 

108,383

17,220

 

333,293

 

412,137

65,482

EBITDA%

 

19.3%

 

23.0%

 

19.9%

19.9%

 

22.2%

 

20.6%

20.6%

Share-based compensation expenses

 

8,993

 

12,085

 

9,585

1,523

 

15,517

 

43,483

6,909

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (non- GAAP) excluding share-based compensation expenses

 

93,708

 

136,075

 

117,968

18,743

 

348,810

 

455,620

72,391

Adjusted EBITDA%

 

21.3%

 

25.2%

 

21.6%

21.6%

 

23.3%

 

22.7%

22.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income attributable to 7 Days Group Holdings Limited ordinary shareholders

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

Dec 31

 

Sep 30

 

Dec 31

 

Dec 31

 

Dec 31

 

 

2010

 

2011

 

2011

 

2010

 

2011

 

 

RMB'000

 

RMB'000

 

RMB'000

US$'000

 

RMB'000

 

RMB'000

US$'000

Net income attributable to 7 Days Group Holdings Limited ordinary shareholders (GAAP)

 

21,983

 

44,271

 

35,217

5,595

 

117,691

 

128,883

20,477

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expenses

 

8,993

 

12,085

 

9,585

1,523

 

15,517

 

43,483

6,909

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to ordinary shareholders excluding share-based compensation expenses (Non GAAP net income)

 

30,976

 

56,356

 

44,802

7,118

 

133,208

 

172,366

27,386

Earnings per share

 

 

Quarter Ended

 

Year Ended

 

 

Dec 30

 

Sep 30

 

Dec 31

 

Dec 31

 

Dec 31

 

 

2010

 

2011

 

2011

 

2010

 

2011

 

 

RMB

 

RMB

 

RMB

USD

 

RMB

 

RMB

USD

Basic earnings per ordinary share (GAAP)

 

0.15

 

0.30

 

0.23

0.04

 

0.79

 

0.86

0.14

Diluted earnings per ordinary share (GAAP)

 

0.15

 

0.29

 

0.23

0.04

 

0.78

 

0.85

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per ordinary share(Non-GAAP), excluding share-based compensation expenses

 

0.21

 

0.38

 

0.30

0.05

 

0.89

 

1.15

0.18

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per ordinary share(Non-GAAP), excluding share-based compensation expenses

 

0.20

 

0.37

 

0.30

0.05

 

0.89

 

1.14

0.18

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of ordinary shares

 

149,388,775

 

149,889,728

 

149, 926,081

 

149,169,106

 

149,811,784

Diluted weighted average number of ordinary shares

 

151,566,823

 

 

 

151,322,024

 

151,023,253

 

150,366,265

 

151,473,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

31-Dec-10

30-Sep-11

31-Dec-11

 

31-Dec-10

31-Dec-11

 

 

RMB '000

RMB '000

RMB'000

USD'000

 

RMB '000

RMB'000

USD'000

Hotel operating cost

 

 

 

 

 

 

 

 

 

GAAP Result

(345,540)

(426,058)

(422,878)

(67,189)

 

(1,182,927)

(1,593,260)

(253,144)

 

% of Total net revenue

78.70%

78.90%

77.50%

77.50%

 

78.92%

79.53%

79.53%

 

Share-based Compensation

566

672

384

61

 

2,018

2,551

405

 

% of Total net revenue

0.13%

0.12%

0.07%

0.07%

 

0.13%

0.13%

0.13%

 

Non-GAAP Result

(344,974)

(425,386)

(422,494)

(67,128)

 

(1,180,909)

(1,590,709)

(252,739)

 

% of Total net revenue

78.57%

78.78%

77.43%

77.43%

 

78.78%

79.40%

79.40%

 

 

 

 

 

 

 

 

 

 

Sales and marketing expenses

 

 

 

 

 

 

 

 

 

GAAP Result

(16,644)

(10,330)

(18,336)

(2,913)

 

(39,557)

(49,222)

(7,821)

 

% of Total net revenue

3.79%

1.91%

3.36%

3.36%

 

2.64%

2.46%

2.46%

 

Share-based Compensation

45

410

626

99

 

267

1,094

174

 

% of Total net revenue

0.01%

0.08%

0.11%

0.11%

 

0.02%

0.05%

0.05%

 

Non-GAAP Result

(16,599)

(9,920)

(17,710)

(2,814)

 

(39,290)

(48,128)

(7,647)

 

% of Total net revenue

3.78%

1.84%

3.25%

3.25%

 

2.62%

2.40%

2.40%

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

 

 

 

 

 

 

 

GAAP Result

(44,794)

(50,677)

(69,545)

(11,050)

 

(122,371)

(209,789)

(33,332)

 

% of Total net revenue

10.20%

9.39%

12.75%

12.75%

 

8.16%

10.47%

10.47%

 

Share-based Compensation

8,382

11,003

8,575

1,362

 

13,232

39,838

6,330

 

% of Total net revenue

1.91%

2.04%

1.57%

1.57%

 

0.88%

1.99%

1.99%

 

Non-GAAP Result

(36,412)

(39,674)

(60,970)

(9,688)

 

(109,139)

(169,951)

(27,002)

 

% of Total net revenue

8.29%

7.35%

11.17%

11.17%

 

7.28%

8.48%

8.48%

 

 

 

 

 

 

 

 

 

 

Total operating cost and expenses

 

 

 

 

 

 

 

 

 

GAAP Result

(406,978)

(487,065)

(510,759)

(81,152)

 

(1,344,855)

(1,852,271)

(294,297)

 

% of Total net revenue

92.69%

90.20%

93.61%

93.61%

 

89.72%

92.46%

92.46%

 

Share-based Compensation

8,993

12,085

9,585

1,523

 

15,517

43,483

6,909

 

% of Total net revenue

2.05%

2.24%

1.76%

1.76%

 

1.04%

2.17%

2.17%

 

Non-GAAP Result

(397,985)

(474,980)

(501,174)

(79,629)

 

(1,329,338)

(1,808,788)

(287,388)

 

% of Total net revenue

90.64%

87.96%

91.85%

91.85%

 

88.69%

90.29%

90.29%

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

 

 

 

 

 

 

GAAP Result

32,085

52,904

34,870

5,540

 

154,054

151,107

24,008

 

% of Total net revenue

7.31%

9.80%

6.39%

6.39%

 

10.28%

7.54%

7.54%

 

Share-based Compensation

8,993

12,085

9,585

1,523

 

15,517

43,483

6,909

 

% of Total net revenue

2.05%

2.24%

1.76%

1.76%

 

1.04%

2.17%

2.17%

 

Non-GAAP Result

41,078

64,989

44,455

7,063

 

169,571

194,590

30,917

 

% of Total net revenue

9.36%

12.04%

8.15%

8.15%

 

11.31%

9.71%

9.71%

 

 

 

 

 

 

 

 

 

 

 

 

7 Days Group Holdings Limited

Operating Data

 

 

 

 

 

 

 

As of and for

the Quarter Ended

 

As of and for

the Year Ended

 

 

Dec 31

Sep 30

Dec 31

 

Dec 31

Dec 31

 

 

2010

2011

2011

 

2010

2011

 

 

 

 

 

 

 

 

Hotels in operation

 

568

838

944

 

568

944

Leased-and-operated hotels

 

321

364

411

 

321

411

Managed hotels

 

247

474

533

 

247

533

 

 

 

 

 

 

 

 

Hotels under conversion

 

197

251

234

 

197

234

Leased-and-operated hotels

 

25

43

32

 

25

32

Managed hotels

 

172

208

202

 

172

202

 

 

 

 

 

 

 

 

Total hotel rooms for hotels in operation

 

56,410

83,487

94,684

 

56,410

94,684

Leased-and-operated hotels

 

32,825

37,458

43,021

 

32,825

43,021

Managed hotels

 

23,585

46,029

51,663

 

23,585

51,663

 

 

 

 

 

 

 

 

Total hotel rooms for hotels under conversion

 

19,345

24,365

22,485

 

19,345

22,485

 

 

 

 

 

 

 

 

Number of cities covered for hotels in operation

 

89

127

141

 

89

141

 

 

 

 

 

 

 

 

Average occupancy rate

 

83.9%

85.5%

82.8%

 

88.7%

84.6%

Leased-and-operated hotels

 

86.2%

88.3%

86.4%

 

91.0%

87.9%

Managed hotels

 

80.4%

83.0%

80.0%

 

84.0%

81.5%

 

 

 

 

 

 

 

 

Average daily rate (in RMB)

 

162.4

168.4

159.6

 

162.3

161.0

Leased-and-operated hotels

 

166.5

173.3

165.8

 

164.9

166.2

Managed hotels

 

155.4

163.8

154.3

 

156.7

155.8

 

 

 

 

 

 

 

 

RevPAR (in RMB)

 

136.3

143.9

132.2

 

143.9

136.2

Leased-and-operated hotels

 

143.4

153.1

143.3

 

150.0

146.0

Managed hotels

 

124.9

135.9

123.5

 

131.6

127.0

 

 

 

 

 

 

 

 

Overnight occupancy rates

 

81.6%

81.5%

79.0%

 

85.5%

81.1%

Leased-and-operated hotels

 

83.8%

84.4%

82.7%

 

87.8%

84.5%

Managed hotels

 

78.0%

79.0%

76.0%

 

81.1%

77.9%


SOURCE 7 Days Group Holdings Limited

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