7 Days Group Holdings Limited Announces Unaudited 2012 Third Quarter Financial Results

7 Days Group Holdings Limited Announces Unaudited 2012 Third Quarter Financial
                                   Results

PR Newswire

GUANGZHOU, China, Nov. 7, 2012

  oThird quarter 2012 adjusted EBITDA increased 34.2% year-over-year to
    RMB182.6 million. Third quarter 2012 net income attributable to the
    Company's ordinary shareholders increased 43.7% year-over-year to RMB63.6
    million.
  oThird quarter income from operations increased 69.4% year-over-year to
    RMB89.6 million.
  oTotal transaction value(1), a measure of total room revenue generated from
    all hotels, reached RMB1,538.9 million, an increase of 45.6%
    year-over-year.
  o104 net hotels added in the third quarter 2012 to a total of 1,236 hotels
    in operation.

GUANGZHOU,China, Nov. 7, 2012 /PRNewswire-FirstCall/-- 7 Days Group Holdings
Limited ("7 Days Group" or the "Company") (NYSE: SVN), a leading and fast
growing national economy hotel chain based in China, today announced its
unaudited financial results for the third quarter 2012.

Third Quarter 2012 Financial Highlights

  oTotal net revenues for the third quarter 2012 increased by 26.6%
    year-over-year to RMB683.4 million (US$108.7 million)(2).
  oIncome from operations for the third quarter 2012 was RMB89.6 million
    (US$14.3 million), a 69.4% year-over-year increase compared to RMB52.9
    million in the third quarter 2011. Non-GAAP income from operations for the
    quarter was RMB96.8 million (US$15.4 million), compared to RMB65.0 million
    for the same period in 2011.
  oEBITDA for the third quarter 2012 was RMB175.4 million (US$27.9 million),
    an increase of 41.4% year-over-year from RMB124.0 million for the same
    period in 2011. Adjusted EBITDA for the quarter was RMB182.6 million
    (US$29.1 million), an increase of 34.2% year-over-year. EBITDA margin was
    25.7% compared to 23.0% in the same period in 2011. Adjusted EBITDA margin
    was 26.7%, compared to 25.2% in the prior year period.
  oNet income attributable to the Company's ordinary shareholders was RMB63.6
    million (US$10.1 million), a 43.7% year-over-year increase compared to
    RMB44.3 million for the same period in 2011. Non-GAAP net income
    attributable to the Company's ordinary shareholders was RMB70.8 million
    (US$11.3 million), representing a year-over-year increase of 25.7%.
  oBasic and diluted earnings per ADS(3) were RMB1.29 (US$0.21) and RMB1.29
    (US$0.20), respectively. Non-GAAP basic and diluted earnings per ADS were
    RMB1.44 (US$0.23) and RMB1.43 (US$0.23), respectively.
  oNet operating cash inflow was RMB134.8 million (US$21.4 million), compared
    to RMB121.1 million in the same period in 2011.

(1) Definition of Total transaction value: total room revenue from
leased-and-operated hotels and managed hotels. The metric is highlighted as an
indicator of the scale and reach of 7 Days' brands.
(2) The Company's reporting currency is Renminbi ("RMB"). The translation of
amounts from RMB to United States Dollars is solely for the convenience of the
reader. RMB amounts included in this press release have been translated into
U.S. dollars at the exchange rate of September 30, 2012 as set forth in the
H.10 statistical release of the Federal Reserve Board, which was US$1.00 =
RMB6.2848. No representation is made that RMB amounts could have been, or
could be, converted into U.S. Dollars at that rate or at any other rate on
September 30, 2012.
(3) Each ADS represents 3 of the Company's ordinary shares.

Third Quarter 2012 Operational Highlights

  oAdded 104 net hotels, comprising 25 net leased-and-operated hotels and 79
    net managed hotels in the third quarter 2012.
  oAs of September 30, 2012, 7 Days Group had 1,236 hotels in operation,
    consisting of 460 leased-and-operated hotels and 776 managed hotels,
    representing a total of 123,080 rooms covering 191 cities.
  oAs of September 30, 2012, there were a total of 228 hotels in the
    pipeline, including 43 leased-and-operated hotels under conversion and 185
    managed hotels contracted but not yet opened.
  oFor the third quarter 2012, occupancy rates for leased-and-operated
    hotels, managed hotels and all hotels were 86.1%, 84.3% and 85.0%,
    respectively, compared to 88.3%, 83.0% and 85.5%, respectively, in the
    third quarter 2011. The year-over-year decrease in occupancy rates was
    mainly due to the broader geographic coverage of the new hotels compared
    to the prior year period.
  oRevPAR(1) for leased-and-operated hotels was RMB145.9 in the third quarter
    2012, compared to RMB153.1 in the same period in 2011. RevPAR for managed
    hotels for the period was RMB137.5 in the third quarter 2012, compared to
    RMB135.9 for the same period in 2011.
  oAs of September 30, 2012, the number of 7 Days Club members was
    approximately 48.5 million, a 74.8% increase from 27.7 million as of
    September 30, 2011.

(1) RevPAR represents revenue per available room

Recent Business Developments:

Mr. Yuezhou Lin, 7 Days Group's Chief Executive Officer and Director,
commented, "We are pleased to report strong results for the third quarter,
with revenue growth near the high end of our guidance range and robust profit
growth.Our results were driven by a healthy performance from our existing
hotels and new hotel openings.In-line with our asset-light strategy, we
continue to expand our hotel portfolio with a greater focus on managed hotels,
which now account for over sixty percent of our hotels in operation and the
majority of hotels in our pipeline.By placing a greater emphasis on managed
hotels, we are seeking to take advantage of the lower risk, less capital
intensive and more profitable nature of the managed hotel business model. We
believe that the merits of our strategy have been proven based on the
increasing profitability and free cash flow that we generated in the third
quarter. With a healthy pipeline and continued demand from both guests and
managed hotel partners, we remain confident in our ability to further expand
our hotel portfolio and deliver profitable growth going forward."

Third Quarter 2012 Unaudited Financial Results

Gross revenues.  Gross revenues for the third quarter of 2012 were RMB724.3
million (US$115.2 million), representing a year-over-year increase of 26.2%
from RMB574.0 million in the third quarter 2011.

Gross revenues from leased-and-operated hotels.  Gross revenues from
leased-and-operated hotels for the third quarter 2012 amounted to RMB646.3
million (US$102.8 million), representing a 25.3% increase from RMB516.0
million in the third quarter 2011.

Gross revenues from managed hotels. Gross revenues from managed hotels for the
third quarter of 2012 increased by 34.3% to RMB77.9 million (US$12.4 million)
from RMB58.0 million in the same period in 2011. During the third quarter
2012, 79 net managed hotels were opened.

Total net revenues. Total net revenues for the third quarter of 2012 totaled
RMB683.4 million (US$108.7 million), representing a year-over-year increase of
26.6% from RMB540.0 million in third quarter 2011, primarily resulting from
the continued growth in the number of hotels in operation.

Hotel operating costs.  Hotel operating costs for the third quarter of 2012
were RMB517.1 million (US$82.3 million), or 75.7% of total net revenues,
compared with 78.9% of total net revenues in the third quarter 2011 and 77.3%
of total net revenues in the second quarter 2012. Pre-opening expenses for the
third quarter 2012 were RMB17.9 million (US$2.9 million), compared to RMB15.1
million in the second quarter of 2012.

Sales and marketing expenses. Sales and marketing expenses for the third
quarter of 2012 were RMB19.1 million (US$3.0 million), or 2.8% of total net
revenues, compared with 1.9% of total net revenues in the same period of 2011
and 3.0% in the second quarter 2012.

General and administrative expenses.  General and administrative expenses for
the third quarter 2012 were RMB57.6 million (US$9.2 million), or 8.4% of total
net revenues, compared to RMB50.7 million, or 9.4% of total net revenues in
the same period of 2011, and RMB48.3 million, or 7.6% of total net revenues in
the second quarter of 2012.

Accordingly, total operating costs and expenses amounted to RMB593.8 million
(US$94.5 million), representing 86.9% of total net revenues, compared to 90.2%
of total net revenues in the same period of 2011 and 88.0% in the second
quarter 2012.

Income from operations. Income from operations for the third quarter 2012 was
RMB89.6 million (US$14.3 million), compared to RMB52.9 million in the third
quarter 2011 and RMB76.2 million in the second quarter 2012. Non-GAAP income
from operations was RMB96.8 million (US$15.4 million), compared to RMB65.0
million for the same period of 2011 and RMB82.1 million in the second quarter
2012.

EBITDA.  EBITDA for the third quarter 2012 was RMB175.4 million (US$27.9
million), an increase of 41.4% year-over-year from RMB124.0 million for the
same period in 2011. Adjusted EBITDA for the quarter was RMB182.6 million
(US$29.1 million) an increase of 34.2% year-over-year. EBITDA margin was 25.7%
compared to 23.0% in the same period in 2011. Adjusted EBITDA margin was 26.7%
compared to 25.2% in the prior year period.

Interest expense. Interest expense for the third quarter 2012 was RMB5.2
million (US$0.8 million), compared to RMB2.0 million for the same period of
2011 and RMB7.0 million in the second quarter 2012.

Income tax expense.  Income tax expense for the third quarter 2012 was RMB25.0
million (US$4.0 million), compared to RMB14.8 million in the same period of
2011 and RMB21.3 million in the second quarter 2012.

Net income  attributable to 7 Days Group Holdings Limited ordinary
shareholders. Net income attributable to 7 Days Group Holdings Limited
ordinary shareholders was RMB63.6 million (US$10.1 million) in the third
quarter 2012, compared to RMB44.3 million in the third quarter 2011 and
RMB55.6 million in the second quarter 2012.

Non-GAAP net income.  Non-GAAP net income was RMB70.8 million (US$11.3
million), compared to Non-GAAP net income of RMB56.4 million for the third
quarter 2011 and Non-GAAP net income of RMB61.4 million in the second quarter
2012.

Basic and diluted earnings per ADS.  Basic and diluted earnings per ADS were
RMB1.29 (US$0.21) and RMB1.29 (US$0.20), respectively, for the third quarter
2012, compared to basic and diluted earnings per ADS of RMB0.89 and RMB0.88,
respectively, in the third quarter 2011 and basic and diluted earnings per ADS
of RMB1.11 in the second quarter 2012. Non-GAAP basic and diluted earnings per
ADS were RMB1.44 (US$0.23) and RMB1.43 (US$0.23), respectively, for the third
quarter 2012, compared to non-GAAP basic and diluted earnings per ADS of
RMB1.13 and RMB1.12, respectively, in the same period of 2011and basic and
diluted earnings per ADS of RMB1.23 and RMB1.22, respectively, in the second
quarter2012.

Cash and pledged bank deposits.  As of September 30, 2012, the Company had
cash and pledged bank deposits of RMB388.6 million (US$61.8 million),
representing a year-over-year decrease of 2.2% from RMB397.3 million as of
September 30, 2011.

Operating cash flow. Net operating cash inflow for the third quarter 2012 was
RMB134.8 million (US$21.4 million), representing an increase of 11.4% from
RMB121.1 million in the third quarter 2011.

Guidance

The Company expects to generate total net revenues in the range of RMB670
million to RMB685 million in the fourth quarter 2012. These forecasts reflect
the Company's current and preliminary view, which is subject to change.

Conference Call

7 Days Group Holdings Limited senior management will host a conference call at
9:00 pm (Eastern) / 6:00 pm (Pacific) Wednesday, November 7, 2012, which is
10:00 am (Beijing) on Thursday, November 8, 2012 to discuss its third quarter
2012 financial results and recent business activity. The conference call may
be accessed by calling the following numbers:

China:  800 8190 121
Hong Kong Toll Free:                  800 930 346
Hong Kong:       852 2475 0994
US Toll Free:             1 866 519 4004
US New York:        1 718 354 1231
International:           65 6723 9381
Passcode:     7Days

A live webcast of the conference call and replay will be available on the
investor relations page of 7 Days Group's website at http://en.7daysinn.cn/.

A telephone replay will be available shortly after the call. The dial-in
details are as follows:

US: 1 866 214 5335
International:          61 2 8235 5000
Conference ID number:             42341347

About 7 Days Group Holdings Limited

7 Days Group is a leading and fast growing national economy hotel chain based
in China. It converts and operates limited service economy hotels across major
metropolitan areas in China under its award-winning "7 Days Inn" brand. The
Company strives to offer consistent and high-quality accommodations and
services primarily to the growing population of value conscious business and
leisure travelers who demand affordable, clean, comfortable, convenient and
safe lodging, and to respond to its guests' needs.

Use of Non-GAAP Financial Measures

To supplement 7 Days Group's unaudited financial results presented in
accordance with U.S. GAAP, the Company has used the following non-GAAP
measures defined as non-GAAP financial measures by the Securities and Exchange
Commission (the "SEC") to report its financial results:

  oNon-GAAP income from operations represents income from operations reported
    in accordance with GAAP, excluding share-based compensation expense.
  oNon-GAAP net income represents net income reported in accordance with
    GAAP, excluding share-based compensation expense.
  oNon-GAAP earnings per ADS represents non-GAAP net income divided by the
    number of ADS used in computing basic and diluted earnings per ADS.
  oEBITDA represents net income reported in accordance with GAAP, adjusted
    for the effects of interest income and expense, provision for income tax,
    depreciation and amortization.
  oAdjusted EBITDA represents EBITDA, excluding share-based compensation
    expense.

The Company believes EBITDA is a useful financial metric to assess its
operating and financial performance before the impact of investing and
financing transactions, if any, and income taxes. In addition, 7 Days Group
believes that EBITDA is widely used by other companies in the lodging industry
and may be used by investors as a measure of its financial performance. Given
the significant investments that 7 Days Group has made in the past in property
and equipment, depreciation and amortization expense comprises a meaningful
portion of its cost structure. 7 Days Group believes that EBITDA will provide
investors with a useful tool for comparability between periods because it
eliminates depreciation and amortization expense attributable to capital
expenditures. The presentation of EBITDA should not be construed as an
indication that the Company's future results will be unaffected by other
charges and gains the Company considers to be outside the ordinary course of
its business. 7 Days Group also calculates Adjusted EBITDA excluding
share-based compensation expense. The Company prepares its financial
statements in accordance with GAAP and, accordingly, expenses its employee
share options. Since share-based compensation expenses are non-cash expenses,
the Company believes excluding them from its calculation of EBITDA allows it
to provide investors with a more useful tool for assessing its operating and
financial performance.

The use of EBITDA and Adjusted EBITDA has certain limitations. Depreciation
and amortization expense for various long-term assets, such as property and
equipment, income tax expense, interest expense and interest income have been
and will be incurred and are not reflected in the presentation of EBITDA. Each
of these items should also be considered in the overall evaluation of its
results. Additionally, EBITDA does not consider capital expenditures and other
investing activities and should not be considered as a measure of the
Company's liquidity. The Company compensates for these limitations by
providing the relevant disclosure of its depreciation and amortization,
interest expense and interest income, income tax expense, capital
expenditures, share-based compensation expense and other relevant items both
in its reconciliations to the GAAP financial measures and in its consolidated
financial statements, all of which should be considered when evaluating the
Company's performance. The terms EBITDA and Adjusted EBITDA are not defined
under GAAP, and EBITDA and Adjusted EBITDA are not measures of net income,
operating income, operating performance or liquidity presented in accordance
with GAAP. When assessing the Company's operating and financial performance,
investors should not consider this data in isolation or as a substitute for
the Company's net income, operating income or any other operating performance
measure that is calculated in accordance with GAAP. In addition, the Company's
EBITDA and Adjusted EBITDA may not be comparable to EBITDA or Adjusted EBITDA
or similarly titled measures utilized by other companies since such other
companies may not calculate EBITDA and Adjusted EBITDA in the same manner as
the Company does.

For reasons same to the use of EBITDA and Adjusted EBITDA described above, the
Company has also reported net income, basic and diluted earnings per ADS and
income (loss) from operations on a non-GAAP basis, excluding share-based
compensation expenses in the relevant period. These non-GAAP operating
measures are useful for understanding and assessing the Company's underlying
business performance and operating trends and the Company expects to report
net income, basic and diluted earnings per ADS and income from operations on a
non-GAAP basis using a consistent method on a quarterly basis going forward.

7 Days Group believes that both management and investors benefit from
referring to these non-GAAP financial measures in assessing 7 Days Group's
financial performance and liquidity and when planning and forecasting future
periods. Readers are cautioned not to view non-GAAP results on a stand-alone
basis or as a substitute for results under GAAP, or as being comparable to
results reported or forecasted by other companies, and should refer to the
reconciliation of GAAP results with non-GAAP results for the periods set forth
in the tables at the end of this release.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and as defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar statements
and including, among other things, 7 Days Group's revenue guidance for the
fourth quarter 2012 and business forecast for 2012, including the Company's
hotel expansion plan, an increased focus on its portfolio of asset-light,
profit-oriented managed hotels, its ability to offer consistent and
high-quality accommodations and services at an affordable price, its ability
to leverage the economies of scale and its ability to achieve strict cost
controls and to deliver continued growth. These forward-looking statements are
not historical facts but instead represent only the Company's belief regarding
future events, many of which, by their nature, are inherently uncertain and
outside of the Company's control. The Company's actual results and financial
condition and other circumstances may differ, possibly materially, from the
anticipated results and financial condition indicated in these forward-looking
statements. In particular, the Company's operating results for any period are
impacted significantly by the mix of leased-and-operated hotels and managed
hotels in its chain, causing the Company's operating results to fluctuate and
making them difficult to predict.

Other factors that could cause forward-looking statements to differ materially
from actual future events or results include risks and uncertainties related
to: uncertainties associated with factors typically affecting the lodging
industry, including changes in economic conditions, adverse weather
conditions, natural disasters or outbreaks of serious contagious diseases in
markets where the Company has a presence; uncertainties regarding the
Company's ability to respond to competitive pressures; uncertainties regarding
the Company's ability to manage its expected growth; uncertainties regarding
the Company's ability to continue its growth and achieve profitability; risks
associated with the Company's limited operating history and historical
operating losses; uncertainties regarding the Company's ability to fund its
working capital needs; uncertainties regarding its ability to successfully and
timely identify, secure or operate additional hotel properties. The financial
information contained in this release should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
2011 Annual Report on Form 20-F filed with the SEC on April 26, 2012, which is
available on the SEC's website at www.sec.gov. For a discussion of other
important factors that could adversely affect the Company's business,
financial condition, results of operations and prospects, see "Risk Factors"
beginning on page 8 of the Company's 2011 Annual Report on Form 20-F. The
Company's results of operations for the third quarter 2012 are not necessarily
indicative of its operating results for any future periods. Any projections in
this release are based on limited information currently available to the
Company, which is subject to change. Although such projections and the factors
influencing them will likely be changed, the Company will not necessarily
update the information. Such information speaks only as of the date of this
release.

Statement Regarding Unaudited Financial Information

The financial information set forth above is unaudited and subject to
adjustments. Adjustments to the financial statements may be identified when
the annual financial statements are prepared and audit work is performed for
the year end audit, which could result in significant differences from this
unaudited financial information.

Contacts:

Investor Contact:
Vivian Chen, Investor Relations Director
7 Days Group Holdings Limited
+86-20-8922-5858
IR@7daysinn.cn

Investor Relations (HK):
Mahmoud Siddig, Managing Director
Taylor Rafferty
Tel: +852 3196-3712
7DaysInn@taylor-rafferty.com

Investor Relations (US):
Marc Raybin, Director
Taylor Rafferty
+1 (212) 889-4350
7DaysInn@taylor-rafferty.com



-- FINANCIAL AND OPERATIONAL TABLES FOLLOW --



7 Days Group Holdings Limited
Unaudited Consolidated Balance Sheet Information
                                      Quarter Ended
                                      30/Sep/11  30/Jun/12  30/Sep/12
                                      RMB' 000   RMB' 000   RMB' 000  US$'000
ASSETS
Current assets:
Cash                                  394,404    614,588    385,070   61,270
Pledged bank deposits                 2,938      989        3,484     554
Short-term investment                 -          -          -         -
Accounts receivable                   8,289      9,983      16,870    2,684
Prepaid rent                          133,295    138,537    173,112   27,545
Other prepaid expenses and current    86,103     57,017     69,433    11,048
assets
Hotel supplies                        42,655     46,141     51,904    8,259
Amounts due from related parties      -          71         87        14
Deferred tax assets                   24,799     22,177     19,144    3,046
Total current assets                  692,483    889,503    719,104   114,420
Property and equipment, net           1,573,101  1,731,410  1,851,653 294,624
Rental deposits                       66,130     85,012     90,731    14,437
Land use right                        24,198     23,735     23,581    3,752
Prepaid rent                          65,289     65,491     63,822    10,155
Intangible assets, net                842        28,323     27,272    4,339
Goodwill                              694        61,041     61,041    9,712
Other non-current assets              70,000     500        -         -
Deferred tax assets                   28,507     57,086     62,615    9,963
Total assets                         2,521,244  2,942,101  2,899,819 461,402
LIABILITIES ANDEQUITY
Current liabilities:
Accounts payable                      216,475    225,338    247,871   39,440
Bills payable                         9,463      3,295      13,182    2,097
Short-term bank loans                 184,993    284,301    71,000    11,297
Accrued expenses and other payables   378,683    437,120    477,603   75,993
Amounts due to related parties        -          2,085      1,850     294
Income taxes payable                  33,367     33,763     36,947    5,879
Total current liabilities            822,981    985,902    848,453   135,000
Long-term bank borrowings             -          106,388    178,975   28,477
Accrued lease payments                189,644    229,024    238,642   37,971
Unfavorable lease contract liability  -          7,474      7,305     1,162
Refundable deposits                   16,450     15,250     15,050    2,395
Deferred revenue                      1,276      660        608       97
Deferred rebate income                6,218      6,175      5,984     952
Borrowings from related parties       1,511      1,112      892       142
 Income taxes payable                -          6,644      6,644     1,057
Deferred tax liabilities              2,876      3,128      2,935     467
Total liabilities                    1,040,956  1,361,757  1,305,488 207,720
Equity:
Ordinary shares                       141,070    141,113    141,133   22,456
Treasury stock                        -          (13,134)   (67,137)  (10,682)
Additional paid-in capital            1,615,090  1,638,440  1,638,948 260,780
Accumulated other comprehensive       3,191      656        1,136     181
income
Accumulated deficit                   (273,567)  (163,812)  (100,203) (15,943)
Total Equity attributable to 7 Days   1,485,784  1,603,263  1,613,877 256,792
Group Holdings Limited
Noncontrolling interests              (5,496)    (22,919)   (19,546)  (3,110)
Total equity                          1,480,288  1,580,344  1,594,331 253,682
Total liabilities and equity          2,521,244  2,942,101  2,899,819 461,402



7 Days Group Holdings Limited
Unaudited Consolidated Statements of Operations Information
                                      Quarter Ended
                                      Sep 30     Jun 30     Sep 30
                                      2011       2012       2012
                                      RMB'000    RMB'000    RMB'000   US$'000
Total Revenues                       573,990    671,080    724,252   115,238
Leased-and-operated hotels           515,972    595,589    646,330   102,840
Managed hotels                       58,018     75,491     77,922    12,398
Less: Business tax and surcharges    (34,021)   (38,350)   (40,854)  (6,500)
Net revenues                         539,969    632,730    683,398   108,738
Operating costs and expenses
Hotel operating costs                (426,058)  (489,262)  (517,129) (82,282)
Rental expenses                       (148,240)  (172,143)  (179,513) (28,563)
Staff cost                            (81,835)   (102,425)  (100,887) (16,053)
Depreciation and amortization         (62,765)   (75,776)   (80,602)  (12,825)
Hotel supplies                        (24,455)   (34,405)   (35,800)  (5,696)
Utilities                             (36,889)   (37,959)   (47,744)  (7,597)
Other                                 (71,874)   (66,554)   (72,583)  (11,549)
Sales and marketing expenses         (10,330)   (18,896)   (19,059)  (3,033)
General and administrative expenses (50,677)   (48,335)   (57,596)  (9,164)
Total operating costs and expenses   (487,065)  (556,493)  (593,784) (94,479)
Income from operations               52,904     76,237     89,614    14,259
Other income (expense)
Interest income                      1,161      3,262      1,716     273
Interest expense                     (1,969)    (6,978)    (5,221)   (831)
Equity in income of an affiliate      -          -          -         -
Income before income taxes            52,096     72,521     86,109    13,701
Income tax expense                    (14,765)   (21,344)   (25,011)  (3,980)
Net income                            37,331     51,177     61,098    9,721
Net income attributable to            6,940      4,390      2,511     400
noncontrolling interest
Net income attributable to 7 Days
Group                                 44,271     55,567     63,609    10,121
Holdings Limited ordinary
shareholders
Basic earnings per ordinary share    0.30       0.37       0.43      0.07
Diluted earnings per ordinary share  0.29       0.37       0.43      0.07
Net income                            37,331     51,177     61,098    9,721
Other comprehensive income (loss)
Foreign currency translation          -          1,131      480       76
adjustment, net of nil income tax
Comprehensive income                  -          52,308     61,578    9,797
Less: comprehensive income
attributable to noncontrolling        -          (4,390)    (2,511)   (400)
interest
Comprehensive income attributable to
7 Days Group                          -          56,698     64,089    10, 197
Holdings Limited ordinary
shareholders



7 Days Group Holdings Limited
Reconciliation of GAAP and Non-GAAP Results
EBITDA(non-GAAP)
                                            Quarter Ended
                                            Sep 30   Jun 30   Sep 30
                                            2011     2012     2012
                                            RMB'000  RMB'000  RMB'000 US$'000
Net income attributable to 7 Days Group     44,271   55,567   63,609  10,121
Holdings Limited ordinary shareholders
Interest income                             (1,161)  (3,262)  (1,716) (273)
Interest expense                            1,969    6,978    5,221   831
Income tax expenses                         14,765   21,344   25,011  3,980
Depreciation and amortization               64,146   78,290   83,237  13,244
EBITDA (non-GAAP)                           123,990  158,917  175,362 27,903
EBITDA%                                     23.0%    25.1%    25.7%   25.7%
Share-based compensation expenses           12,085   5,845    7,227   1,150
Adjusted EBITDA (non- GAAP) excluding       136,075  164,762  182,589 29,053
share-based compensation expenses
Adjusted EBITDA%                            25.2%    26.0%    26.7%   26.7%



Non-GAAP net income attributable to 7 Days Group Holdings Limited ordinary
shareholders
                                             Quarter Ended
                                             Sep 30   Jun 30   Sep 30
                                             2011     2012     2012
                                             RMB'000  RMB'000  RMB'000 US$'000
Net income attributable to 7 Days Group
Holdings Limited ordinary shareholders       44,271   55,567   63,609  10,121
(GAAP)
Share-based compensation expenses            12,085   5,845    7,227   1,150
Net income attributable to ordinary
shareholders excluding share-based           56,356   61,412   70,836  11,271
compensation expenses (Non GAAP net income)



Earnings per share
                                      Quarter Ended
                                      Sep 30        Jun 30        Sep 30
                                      2011          2012          2012
                                      RMB           RMB           RMB   USD
Basic earnings per ordinary share     0.30          0.37          0.43  0.07
(GAAP)
Diluted earnings per ordinary share   0.29          0.37          0.43  0.07
(GAAP)
Basic earnings per ordinary
share(Non-GAAP), excluding            0.38          0.41          0.48  0.08
share-based compensation expenses
Diluted earnings per ordinary
share(Non-GAAP), excluding            0.37          0.41          0.48  0.08
share-based compensation expenses
Denominator:
Basic weighted average number of      149,889,728   149,914,680   147, 769,286
ordinary shares
Diluted weighted average number of    151,322,024   150,456,381   148,164,932
ordinary shares

                                    Quarter Ended
                                    30-Sep-11 30-Jun-12 30-Sep-12
                                    RMB '000  RMB '000  RMB'000   USD'000
Hotel operating cost
     GAAP Result                    (426,058) (489,262) (517,129) (82,282)
     % of Total net revenue         78.90%    77.33%    75.67%    75.67%
     Share-based Compensation       672       273       582       93
     % of Total net revenue         0.12%     0.04%     0.09%     0.09%
     Non-GAAP Result                (425,386) (488,989) (516,547) (82,189)
     % of Total net revenue         78.78%    77.28%    75.58%    75.58%
Sales and marketing expenses
     GAAP Result                    (10,330)  (18,896)  (19,059)  (3,033)
     % of Total net revenue         1.91%     2.99%     2.79%     2.79%
     Share-based Compensation       410       614       703       112
     % of Total net revenue         0.08%     0.10%     0.10%     0.10%
     Non-GAAP Result                (9,920)   (18,282)  (18,356)  (2,921)
     % of Total net revenue         1.84%     2.89%     2.69%     2.69%
General and administrative expenses
     GAAP Result                    (50,677)  (48,335)  (57,596)  (9,164)
     % of Total net revenue         9.39%     7.64%     8.43%     8.43%
     Share-based Compensation       11,003    4,958     5,942     945
     % of Total net revenue         2.04%     0.78%     0.87%     0.87%
     Non-GAAP Result                (39,674)  (43,377)  (51,654)  (8,219)
     % of Total net revenue         7.35%     6.86%     7.56%     7.56%
Total operating cost and expenses
     GAAP Result                    (487,065) (556,493) (593,784) (94,479)
     % of Total net revenue         90.20%    87.95%    86.89%    86. 89%
     Share-based Compensation       12,085    5,845     7,227     1,150
     % of Total net revenue         2.24%     0.92%     1.06%     1.06%
     Non-GAAP Result                (474,980) (550,648) (586,557) (93,329)
     % of Total net revenue         87.96%    87.03%    85.83%    85.83%
Income from operations
     GAAP Result                    52,904    76,237    89,614    14,259
     % of Total net revenue         9.80%     12.05%    13.11%    13.11%
     Share-based Compensation       12,085    5,845     7,227     1,150
     % of Total net revenue         2.24%     0.92%     1.06%     1.06%
     Non-GAAP Result                64,989    82,082    96,841    15,409
     % of Total net revenue         12.04%    12.97%    14.17%    14.17%



7 Days Group Holdings Limited
Operating Data
                                                  As of and for

                                                  the Quarter Ended
                                                  Sep 30 Jun 30  Sep 30
                                                  2011   2012    2012
Hotels in operation                               838    1,132   1,236
Leased-and-operated hotels                        364    435     460
Managed hotels                                    474    697     776
Hotels under conversion                           251    226     228
Leased-and-operated hotels                        43     50      43
Managed hotels                                    208    176     185
Total hotel rooms for hotels in operation         83,487 112,631 123,080
Leased-and-operated hotels                        37,458 45,701  48,380
Managed hotels                                    46,029 66,930  74,700
Total hotel rooms for hotels under conversion     24,365 21,961  21,674
Number of cities covered for hotels in operation  127    168     191
Average occupancy rate                            85.5%  84.6%   85.0%
Leased-and-operated hotels                        88.3%  86.8%   86.1%
Managed hotels                                    83.0%  83.0%   84.3%
Average daily rate (in RMB)                       168.4  161.7   165.6
Leased-and-operated hotels                        173.3  167.2   169.5
Managed hotels                                    163.8  157.7   163.0
RevPAR (in RMB)                                   143.9  136.8   140.9
Leased-and-operated hotels                        153.1  145.1   145.9
Managed hotels                                    135.9  130.9   137.5

SOURCE 7 Days Group Holdings Limited

Website: http://en.7daysinn.cn/
 
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