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ChinaCache Reports Adjusted Fourth Quarter and Full Year 2016 Results

BEIJING, Nov. 14, 2017 (GLOBE NEWSWIRE) -- ChinaCache International Holdings Ltd. ("ChinaCache" or the "Company") (Nasdaq:CCIH), a leading total solutions provider of Internet content and application delivery services in China, today reported adjusted audited financial results for the fourth quarter and full year 2016, which included a non-cash impairment charge of RMB399.1 million, resulting in an retroactive increase to operating expenses for both the fourth quarter and full year 2016.

Due to the downturn in the Company’s operating results, ChinaCache has impaired the net value of all its property and equipment and intangible assets as of December 31, 2016 based on the excess of the carrying amount of the asset group over its fair value. The Company determined the fair value of the asset group using the income approach based on the discounted expected cash flows associated with the asset group. The discounted cash flow for the asset group was based on three-year projections, which is consistent with the remained useful lives of the principal assets. Cash flow projections were based on past experience, actual results of operations and management best estimates about future developments, as well as certain market assumptions.

ChinaCache currently expects to generate total net revenues in the range of RMB0.84 billion to RMB0.87 billion for the full year of 2017, representing year-over-year decrease of approximately 20% to 17%.

This forecast reflects ChinaCache's current view, which is subject to change.

The following presents the Company's unaudited financial results for the fourth quarter 2016 and full year 2016 after giving effect to the aforementioned adjustment(s).

Condensed Consolidated Balance Sheets
(amounts in thousands)
As of Dec 31 As of Dec 31 As of Dec 31
2015 2016 2016
RMB RMB US$
(Audited) (Unaudited) (Unaudited)
ASSETS
Current assets
Cash and cash equivalents 606,796 134,924 19,433
Accounts receivable, net 243,431 190,587 27,450
Prepaid expenses and other current assets 31,560 56,976 8,206
Short term investments 26,169 - -
Deferred tax assets 17,923 - -
Amount due from a subsidiary held for sale 435 53,169 7,658
Assets held for sale 1,060,543 1,270,483 182,988
Total current assets 1,986,857 1,706,139 245,735
Non-current assets
Property and equipment, net 499,946 - -
Intangible assets, net 10,898 - -
Long term investments 50,157 34,159 4,920
Deferred tax assets 11,368 - -
Long term deposits and other non-current assets 59,390 36,525 5,261
Total non-current assets 631,759 70,684 10,181
Total Assets 2,618,616 1,776,823 255,916
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term loan - 29,311 4,222
Accounts payable 205,593 301,569 43,435
Accrued employee benefits 44,690 46,233 6,659
Accrued expenses and other payables 76,409 52,697 7,590
Income tax payable 13,513 13,924 2,005
Liabilities for uncertain tax positions 11,337 10,020 1,443
Amounts due to related parties 18 18 3
Current portion of long term loan 7,180 3,840 553
Current portion of capital lease obligations 70,615 72,851 10,493
Deferred government grant 16,360 13,000 1,872
Amount due to a subsidiary held for sale 319,536 18,063 2,602
Liabilities held for sale 1,014,449 1,302,658 187,622
Total current liabilities 1,779,700 1,864,184 268,499
Non-current liabilities
Long-term loan 4,340 - -
Non-current portion of capital lease obligations 104,450 43,951 6,330
Deferred government grant 8,439 11,208 1,614
Total non-current liabilities 117,229 55,159 7,944
Total Liabilities 1,896,929 1,919,343 276,443
Total Shareholders' equity 721,687 (142,520) (20,527)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,618,616 1,776,823 255,916


Condensed Consolidated Statements of Comprehensive Income
(amounts in thousands, except for number of shares, per share and per ADS data)
For the Three Months Ended For the Twelve Months Ended
Dec 31, 2015 Sep 30, 2016 Dec 31, 2016 Dec 31, 2016 Dec 31, 2015 Dec 31, 2016 Dec 31, 2016
RMB RMB RMB US$ RMB RMB US$
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited)
Net revenues 311,447 261,643 263,312 37,926 1,353,627 1,054,235 151,842
Cost of revenues (267,339) (255,133) (275,927) (39,742) (1,041,412) (1,077,810) (155,237)
Gross profit (loss) 44,108 6,510 (12,615) (1,816) 312,215 (23,575) (3,395)
Other operating income (loss) 13,911 3,260 (28,895) (4,162) 13,911 (19,044) (2,743)
Sales & marketing expenses (30,145) (23,009) (22,467) (3,236) (115,621) (93,603) (13,482)
General & administrative expenses (61,062) (62,202) (50,264) (7,240) (198,626) (265,017) (38,170)
Research & development expenses (25,530) (24,037) (25,102) (3,615) (103,110) (104,018) (14,982)
Transaction tax on assets transfer (5,394) - - - (27,733) - -
Impairment of long lived assets - - (399,094) (57,482) - (399,094) (57,482)
Impairment of long term investments - - (18,240) (2,627) - (18,240) (2,627)
Operating loss (64,112) (99,478) (556,677) (80,178) (118,964) (922,591) (132,881)
Interest income 1,940 1,627 261 38 4,618 4,669 672
Interest expense (2,473) (2,932) (2,091) (301) (13,158) (11,647) (1,678)
Other income (expense) 141 5,171 (263) (38) 2,991 5,336 769
Foreign exchange gain, net 4,845 915 8,015 1,154 13,164 14,209 2,047
Loss before income taxes (59,659) (94,697) (550,755) (79,325) (111,349) (910,024) (131,071)
Income tax benefit (expense) 22,861 384 (21,805) (3,141) 22,614 (4,229) (609)
Net loss (36,798) (94,313) (572,560) (82,466) (88,735) (914,253) (131,680)
Net loss attributable to the noncontrolling interest(44) (152) (463) (67) (44) (776) (112)
Net loss attributable to the Company's shareholders(36,754) (94,161) (572,097) (82,399) (88,691) (913,477) (131,568)
Foreign currency translation 249 (196) (286) (41) 264 (293) (42)
Unrealized holding gain on available-for-sale investments1,106 36 - - 1,853 659 95
Reclassification adjustments for gains included in net income- (3,741) - - - (3,552) (512)
Total other comprehensive income (loss), net of tax1,355 (3,901) (286) (41) 2,117 (3,186) (459)
Comprehensive loss (35,443) (98,214) (572,846) (82,507) (86,618) (917,439) (132,139)
Comprehensive loss attributable to the noncontrolling interest(44) (152) (463) (67) (44) (776) (112)
Comprehensive loss attributable to the Company's shareholders(35,399) (98,062) (572,383) (82,440) (86,574) (916,663) (132,027)
Loss per ordinary share:
Basic (0.09) (0.23) (1.36) (0.20) (0.22) (2.24) (0.32)
Diluted (0.09) (0.23) (1.36) (0.20) (0.22) (2.24) (0.32)
Loss per ADS*:
Basic (1.45) (3.68) (21.76) (3.20) (3.49) (35.84) (5.12)
Diluted (1.45) (3.68) (21.76) (3.20) (3.49) (35.84) (5.12)
Weighted average number of ordinary shares used in earnings per share computation:
Basic 404,344,939 412,253,323 421,522,374 421,522,374 407,149,509 408,189,722 408,189,722
Diluted 404,344,939 412,253,323 421,522,374 421,522,374 407,149,509 408,189,722 408,189,722
*Note1: 1 ADS = 16 shares


Supplementary Metrics - Reconciliations of Non-GAAP to GAAP Financial Measures
(amounts in thousands, except for percentages, number of shares, per share and per ADS data)
(Unaudited)
For the Three Months Ended For the Twelve Months Ended
Dec 31, 2015 Sep 30, 2016 Dec 31, 2016 Dec 31, 2016 Dec 31, 2015 Dec 31, 2016 Dec 31, 2016
RMB RMB RMB US$ RMB RMB US$
Adjusted EBITDA — defined as EBITDA before share-based compensation expense, foreign exchange gain, transaction tax on assets transfer, impairment of long lived assets and impairment of long term investments
Net loss (36,798) (94,313) (572,560) (82,466) (88,735) (914,253) (131,680)
Depreciation 40,872 38,653 38,090 5,486 153,313 155,225 22,357
Amortization 1,151 1,102 1,253 180 4,298 3,869 557
Interest expense 2,473 2,932 2,091 301 13,158 11,647 1,678
Interest income (1,940) (1,627) (261) (38) (4,618) (4,669) (672)
Income tax (benefit) expense (22,861) (384) 21,805 3,141 (22,614) 4,229 609
Share-based compensation 18,259 8,601 2,685 387 48,606 85,025 12,246
Foreign exchange gain (4,845) (915) (8,015) (1,154) (13,164) (14,209) (2,047)
Penalties on uncertain tax positions 2,206 - 658 95 2,206 658 95
Transaction tax on assets transfer 5,394 - - - 27,733 - -
Impairment of long lived assets - - 399,094 57,482 - 399,094 57,482
Impairment of long term investments - - 18,240 2,627 - 18,240 2,627
Adjusted EBITDA 3,911 (45,951) (96,920) (13,959) 120,183 (255,144) (36,748)
Margin%
1.3 % (17.6
%) (36.8%) (36.8%) 8.9 % (24.2%) (24.2%)
Adjusted net loss — defined as net loss before share-based compensation, foreign exchange gain (loss), penalties on uncertain tax positions, transaction tax on assets transfer, impairment of long lived assets and impairment of long term investments
Net loss (36,798) (94,313) (572,560) (82,466) (88,735) (914,253) (131,680)
Share-based compensation 18,259 8,601 2,685 387 48,606 85,025 12,246
Foreign exchange gain (4,845) (915) (8,015) (1,154) (13,164) (14,209) (2,047)
Penalties on uncertain tax positions 2,206 - 658 95 2,206 658 95
Transaction tax on assets transfer 5,394 - - - 27,733 - -
Impairment of long lived assets - - 399,094 57,482 - 399,094 57,482
Impairment of long term investments - - 18,240 2,627 - 18,240 2,627
Adjusted net loss (15,784) (86,627) (159,898) (23,029) (23,354) (425,445) (61,277)
Margin%
(5.1%) (33.1
%) (60.7%) (60.7%) (1.7%) (40.4%) (40.4%)
Loss per ordinary share:
Basic (0.04) (0.21) (0.38) (0.05) (0.13) (1.04) (0.15)
Diluted (0.04) (0.21) (0.38) (0.05) (0.13) (1.04) (0.15)
Loss per ADS:
Basic (0.64) (3.36) (6.08) (0.80) (2.01) (16.64) (2.40)
Diluted (0.64) (3.36) (6.08) (0.80) (2.01) (16.64) (2.40)
Non-GAAP gross profit (loss) — defined as gross profit (loss) before share-based compensation expense
Gross profit (loss) 44,108 6,510 (12,615) (1,816) 312,215 (23,575) (3,395)
Plus: Share-based compensation 945 378 623 90 3,670 5,961 859
Non-GAAP gross profit (loss) 45,053 6,888 (11,992) (1,726) 315,885 (17,614) (2,536)
Margin%
14.5 % 2.6 % (4.6%) (4.6%) 23.3 % (1.7%) (1.7%)
Non-GAAP operating expense — defined as operating expense before share-based compensation expense
Sales & marketing expenses 30,145 23,009 22,467 3,236 115,621 93,603 13,482
Minus: Share-based compensation (693) 131 (7) (1) (2,882) (2,753) (397)
Non-GAAP sales & marketing expenses 29,452 23,140 22,460 3,235 112,739 90,850 13,085
% of net revenues
9.5 % 8.8 % 8.5 % 8.5 % 8.3 % 8.6 % 8.6 %
General & administrative expenses 61,062 62,202 50,264 7,240 198,626 265,017 38,170
Minus: Share-based compensation (15,876) (8,092) (1,854) (267) (38,796) (72,483) (10,440)
Non-GAAP general & administrative expenses 45,186 54,110 48,410 6,973 159,830 192,534 27,730
% of net revenues
14.5 % 20.7 % 18.4 % 18.4 % 11.8 % 18.3 % 18.3 %
Research & development expenses 25,530 24,037 25,102 3,615 103,110 104,018 14,982
Minus: Share-based compensation (745) (262) (201) (29) (3,258) (3,828) (550)
Non-GAAP research & development expenses 24,785 23,775 24,901 3,586 99,852 100,190 14,432
% of net revenues
8.0 % 9.1 % 9.5 % 9.5 % 7.4 % 9.5 % 9.5 %
Non-GAAP operating loss — defined as GAAP operating loss before share-based compensation expense, transaction tax on assets transfer, impairment of long lived assets and impairment of long term investments
Operating loss (64,112) (99,478) (556,677) (80,178) (118,964) (922,591) (132,881)
Share-based compensation 18,259 8,601 2,685 387 48,606 85,025 12,246
Transaction tax on assets transfer 5,394 - - - 27,733 - -
Impairment of long lived assets - - 399,094 57,482 - 399,094 57,482
Impairment of long term investments - - 18,240 2,627 - 18,240 2,627
Non-GAAP operating loss (40,459) (90,877) (136,658) (19,682) (42,625) (420,232) (60,526)
Margin%
(13.0%) (34.7%) (51.9%) (51.9%) (3.1%) (39.9%) (39.9%)

About ChinaCache International Holdings Ltd.

ChinaCache International Holdings Ltd. (Nasdaq:CCIH) is a leading total solutions provider of Internet content and application delivery services in China. As a carrier-neutral service provider, ChinaCache's network in China is interconnected with networks operated by all telecom carriers, major non-carriers and local Internet service providers. With more than a decade of experience in developing solutions tailored to China's complex Internet infrastructure, ChinaCache is a partner of choice for businesses, government agencies and other enterprises to enhance the reliability and scalability of online services and applications and improve end-user experience. For more information on ChinaCache, please visit ir.chinacache.com.

Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. 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. Among other things, the revenue guidance and quotations from management in this announcement, as well as ChinaCache's strategic and operational plans, contain forward-looking statements. ChinaCache may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and ChinaCache undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries please contact:

Investor Relations Department
ChinaCache International Holdings
Tel: +86 10 6408 5306
Email: ir@chinacache.com

Mr. Ross Warner
The Piacente Group | Investor Relations
Tel: +86 10 5730-6200
Email: chinacache@tpg-ir.com

Ms. Brandi Piacente
The Piacente Group | Investor Relations
Tel: +1 212-481-2050
Email: chinacache@tpg-ir.com

Source:ChinaCache International Holdings Ltd.