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7 Days Group Holdings Limited
Investor Presentation
March 2013
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1
Safe Harbor Statement
Statements in this presentation contain “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 of 2013 and business forecast for 2013 including the expected number of hotels to be opened, Company’s business strategies, 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 2011 Annual Report on Form 20-F filed with the SEC on April 26, 2012 and 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 actual results of operations for the fourth 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.
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2
Agenda
Company Overview
Financial and Operational Highlights
Investment Highlights
Growth Strategies
Appendix
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3
Fast-growing National Economy Hotel Market Leader
No. 1 in loyalty programs e-Commerce platforms • Over 52.9 mm members
• Highest room night contribution from members
• Website has highest internet traffic ranking
• Highest online booking ratio
No. 1 in growth in hotel expansion • Highest number of new hotels opened in 2010 – 2012
• 1,345 hotels in operation, expect to have 2,000 hotels by 2014
• 401 new hotels opened during 2012 – industry record
• Total Transaction Value (TTV1) year-over-year growth 50.4% in 2012
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.
“No. 1 Brand Influence in Economy Hotel Industry” -- China Brand Power Index, Ministry of Industry and Information Technology, 2012
-- CCTV China Brand, CCTV, 2012
Sustainable profitability: • 2010Q1 to 2012Q4 – twelfth consecutive profitable quarters
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Total Transaction Value
4
Members
Cities covered
* Source: China Tourism Bureau as of 12/31/10 and Company report
2006 2007 2008 2009 2010 2011 2012
0.06 bn 0.3 bn 0.8 bn 1.3 bn 2.1 bn 3.7 bn 5.6 bn
7 20 33 54 89 141 208
~0.2m ~2m ~6m ~10m ~16.5m ~33.8m ~52.9m
Opening schedule and growth roadmap Total addressable market in China
Accelerated Growth Driven by Managed Hotels
2009 2010 2011 2012 2013E 2014E
236 321 411 491 541101247
533
853
1163
Managed Hotels L&O Hotels
337 568
944
1,344
2,000+
1,704
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5
Agenda
Company Overview
Financial and Operational Highlights
Investment Highlights
Growth Strategies
Appendix
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Unique Business Model Leads to Faster Growth
6
Managed hotel model provides the best alignment of
interest with owners and most attractive terms
Largest membership base with improved brand recognition
and growing presence in new markets
Well-designed and executed hiring and in-house training
program + incentive scheme
Best-in-class IT infrastructure and industry leading e-
commerce system
Single brand strategy in economy segment, with highly
standardized and efficient hotel operations
Accelerated pace of hotel openings
114
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Rapid Expansion Supports Sustainable Margin and Cash Flow
Growth
7
Leads to increasing economies of scale, supporting
profit growth
Twelfth consecutive profitable quarters since 1Q10
Improved cash flow
Net revenues (RMB mm)
EBITDA exl. Share-based compensation expenses (RMB mm) Rapid hotel expansion driving top-line growth and total
transaction value (TTV)
Focused on managed hotels to drive the long-term
growth
• Lower risk
• Higher margin
• Better cash flow
Leverage economies of scale inherent in managed
hotel business model
Strategic shift
20%
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Largest Membership Base Provides Competitive Aadvantages
Largest and most effective membership base: 52.9 million members
8
Best-in-class proprietary integrated IT System
Most active e-commerce platform
Helps improve
operating
performance
One of the highest
overnight occupancy
rates in the industry
Provides built-
in customer
base
Allowing faster
expansion
Shorter ramp up
period
Lower
customer
acquisition cost
Established
industry leader
7 Days Club far
exceeds competitors’
loyalty programs in
terms of size and
benefits
Enhances
customer
loyalty
Majority of total
room nights by
repeat customers
Lowers
operating
costs
200k+ surveys received
from members every
month¹
Additional
revenue streams
Rental car and
air ticket service
on our website
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Industry Cost Leader With Higher Operational Efficiency
9
¹ source: 2009 China economy hotel survey
Lower conversion costs Lower rent per room Lower staff costs
Streamlined product design
Modular fixtures and
furnishings
Lower Cap-ex per room
Target existing properties in
prime area
Largest membership base
allows the flexibility to select
slightly off-main-street buildings
Efficient use of real estate
Lean operations while
maintaining high customer
satisfaction
Performance-oriented incentive
program
Industry Average Industry Average
Industry Average
Conversion cost per room¹
(RMB 000)
0.0
1.0
2.0
3.0
Rent cost¹ (RMB/day/sq) Staff-to-room¹
Our distinguished competencies in membership program, eCommerce and information technology, as well as our unique
ability to interact directly with our customers ensures high level of efficiency in both hotel and headquarter operations:
20
40
60
80
0.00
0.25
0.50
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10
Unique Competitive Edge Improves Brand Influence and Drives
Demand
High-quality services and
amenities in core areas
Better beddings
Better showers
Better cleanliness
More interactive with members
Cultivates customer
loyalty
Encourage members to
monitor the hotel
service
Hotel rating based on
member’s reviews
Value-oriented pricing
Bring more value to
members
Competitive and
consistent pricing
Enhances member
stickiness
“No. 1 Brand Influence in Economy Hotel Industry”
-- China Brand Power Index, Ministry of Industry and Information Technology, 2012
-- CCTV China Brand, CCTV, 2012
Always Focus on What Consumers Want Most ……
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11
Agenda
Company Overview
Financial and Operational Highlights
Investment Highlights
Growth Strategies
Appendix
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7 Days’ Long Term Growth Strategies
12
FY 2012 Target 2,000+ hotels
in operation
320
Managed Hotels
81
L&O Hotels
FY 2014
City with 1 hotel: 44% of total cities
City with 2–5 hotels: 35%
City with 6–9 hotels: 7%
City with more than 10 hotels: 14%
Total Current Coverage: 208 cities
Continued market penetration with one-brand strategy in
economy hotel segment
44%
35%
14%
7%
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Strategic Focus on Managed Hotels to Drive Profitable Growth
Focus on managed hotels as main growth driver
Support continued rapid growth, stable revenue
generation, expanding brand presence and influence
with lower capital requirements and higher return on
employed capital
Strategic shift expect to increase profitability and free
cash flow generation
Leverage 7 Days’ leading loyalty club and best-in-
class proprietary e-Commerce platform
13
Managed hotels63%
Leased-and-Operated hotels
37%
Managed hotels91%
Leased-and-Operated hotels
9%
Asset-light Growth Strategy
Pipeline mix as at 31 Dec 2012
Portfolio mix as at 31 Dec 2012
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14
Agenda
Company Overview
Financial and Operational Highlights
Industry Overview
Investment Highlights
Growth Strategies
Appendix
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15
Consistent & Sustainable Growth Track Record
Operating cash flow (RMB mm)
Total net revenue (RMB mm)
4.4
248.6 335.3
457.5
572.5
106.1 154.5
2008 2009 2010 2011 2012 11Q4 12Q4
721.4
1,141.3 1,498.9
2,003.4
2,557.2
454.6 696.0
2008 2009 2010 2011 2012 11Q4 12Q4
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229.7348.8 455.6
608.4
20.1%
23.3% * 22.7%23.3%
2009 2010 2011 2012
Adjusted EBITDA Adjusted EBITDA Margin
16
Sustainable Profitability
EBITDA exl. SBC (RMB ‘000,000)
Net Income attributable to 7 Days (RMB ‘000,000)
* For 2010, there was positive impact from EXPO held in Shanghai during May to Oct.
(104.0)
117.7 128.9 176.0
7.9% * 6.4%6.9%
2009 2010 2011 2012
Net Income Net Margin
118.0146.4
21.6% 21.0%
4Q11 4Q12
Adjusted EBITDA Adjusted EBITDA Margin
35.2 37.9
6.5%
5.4%
4Q11 4Q12
Net Income Net Margin
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17
Managed Hotels - Record Expansion with Sustainable Operational
Performance
4Q & FY12 operating performance:
320 new hotels added during last twelve months
Y-o-Y ADR for 4Q and FY 2012 increased by 2.0% and 1.4% respectively
Key operating metrics
Average Daily Rate (RMB) RevPAR (RMB) Occupancy Rate
2009 2010 2011 2012 4Q11 4Q12 2009 2010 2011 2012 4Q11 4Q12 2009 2010 2011 2012 4Q11 4Q12
156.2 156.7 155.8 158.0 154.3 157.4 82.8% 84. 0% 81.5% 80.3% 80.0% 77.4% 129.3 131.6 127.0 126.9 123.5 121.9
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18
Leased & Operated Hotels - Improving Mature Hotel Performance
Key operating metrics
4Q & FY 2012 Operating performance
Y-o-Y ADR for 4Q and FY 2012 increased by 1.6% and 0.5% respectively
Improving mature hotel metrics demonstrates underlying strength of portfolio
Average Daily Rate (RMB) RevPAR (RMB) Occupancy Rate
2009 2010 2011 2012 4Q11 4Q12 2009 2010 2011 2012 4Q11 4Q12 2009 2010 2011 2012 4Q11 4Q12
160.0 164.9 166.2 167.0 165.8 168.5 89.2% 91.0% 87.9% 82.9% 86.4% 79.2% 142.7 150.0 146.0 138.3 143.3 133.4
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19
Agenda
Appendix
Management team
Hotel business model and economics
Income statement & balance sheet
Reconciliation of GAAP and non-GAAP results
Industry Overview
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20
Management Team
Boquan He, Chairman
Founder and former CEO of Robust Group
Leading Chinese F&B company later acquired by
Danone
Over 20 years of entrepreneurial and consumer sector
experience
“The Best Angel Investor”
“2008 Top Ten Angel Investors”
Over eight years management experience in China
high-growth companies
Four years at Ctrip.com,
Vice President, marketing
General Manager, southern China
Highly respected entrepreneur and award-winning
industry leader
Nanyan (Alex) Zheng, Chairman
Over nine years of work experience in
PricewaterhouseCoopers in the U.S. and China
Specialized in internal controls, risk
management, corporate governance and audit
support
CPA and MBA
Eric Haibing Wu, CFO
Principal Shareholders*
Prototal Enterprises Limited (Owned by Boquan He)
23.5%
WP RE (Cayman) International Ltd (Owned by Warburg Pincus)
16.0%
Happy Travel Limited (Owned by Actis)
11.7%
Fortune News International Limited (Owned by Nanyan Zheng)
9.1%
* As in Company’s 2011 20-F report
One of the founding management team members of
7 Days
Over 7 years with the Company
Held various key functions
Expert in IT system, e-commerce platform,
business development
Yuezhou Lin, CEO
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21
US China
Largely untapped market in China allows significant expansion opportunities
US market
2.5 economy hotel rooms per 1,000 people
Dominated by a small number of players
Largest player, Choice, has 6,243 hotels1
Growth
potential
China market
0.6 economy hotel rooms per 1,000 people
Fragmentation Highly fragmented
Largest player, Home Inns, has 1,772 economy hotels1
Branding Established brands
68% of hotels with a brand affiliation
Relatively new phenomenon
Only 15% of hotels with a brand affiliation
Sources: STR Global, China Economy Hotel Survey, Global Insight, CEIC Data, U.S. Census Bureau, www.inn.net.cn, IMF
¹ Data as of 2012Q4; ² United Nations population database, data projection for 2010; Population data from IMF as of 2011
The Chinese Economy Hotel Chain Industry Today:
A Highly Fragmented, Early-stage Industry
Population size2
Smaller population base
312mm
Established middle class
108mm+ households with income over US$10,000
Moderate population density
9 cities with over 3mm population
Larger population base
1,348mm
Large and growing middle class
20mm+ households with income over US$10,000
High population density
Over 250 cities with over 3mm population
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Industry Growth Well Supported by Underlying Demand Catalysts…
Sources: National Bureau of Statistics of China; China Statistics Yearbook (2011); World Travel and Tourism Council 2012; iResearch; CEIC Data
Fast-growing
China economy
Robust
domestic
tourism
Increasing capital
investment for
tourism
development
Growing
GDP
contribution
of Travel &
Tourism
Large
Internet
population
18 22 27 31 3440
47
2005 2006 2007 2008 2009 2010 2011
273384
513457
210137111
2005 2006 2007 2008 2009 2010 2011
1,2581,018875777623529
1,931
2005 2006 2007 2008 2009 2010 2011
2,616 3,114 3,398 3,562 3,709 4,156
2006 2007 2008 2009 2010 2011
102120
141 155182
206
2006 2007 2008 2009 2010 2011
China GDP (RMBtrn)
Internet population
(mm)
Total contribution of Travel &
Tourism to GDP (RMB bn)
Government expenditure on
tourism industry (RMB bn)
Domestic travel spending
(RMB bn)
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786 853 516 498
183
652 492
465
970 192
466 447 151
Home Inns+ 7 Days Inn Hantings³ Green Tree Jinjiang Thank Super 8 Motel 168+
Managed hotels Leased-and-operated hotels
Addressable market
23
+ Motel 168 was accquaried by Home Inns in 2011 1 China Tourism Bureau as of 1Q 2012 2 2012Q2 China’s Budget Hotel Ranking by Inntie (http://www.inn.net.cn/)
³ Excluded 54 hotels of Starway
Growth of economy hotel chains has been accelerating due to growing consumer demand
for well-managed and affordable hotels
~9,860 hotels
~0.9 million
hotel rooms
Mixture of
globally flagged
hotels and
locally run
hotels
Highly
fragmented
Dominated
largely by local
operators
1–3 star-rated
hotels1
Economy
hotels2
Private
guesthouses
Large number of
low-end
guesthouses
operated by
independent
operators
Non-standardized
accommodations
Number of hotels (as of December 31, 2012)
1,438 1,345
981
690
466 447 334
Top 8 economy hotel brands in China2
970
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24
Leased-and-operated Hotels vs. Managed Hotels
Lease existing properties from real estate owners
Large supply of qualified buildings owned by PRC state-owned
enterprises in desirable locations
Convert properties to conform to 7 Days Inn standards
Easily replicable product designs, such as modular bathroom and
furniture designs, expedite installation and fit-out time
Leased-and-operated hotels Managed hotels
Lean capital deployment
RMB52,000 (US$7,613) per room
– Industry average of RMB62,500 (US$9,151)
Fast pay-back
Typical conversion period of 4 months
– Versus more than one year construction period for own-build-
operate model
High-margin with minimal cost
Ongoing management fee 5-7% of hotel revenues
One-time management fee
Revenues from managed hotels have grown significantly
Capitalize on our hotel chain’s maturity and brand recognition
without the same level of capital expenditure
License our brand to third parties and manage the hotels, including
hiring and training hotel staff under stringent control of 7 Days Inn’s
quality standards
Business
model
Economics
Unified management and quality control standards
All hotels are operated and managed under 7 Days Inn’s unified hotel operating system, including management functions such as: staff
recruitment, training, daily operation, financial management, sales and marketing, etc.
Provide full range of services to managed hotels so as to meet the quality control and internal control standards of leased-and-operated hotels,
including decision-making assistance, customer base and efficiency analysis, investment and consulting services, cost control analysis and
guidance, etc.
Recruitment, training, and management of all hotel managers and staffs conducted by head office, with rigorous selection process
Centralized procurement and unified financial management; gradually reduce average cost by achieving economies of scale
Mature IT infrastructure (e.g. central reservation system and hotel management system) and service platform effectively centralize the
monitoring and quality control of all hotels
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Streamlined and Modularized Product Design
25
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26
Financial Information – 2012 FY Balance Sheet (Unaudited)
7 Days Group Holdings Limited
Consolidated balance sheet information
Quarter Ended
31/Dec/11 30/Sep/12 31/Dec/12
RMB' 000 RMB' 000 RMB' 000 US$'000
ASSETS
Current assets:
Cash 493,256 385,070 378,809 60,803
Pledged bank deposits 19,852 3,484 3,443 553
Short-term investment 10,000 - - -
Accounts receivable 7,881 16,870 17,015 2,731
Prepaid rent 152,629 173,112 171,370 27,507
Other prepaid expenses and current assets 52,550 69,433 77,608 12,457
Hotel supplies 47,371 51,904 56,591 9,083
Amounts due from related parties - 87 87 14
Deferred tax assets 19,842 19,144 26,222 4,209
Total current assets 803,381 719,104 731,145 117,357
Property and equipment, net 1,701,431 1,851,653 1,970,763 316,329
Rental deposits 69,861 90,731 90,824 14,578
Land use right 24,044 23,581 23,426 3, 760
Prepaid rent 73,419 63,822 71,088 11,410
Intangible assets, net 30,426 27,272 26,221 4,209
Goodwill 61,041 61,041 61,041 9,798
Other non-current assets 500 - - -
Deferred tax assets 46,096 62,615 62,513 10, 034
Total assets 2,810,199 2,899,819 3,037,021 487,475
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable 249,592 247,871 300,240 48,192
Bills payable 16,009 13,182 11,475 1,842
Short-term bank borrowings 334,686 71,000 130,015 20,869
Accrued expenses and other payables 418,308 477,603 511,800 82,150
Amounts due to related parties 333 1,850 2,601 417
Income taxes payable 25,509 36,947 25,617 4,112
Total current liabilities 1,044,437 848,453 981,748 157,582
Long-term bank borrowings - 178,975 121,381 19,483
Accrued lease payment 206,113 238,642 256,472 41,167
Unfavorable lease contract liability 7,812 7,305 7,136 1,145
Refundable deposits 15,823 15,050 14,850 2,384
Deferred revenue 770 608 - -
Deferred rebate income 6,663 5,984 5,727 919
Borrowings from related parties 1,388 892 752 121
Income taxes payable 6,644 6,644 3,317 532
Deferred tax liabilities 4,565 2,935 7,527 1,208
Total liabilities 1,294,215 1,305,488 1,398,910 224,541
Equity:
Ordinary shares 141,080 141,133 141,317 22,683
Treasury stock - (67,137) (67,137) (10,776)
Additional paid-in capital 1,623,275 1,638,948 1,649,880 264,824
Accumulated other comprehensive income 330 1,136 (721) (116)
Accumulated deficit (238,348) (100,203) (62,303) (10,001)
Total 7 Days Group Holdings Limited share holders’ equity 1,526,337 1,613,877 1,661,036 266,614
Non-controlling interests (10,353) (19,546) (22,925) (3,680)
Total equity 1,515,984 1,594,331 1,638,111 262,934
Total liabilities and equity 2,810,199 2,899,819 3,037,021 487,475
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Financial Information – 2012 Q4 & FY Income Statement (Unaudited)
Quarter Ended Year Ended
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
2011 2012 2012 2011 2012
RMB'000 RMB'000 RMB'000 US$'000 RMB'000 RMB'000 US$'000
Total Revenues 578,481 724,252 736,385 118,198 2,127,938 2,709,356 434,881
Leased-and-operated hotels 527,609 646,330 648,427 104,080 1,927,537 2,409,805 386,800
Managed hotels 50,872 77,922 87,958 14,118 200,401 299,551 48,081
Less: Business tax and surcharges (32,852) (40,854) (40,355) (6,477) (124,560) (152,171) (24,425)
Net revenues 545,629 683,398 696,030 111,721 2,003,378 2,557,185 410,456
Operating costs and expenses
Hotel operating costs (422,878) (517,129) (560,637) (89,988) (1,593,260) (2,033,508) (326,400)
Rental expenses (152,923) (179,513) (190,645) (30,601) (571,351) (707,692) (113,592)
Staff cost (88,794) (100,887) (114,169) (18,325) (317,374) (406,623) (65,267)
Depreciation and amortization (66,961) (80,602) (84,790) (13,610) (241,020) (314,189) (50,431)
Hotel supplies (25,967) (35,800) (40,439) (6,491) (97,452) (135,112) (21,687)
Utilities (35,618) (47,744) (46,554) (7,472) (145,468) (190,030) (30,502)
Other (52,615) (72,583) (84,040) (13,489) (220,595) (279,862) (44,921)
Sales and marketing expenses (18,336) (19,059) (31,702) (5,089) (49,222) (82,116) (13,181)
General and administrative expenses (69,542) (57,596) (52,555) (8,436) (209,786) (201,271) (32,306)
Total operating costs and expenses (510,756) (593,784) (644,894) (103,513) (1,852,268) (2,316,895) (371,887)
Income from operations 34,873 89,614 51,136 8,208 151,110 240,290 38,569
Other income (expenses)
Interest income 2,350 1,716 800 128 6,224 7,887 1,266
Interest expense (4,627) (5,221) (2,875) (461) (7,212) (21,459) (3,444)
Equity income (loss) of an affiliate - - - - 120 - -
Income before income tax 32,596 86,109 49,061 7,875 150,242 226,718 36,391
Income tax expenses (2,507) (25,011) (13,844) (2,222) (36,259) (67,540) (10,841)
Net income 30,089 61,098 35,217 5,653 113,983 159,178 25,550
Net income attributable to non-controlling interest 5,131 2,511 2,683 431 14,903 16,867 2,707
Net income attributable to 7 Days Group Holdings Limited ordinary shareholders 35,220 63,609 37,900 6,084 128,886 176,045 28,257
Basic earnings per ordinary share 0.23 0.43 0.26 0.04 0. 86 1.18 0.19
Diluted earnings per ordinary share 0.23 0.43 0.26 0.04 0.85 1.18 0.19
Other Comprehensive income (loss)
Foreign currency transaction adjustment, net of nil income tax (2,861) 480 (1,857) (298) (15,319) (1,051) (169)
Comprehensive income 27,228 61,578 33,360 5,355 98,664 158,127 25,381
Less: Comprehensive income attributable to noncontrolling interest (5,131) (2,511) (2,683) (431) (14,903) (16,867) (2,707)
Comprehensive income attributable to 7 Days Group Holdings Limited ordinary shareholders 32,359 64,089 36,043 5,786 113,567 174,994 28,088
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Financial Information – Selected Non-GAAP Financial Statement
28
EBITDA(non-GAAP)
Quarter Ended Year Ended
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
2011 2012 2012 2011 2012
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 35,220 63,609 37,900 6,084
128,886 176,045 28,257
Interest income (2,350) (1,716) (800) (128) (6,224) (7,887) (1,266)
Interest expense 4,627 5,221 2,875 461 7,212 21,459 3,444
Income tax expenses 2,507 25,011 13,844 2,222 36,259 67,540 10,841
Depreciation and amortization 68,382 83,237 87,429 14,033 246,007 324,126 52,026
EBITDA (non-GAAP) 108,386 175,362 141,248 22,672 412,140 581,283 93,302
EBITDA% 19.9% 25.7% 20.3% 20.3% 20.6% 22.7% 22.7%
Share-based compensation expenses 9,585 7,227 5,187 833 43,483 27,127 4,354
Adjusted EBITDA (non- GAAP) excluding share-based compensation
expenses 117,971 182,589 146,435 23,505
455,623 608,410 97,656
Adjusted EBITDA% 21.6% 26.7% 21.0% 21.0% 22.7% 23.8% 23.8%
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
2011 2012 2012 2011 2012
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) 35,220 63,609 37,900 6,084
128,886 176,045 28,257
Share-based compensation expenses 9,585 7,227 5,187 833 43,483 27,127 4,354
Net income attributable to ordinary shareholders excluding share-based
compensation expenses (Non GAAP net income) 44,805 70,836 43,087 6,917
172,369 203,172 32,611
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Use of Non-GAAP Financial Measures
29
To supplement 7 Days Group's 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 SEC:
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
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
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