7 Days Group Holdings Limited Announces Unaudited 2010 Second Quarter Financial Results
-- Second quarter total net revenue of RMB352 million exceeds guidance -- EBITDA grew 67.7% year-over-year to RMB84.6 million -- Added 53 net hotels in second quarter for a total of 399 hotels in operation, with another 147 hotels under development as of June 30, 2010 -- 7 Days Club membership increased over 65% year-over-year to 13 million members
GUANGZHOU, China, Aug. 11 /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 second quarter 2010.
Second Quarter 2010 Financial Highlights
-- Total net revenues increased by 24.9% to RMB352.2 million
(US$51.9 million)(1), compared to RMB282.1 million for the same quarter
in 2009.
-- Income from operations was RMB43.8 million (US$6.5 million), compared
to RMB17.1 million in the second quarter of 2009. Non-GAAP income from
operations increased to RMB45.7 million (US$6.7 million) from
RMB20.1 million for the same quarter in 2009.
-- EBITDA was RMB84.6 million (US$12.5 million), compared to
RMB50.5 million for the same quarter in 2009 representing a 67.7%
year-over-year growth. Adjusted EBITDA increased 57.7% year-over-year
to RMB86.5 million (US$12.8 million). EBITDA margin was 24.0% as
compared to 17.9% in the same quarter in 2009. Adjusted EBITDA margin
increased to 24.6% from 19.5% in the same quarter in 2009.
-- Net income attributable to the Company's shareholders was
RMB30.2 million (US$4.4 million), compared to a net loss of
RMB6.2 million for the second quarter 2009. Non-GAAP net income was
RMB32.1 million (US$4.7 million), compared to a loss of RMB1.8 million
for the second quarter 2009.
-- Basic and diluted earnings per ADS(2) were RMB0.61 (US$0.09). Non-GAAP
basic and diluted earnings per ADS were RMB0.65 (US$0.10).
-- Net operating cash inflow was RMB91.6 million (US$13.5 million), an
increase of 99.0% compared to RMB46.1 million in the second quarter
2009.
Second Quarter 2010 Operational Highlights
-- Added 18 net leased-and-operated hotels and 35 net managed hotels in
the second quarter 2010.
-- As of June 30, 2010, 7 Days Group had 399 hotels in operation,
consisting of 257 leased-and-operated hotels and 142 managed hotels,
representing a total of 39,561 rooms covering 62 cities.
-- As of June 30, 2010, there were 48 leased-and-operated hotels under
conversion and 99 managed hotels contracted but not yet opened.
-- In the second quarter of 2010, occupancy rates for leased-and-operated
hotels, managed hotels and all hotels were 95.5%, 88.8% and 93.4%,
respectively, compared with 89.3%, 84.7% and 88.9% for the same quarter
in 2009.
-- RevPAR(3) for leased-and-operated hotels improved to RMB157.6 in the
second quarter of 2010, from RMB143.2 in the same quarter in 2009,
while RevPAR for managed hotels was RMB137.9 in the second quarter of
2010, compared with RMB129.4 in the second quarter of 2009.
-- The improvement in RevPAR for leased-and-operated hotels was primarily
a result of higher average daily rates and occupancy rates due to our
powerful loyalty program and increased brand name recognition together
with an improved macro environment. The RevPAR performance for our
hotels in Shanghai also benefited from the Expo. As of June 30, 2010,
we had 14 leased-and-operated hotels and 12 managed hotels in Shanghai.
-- As of June 30, 2010, the number of 7 Days Club members increased by
over 65% to approximately 13 million from 7.8 million as of June 30,
2009, with repeat customers accounting for 86% of total room nights in
the second quarter 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 June 30,
2010 as set forth in the H.10 statistical release of the Federal
Reserve Board, which was US$1.00 = RMB6.7815. 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 June 30, 2010.
(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 and Director, commented, "7 Days achieved record revenue that exceeded our guidance during the second quarter of 2010 and grew non-GAAP net income for a fourth consecutive quarter. Our strong financial results were supported by solid operational execution. We continued to expand our network of hotels into 62 cities in China from 55 last quarter, and added a total of 53 new hotels during the quarter. We also saw improvements in all our key operational metrics, with average occupancy, overnight occupancy and RevPAR up across our network of both leased-and-operated hotels and managed hotels.
"As our base of hotels grows, so does the scalability of our operations, as witnessed by our healthy margin improvement during the quarter. Our ability to increase efficiency and gain further operating leverage is to a large extent a function of our unique business model. Our 7 Days Club, the largest loyalty club in the Chinese hotel industry, which generated 97% of our room nights in the second quarter, coupled with our centralized reservations and powerful eCommerce system which provides real-time hotel booking status, supports the expansion of our business in a highly cost effective manner. As a result, we have been able to achieve strong and sustainable growth rates which we believe could accelerate over time.
"We are proud of our performance since our IPO, and believe that our track record of consistent financial growth, continued hotel expansion and unique business model position us well to deliver long-term value to our shareholders."
Mr. Eric Haibing Wu, 7 Days Group's Chief Financial Officer, added, "We delivered another quarter of profitable growth as we continue to leverage our increasing economies of scale, supported by diligent execution from all levels of our staff. We see our growth as sustainable, as we increase the size and scope of our network and as hotels in our portfolio continue to mature. In addition, the growth of our managed hotels portfolio, a key element of our strategy, contributed to the strong growth in our bottom line. We enter the second half on a healthy financial footing, with strong cash flow and a robust capital position, which puts us in good position to continue executing our strategy."
Second Quarter 2010 Unaudited Financial Results
Gross revenues. Gross revenues for the second quarter of 2010 were RMB373.3 million (US$55.1 million), representing a year-over-year increase of 24.9% from RMB299.0 million in the second quarter of 2009 and an increase of 16.6% from RMB320.2 million in the first quarter of 2010.
Gross revenues from leased-and-operated hotels. Gross revenues from leased-and-operated hotels for the second quarter of 2010 were RMB360.3 million (US$53.1 million), a 21.1% increase from RMB297.6 million in the second quarter 2009, driven by the expansion of the Company's hotel portfolio and higher RevPAR, and an increase of 15.1% from RMB313.0 million in the first quarter 2010.
Gross revenues from managed hotels. Gross revenues from managed hotels for the second quarter of 2010 increased 825.4% year-over-year and 79.3% quarter-over-quarter to RMB13.0 million (US$1.9 million) as we further expanded our managed hotel portfolio. In the second quarter of 2010, 7 Days Group opened 35 net managed hotels.
Total net revenues. Total net revenues for the second quarter of 2010 were RMB352.2 million (US$51.9 million), representing a year-over-year increase of 24.9% from RMB282.1 million in second quarter 2009, reflecting a strong growth in the number of hotels and an improved operating performance supported by our powerful loyalty program, increased brand name recognition as well as an improved macro environment. Sequentially, total net revenues increased by 16.6% from RMB302.2 million in the first quarter 2010.
Hotel operating costs. Hotel operating costs for the second quarter of 2010 were RMB275.8 million (US$40.7 million), or 78.3% of total net revenues, compared with 85.7% of total net revenues in the same quarter in 2009 and 85.6% for the first quarter 2010. The improvement in operating costs as a percentage of total net revenues was primarily due to revenue growth and operational efficiency improvements.
Sales and marketing expenses. Sales and marketing expenses for the second quarter of 2010 were RMB8.0 million (US$1.2 million), or 2.3% of total net revenues, compared with 2.2% of total net revenues in the same quarter in 2009 and 1.9% in the first quarter 2010.
General and administrative expenses. General and administrative expenses for the second quarter of 2010 were RMB24.6 million (US$3.6 million), or 7.0% of total net revenues, compared to RMB17.0 million, or 6.0% of total net revenues in the same quarter in 2009, and RMB24.9 million, or 8.2% of total net revenues in the first quarter 2010.
Accordingly, total operating costs and expenses was RMB308.4 million (US$45.5 million), representing 87.6% of total net revenues, compared to 93.9% of total net revenues in the same quarter of 2009 and 95.7% in the first quarter 2010.
Income from operations. Income from operations for the second quarter of 2010 was RMB43.8 million (US$6.5 million), compared to income from operations of RMB17.1 million in the second quarter 2009 and an income from operations of RMB12.8 million in the first quarter 2010. The year-over-year increase in income from operations was driven by the increased number of hotels in the portfolio and higher average daily rates and occupancy rates due to our powerful loyalty program coupled with increased brand name recognition and an improved macro environment. Non-GAAP income from operations was RMB45.7 million (US$6.7 million), compared to a non-GAAP income from operations of RMB20.1 million for the same quarter in 2009 and non-GAAP income from operations of RMB15.6 million in the first quarter 2010.
EBITDA. EBITDA was RMB84.6 million (US$12.5 million) reflecting a 67.7% year-over-year increase and a 59.9% increase compared to the first quarter 2010. Adjusted EBITDA for the second quarter of 2010 was RMB86.5 million, compared to RMB54.9 million for the same quarter in 2009 and RMB55.7 million in the first quarter 2010. Adjusted EBITDA margin was 24.6% during the second quarter of 2010, an improvement compared to 19.5% in second quarter 2009 and 18.4% in the first quarter 2010.
Net income (loss) attributable to 7 Days Group Holdings Limited shareholders. Net income attributable to 7 Days Group Holdings Limited shareholders was RMB30.2 million (US$4.4 million) in the second quarter of 2010, compared to a net loss of RMB6.2 million in the second quarter 2009 and net income of RMB5.7 million in the first quarter 2010.
Non-GAAP net income (loss). Non-GAAP net income was RMB32.1 million (US$4.7 million), compared to Non-GAAP net loss of RMB1.8 million for the second quarter 2009 and Non-GAAP net income of RMB8.5 million in the first quarter 2010.
Basic and diluted earnings (loss) per ADS. Basic and diluted earnings per ADS were RMB0.61 (US$0.09) for the second quarter of 2010, compared to the basic and diluted loss per ADS of RMB0.31 for the same quarter in 2009 and the basic and diluted earnings per ADS of RMB0.12 and RMB0.11, respectively, in the first quarter 2010. Non-GAAP basic and diluted earnings per ADS were RMB0.65 (US$0.10) for the second quarter 2010, compared to non-GAAP basic and diluted loss per ADS of RMB0.09 in the same quarter in 2009 and the basic and diluted earnings per ADS of RMB0.17 in the first quarter 2010.
Cash and pledged bank deposits. As of June 30, 2010, the Company had cash and pledged bank deposits of RMB510.9 million (US$75.3 million), representing a quarter-over-quarter decrease of 9.2%, from RMB562.5 million as of March 31, 2010.
Operating cash flow. Net operating cash inflow for the second quarter of 2010 was RMB91.6 million (US$13.5 million), representing quarter-over-quarter increase of 87.6% from RMB48.9 million in the first quarter 2010 and a year-over-year increase of 99.0% from RMB46.1 million in second quarter 2009.
Guidance
The Company expects to generate total net revenues in the range of RMB395 million to RMB405 million in the third quarter 2010. The forecast reflects 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) on Wednesday, August 11, 2010, which is 9:00 am (Beijing) on Thursday, August 12, 2010 to discuss its second quarter 2010 financial results and recent business activity. The conference call may be accessed by calling the following numbers:
China: 800 819 0121
Hong Kong: 852 2475 0994
US / International: 1 718 354 1231
US Toll Free: 1 866 519 4004
Conference ID number: 90008280
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 (toll free)/International: 1 866 214 5335
China North: 1080 0714 0386
China South: 1080 0140 0386
Hong Kong: 800 901 596
Conference ID number: 90008280
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, loss on debt
extinguishment and change in fair value of ordinary share purchase
warrants, in each case, if any.
-- 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, loss on debt extinguishment and change in fair value of
ordinary share purchase warrants, in each case, if any.
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, loss on debt extinguishment and change in fair value of ordinary share purchase warrants, in each case, if any. The Company prepares its financial statements in accordance with GAAP and, accordingly, expenses its employee share options and recognizes, if any, the impact of loss on debt extinguishment and changes in the fair value of its ordinary share purchase warrants. Since share-based compensation expense, loss on debt extinguishment and change in fair value of ordinary share purchase warrants 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 expense, loss on debt extinguishment and change in fair value of ordinary share purchase warrants, in each case, if any, in the relevant period. These non-GAAP operating measures are useful for understanding the 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 (loss) 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 under the Private Securities Litigation Reform Act of 1995
This press release contains "forward-looking statements," including, among other things, 7 Days Group's beliefs as to the overall industry outlook and the factors driving expected growth, its revenue guidance for the third quarter of 2010 and full-year 2010, its expected number of new hotels in 2010 (including the related breakdown of expected new leased and operated hotels and new managed hotels) and expected continued growth and margin improvements and efficiency gains resulting from the Company's unique business model (including its 7 Days Club, centralized reservations and eCommerce platform) and increased size and scope of the Company's hotel network and maturity of its hotels. 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: risks associated with the Company's limited operating history and historical operating losses; uncertainties regarding the Company's ability to continue its growth and achieve profitability; uncertainties regarding the Company's ability to fund its working capital needs; uncertainties regarding the Company's ability to expand its operations while maintaining consistent and high-quality accommodations and services; uncertainties regarding the Company's ability to respond to competitive pressures; and 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. 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 2009 Annual Report on Form 20-F filed with the SEC on April 26, 2010 and is available on the SEC's website at http://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 9 of the Company's 2009 Annual Report on Form 20-F. The Company's actual results of operations for the second quarter 2010 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 change, 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 audit work is performed for the year end audit, which could result in significant differences from this preliminary unaudited financial information.
7 Days Group Holdings Limited
Unaudited consolidated balance sheet information
Dec. 31, Mar. 31, Jun. 30,
2009 2010 2010
RMB' 000 RMB' 000 RMB' 000 US$'000
ASSETS
Current assets:
Cash 341,370 558,710 507,483 74,833
Pledged bank deposits 5,400 3,817 3,397 501
Short-term investment 293,613 -- -- --
Accounts receivable 4,557 4,399 4,926 726
Prepaid rent 64,509 78,579 107,803 15,897
Other prepaid expenses and
current assets 48,392 49,103 50,880 7,503
Deferred tax assets 7,551 8,713 11,150 1,644
Total current assets 765,392 703,321 685,639 101,104
Property and equipment, net 1,013,500 1,012,728 1,111,900 163,961
Rental deposits 38,297 41,266 47,096 6,945
Investment in and advances to
an affiliate 1,359 1,811 1,810 267
Deferred tax assets 15,867 15,876 15,700 2,315
Total assets 1,834,415 1,775,002 1,862,145 274,592
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 141,056 128,707 177,080 26,112
Bills payable 17,142 12,286 10,902 1,608
Accrued expenses and other
payables 162,164 158,476 204,009 30,083
Amounts due to related parties 162 5,232 2,250 332
Income taxes payable 5,965 8,183 13,907 2,051
Total current liabilities 326,489 312,884 408,148 60,186
Long-term bank borrowings 110,000 50,000 -- --
Accrued lease payments 116,896 123,859 140,646 20,740
Refundable deposits 24,250 22,148 18,774 2,768
Deferred revenue 5,046 4,874 4,703 693
Borrowings from related parties 3,233 3,752 2,527 373
Total liabilities 585,914 517,517 574,798 84,760
Equity:
Ordinary shares 140,377 140,377 140,401 20,704
Additional paid-in capital 1,559,458 1,562,223 1,564,303 230,672
Accumulated other comprehensive
income 30,696 30,551 27,865 4,109
Accumulated deficit (484,925) (479,210) (449,048) (66,217)
Total 7 Days Group Holdings
Limited shareholders' equity 1,245,606 1,253,941 1,283,521 189,268
Noncontrolling interests 2,895 3,544 3,826 564
Total equity 1,248,501 1,257,485 1,287,347 189,832
Total liabilities and equity 1,834,415 1,775,002 1,862,145 274,592
7 Days Group Holdings Limited
Unaudited consolidated statements of operations information
Quarter Ended
Jun. 30, Mar. 31, Jun. 30,
2009 2010 2010
RMB'000 RMB'000 RMB'000 US$'000
Total Revenues 299,000 320,187 373,323 55,050
Leased-and-operated hotels 297,596 312,939 360,330 53,134
Managed hotels 1,404 7,248 12,993 1,916
Less: Business tax and surcharges (16,919) (18,012) (21,137) (3,117)
Net revenues 282,081 302,175 352,186 51,933
Operating costs and expenses
Hotel operating costs (241,743) (258,750) (275,837) (40,675)
Sales and marketing expenses (6,256) (5,673) (7,954) (1,173)
General and administrative
expenses (17,001) (24,909) (24,644) (3,634)
Total operating costs and expenses (265,000) (289,332) (308,435) (45,482)
Income from operations 17,081 12,843 43,751 6,451
Other income (expense)
Interest income 1,154 452 343 51
Interest expense (21,742) (1,256) (546) (81)
Change in fair value of ordinary
share purchase warrants (1,433) -- -- --
Equity income (loss) of an
affiliate 70 (77) 78 12
Income (loss) before income tax (4,870) 11,962 43,626 6,433
Income tax expense (863) (5,935) (12,871) (1,898)
Net income (loss) (5,733) 6,027 30,755 4,535
Net income attributable to
noncontrolling interests (498) (312) (593) (87)
Net income (loss) attributable to 7
Days Group Holdings Limited
shareholders (6,231) 5,715 30,162 4,448
Basic earnings (loss) per ordinary
share (0.10) 0.04 0.20 0.03
Diluted earnings (loss) per
ordinary share (0.10) 0.04 0.20 0.03
7 Days Group Holdings Limited
Reconciliation of GAAP and Non-GAAP Results
EBITDA (non-GAAP)
Quarter Ended
Jun. 30, Mar. 31, Jun. 30,
2009 2010 2010
RMB'000 RMB'000 RMB'000 US$'000
Net income (loss)
attributable to 7 Days
Group Holdings Limited
shareholders (6,231) 5,715 30,162 4,448
Interest income (1,154) (452) (343) (51)
Interest expense 21,742 1,256 546 81
Income tax expense 863 5,935 12,871 1,898
Depreciation and
amortization 35,240 40,458 41,376 6,101
EBITDA (non-GAAP) 50,460 52,912 84,612 12,477
EBITDA% 17.9% 17.5% 24.0% 24.0%
Share-based compensation
expenses 3,004 2,765 1,935 285
Change in fair value of
ordinary share purchase
warrants 1,433 -- -- --
Adjusted EBITDA (non- GAAP)
excluding share-based
compensation expense and
change in fair value of
ordinary share purchase
warrants 54,897 55,677 86,547 12,762
Adjusted EBITDA% 19.5% 18.4% 24.6% 24.6%
Non-GAAP net income (loss) attributable to 7 Days Group Holdings Limited
Shareholders
Quarter Ended
Jun. 30, Mar. 31, Jun. 30,
2009 2010 2010
RMB'000 RMB'000 RMB'000 US$'000
Net income (loss)
attributable to 7 Days
Group Holdings Limited
shareholders (GAAP) (6,231) 5,715 30,162 4,448
Share-based compensation
expenses 3,004 2,765 1,935 285
Change in fair value of
ordinary share purchase
warrants 1,433 -- -- --
Net income (loss)
attributable to
shareholders excluding
share-based compensation
expense and change in fair
value of ordinary share
purchase warrants (Non
GAAP net income) (1,794) 8,480 32,097 4,733
Earnings (loss) per share
Quarter Ended
Jun. 30, Mar. 31, Jun. 30,
2009 2010 2010
RMB RMB RMB US$
Basic earnings (loss) per
ordinary share (GAAP) (0.10) 0.04 0.20 0.03
Diluted earnings (loss) per
ordinary share (GAAP) (0.10) 0.04 0.20 0.03
Basic earnings (loss) per
ordinary share(Non-GAAP),
excluding share-based
compensation expense and
change in fair value of
ordinary share purchase
warrants (0.03) 0.06 0.22 0.03
Diluted earnings (loss) per
ordinary share(Non-GAAP),
excluding share-based
compensation expense and
change in fair value of
ordinary share purchase
warrants (0.03) 0.06 0.21 0.03
Denominator:
Basic weighted average
number of ordinary shares 60,000,000 149,067,932 149,069,937
Diluted weighted average
number of ordinary shares 60,000,000 150,032,563 149,931,579
Quarter Ended
Jun. 30, Mar. 31, Jun. 30, Jun. 30,
2009 2010 2010 2010
RMB '000 RMB '000 RMB '000 USD '000
Hotel operating costs
GAAP Result (241,743) (258,750) (275,837) (40,675)
% of Total net revenue 85.70% 85.63% 78.32% 78.32%
Share-based Compensation 440 592 477 70
% of Total net revenue 0.16% 0.20% 0.14% 0.13%
Non-GAAP Result (241,303) (258,158) (275,360) (40,605)
% of Total net revenue 85.54% 85.43% 78.19% 78.19%
Sales and marketing
expenses
GAAP Result (6,256) (5,673) (7,954) (1,173)
% of Total net revenue 2.22% 1.88% 2.26% 2.26%
Share-based Compensation 180 135 71 10
% of Total net revenue 0.06% 0.04% 0.02% 0.02%
Non-GAAP Result (6,076) (5,538) (7,883) (1,163)
% of Total net revenue 2.15% 1.83% 2.24% 2.24%
General and administrative
expenses
GAAP Result (17,001) (24,909) (24,644) (3,634)
% of Total net revenue 6.03% 8.24% 7.00% 7.00%
Share-based Compensation 2,384 2,037 1,387 205
% of Total net revenue 0.85% 0.67% 0.39% 0.39%
Non-GAAP Result (14,617) (22,872) (23,257) (3,429)
% of Total net revenue 5.18% 7.57% 6.60% 6.60%
Total operating costs and
expenses
GAAP Result (265,000) (289,332) (308,435) (45,482)
% of Total net revenue 93.94% 95.75% 87.58% 87.58%
Share-based Compensation 3,004 2,765 1,935 285
% of Total net revenue 1.06% 0.92% 0.55% 0.55%
Non-GAAP Result (261,996) (286,567) (306,500) (45,197)
% of Total net revenue 92.88% 94.83% 87.03% 87.03%
Income from operations
GAAP Result 17,081 12,843 43,751 6,451
% of Total net revenue 6.06% 4.25% 12.42% 12.42%
Share-based Compensation 3,004 2,765 1,935 285
% of Total net revenue 1.06% 0.92% 0.55% 0.55%
Non-GAAP Result 20,085 15,608 45,686 6,736
% of Total net revenue 7.12% 5.17% 12.97% 12.97%
7 Days Group Holdings Limited
Operating Data
As of and for the quarter ended
Jun. 30, Mar. 31, Jun. 30,
2009 2010 2010
Hotels in operation 259 346 399
Leased-and-operated hotels 228 239 257
Managed hotels 31 107 142
Hotels under conversion 59 101 147
Leased-and-operated hotels 11 35 48
Managed hotels 48 66 99
Total hotel rooms for hotels in
operation 25,758 34,055 39,561
Leased-and-operated hotels 22,837 24,088 26,051
Managed hotels 2,921 9,967 13,510
Total hotel rooms for hotels in
conversion 5,834 10,589 14,645
Number of cities covered for hotels
in operation 35 55 62
Occupancy rate 88.9% 86.2% 93.4%
Leased-and-operated hotels 89.3% 89.6% 95.5%
Managed hotels 84.7% 77.7% 88.8%
Average daily rate (in RMB) 159.5 156.5 162.2
Leased-and-operated hotels 160.3 159.1 165.0
Managed hotels 152.7 149.0 155.3
RevPAR (in RMB) 141.8 135.0 151.5
Leased-and-operated hotels 143.2 142.5 157.6
Managed hotels 129.4 115.7 137.9
Overnight occupancy rates 85.5% 82.8% 89.8%
Leased-and-operated hotels 85.9% 86.0% 91.8%
Managed hotels 81.1% 74.7% 85.3%
For further information, please contact:
Investor Contact:
Vivian Chen, Investor Relations Senior Manager
7 Days Group Holdings Limited
Tel: +86-20-8922-5858
Email: [email protected]
Investor Relations (HK):
Ruby Yim, Managing Director
Taylor Rafferty
Tel: +852-3196-3712
Investor Relations (US):
Mahmoud Siddig, Director
Taylor Rafferty
Tel: +1-212-889-4350
SOURCE 7 Days Group Holdings Limited
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