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ChinaCache International Holdings Ltd. Announces Fourth Quarter And Full Fiscal Year 2012 Financial Results

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 outlook for the first quarter of 2013 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.

FINANCIAL TABLES

 
 
Condensed Consolidated Balance Sheets
(amounts in thousands)
         
         
  As of Dec 31 As of Sept 30 As of Dec 31 As of Dec 31
   2011  2012 2012 2012
   RMB   RMB   RMB   US$ 
  (Audited) (Unaudited) (Unaudited) (Unaudited)
ASSETS         
Current assets        
Cash and cash equivalents  392,535  274,142  317,137 50,904
Accounts receivable, net  156,215  276,262  230,199 36,949
Prepaid expenses and other current assets  23,412  17,975  31,240 5,014
Deferred tax assets  5,845  7,912  13,626 2187
Amounts due from a related party   --   8,640  8,640 1,387
Total current assets  578,007 584,931 600,842 96,441
         
Non-current assets         
Property & equipment, net  154,903  178,332  179,239 28,770
Acquired intangible assets, net   --   2,573  3,368 541
Long term investment  9,136 13,136 15,136 2,429
Available-for-sale investments  99,280  100,337  82,292 13,209
Deferred tax assets  2,750  2,934  6,166 990
Long-term deposits  2,932  3,847  13,847 2,223
Total non-current assets  269,001 301,159 300,048 48,162
         
         
Total Assets  847,008 886,090 900,890 144,603
         
LIABILITIES AND SHAREHOLDERS' EQUITY(DEFICIT)         
Current Liabilities         
Accounts payable   59,618  83,076  107,443  17,246
Accrued employee benefits   30,478  28,571  36,084  5,792
Accrued expenses and other payables   61,565  62,117  57,773  9,273
Income tax payable   16,150  16,074  22,537  3,617
Liabilities for uncertain tax positions   6,193  6,238  11,786  1,892
Dividend payable   130  --  --  --
Amounts due to related parties   18  18  18  3
Deferred government grants       3,360  539
Current portion of capital lease obligations   5,347  --  --  --
Total current liabilities  179,499 196,094 239,001 38,362
         
         
Total Liabilities  179,499 196,094 239,001 38,362
         
Total Shareholders' Equity   667,509  689,996  661,889  106,241
         
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  847,008 886,090 900,890 144,603
 
 
 
Condensed Consolidated Statements of Operations
(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, 2011 Sept 30, 2012 Dec 31, 2012 Dec 31, 2012 Dec 31, 2011 Dec 31, 2012 Dec 31, 2012
  RMB RMB RMB US$ RMB RMB US$
  (Audited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited)
               
Net revenues 179,610 209,202 225,019 36,118 618,422 813,732 130,613
Cost of revenues (126,375) (140,929) (157,372) (25,260) (432,736) (559,460) (89,800)
               
Gross profit 53,235 68,273 67,647 10,858 185,686 254,272 40,813
Sales & marketing expenses (22,249) (21,567) (27,376) (4,394) (72,040) (87,597) (14,060)
General & administrative expenses (17,353) (22,250) (43,225) (6,938) (57,308) (106,115) (17,033)
Research & development expenses (13,392) (18,575) (20,856) (3,348) (40,952) (68,523) (10,999)
Post-acquisition settlement consideration  --   --   --   --  (7,158)  --   -- 
               
Operating income/(loss) 241 5,881 (23,810) (3,822) 8,228 (7,963) (1,279)
Interest income 619 243 309 50 2,233 1,844 296
Interest expense (460) (209) (575) (92) (1,254) (1,340) (215)
Other expense, net (5,241) (443) (1,867) (300) (5,165) (1,758) (282)
Foreign exchange loss (826) (1,423) (994) (160) (4,411) (1,481) (238)
               
(Loss)/Income from continuing operations before income tax (expense)/benefit (5,667) 4,049 (26,937) (4,324) (369) (10,698) (1,718)
Income tax (expense)/benefit (5,734) (1,187) 266 43 (11,145) (6,293) (1,010)
               
(Loss)/income from continuing operations (11,401) 2,862 (26,671) (4,281) (11,514) (16,991) (2,728)
               
Discontinued operations               
Income from operations of discontinued component Jnet 30,931  --   --   --  31,977  --   -- 
               
Income from discontinued operation 30,931  --   --   --  31,977  --   -- 
               
               
Net income/(loss) attributable to ordinary shareholders 19,530 2,862 (26,671) (4,281) 20,463 (16,991) (2,728)
               
Foreign currency translation 326 81 77 12 785 29 5
Unrealized gain from available-for-sale investments 277 382 311 50 81 1,370 220
               
Total other comprehensive income, net of tax  603  463  388  62  866  1,399  225
               
Comprehensive income/(loss) 20,133 3,325 (26,283) (4,219) 21,329 (15,592) (2,503)
               
Earnings/(loss) per ordinary share:              
(Loss)/income from continuing operations (0.03) 0.01 (0.07) (0.01) (0.03) (0.05) (0.01)
Income from discontinued operations 0.08 0.00 0.00 0.00 0.08 0.00 0.00
Basic 0.05 0.01 (0.07) (0.01) 0.05 (0.05) (0.01)
               
(Loss)/income from continuing operations (0.03) 0.01 (0.07) (0.01) (0.03) (0.05) (0.01)
Income/(loss) from discontinued operations 0.08 0.00 0.00 0.00 0.08 0.00 0.00
Diluted 0.05 0.01 (0.07) (0.01) 0.05 (0.05) (0.01)
               
Earnings/(loss) per ADS:              
(Loss)/income from continuing operations (0.49) 0.13 (1.17) (0.19) (0.48) (0.75) (0.12)
Income/(loss) from discontinued operations 1.34 0.00 0.00 0.00 1.28 0.00 0.00
Basic 0.85 0.13 (1.17) (0.19) 0.80 (0.75) (0.12)
               
(Loss)/income from continuing operations (0.49) 0.12 (1.17) (0.19) (0.48) (0.75) (0.12)
Income/(loss) from discontinued operations 1.34 0.00 0.00 0.00 1.28 0.00 0.00
Diluted 0.85 0.12 (1.17) (0.19) 0.80 (0.75) (0.12)
               
Weighted average number of ordinary shares used in earnings/(loss) per share computation:              
Basic 370,512,795 364,104,587 363,282,183 363,282,183 381,984,517 363,780,875 363,780,875
Diluted 370,512,795 370,237,748 363,282,183 363,282,183 381,984,517 363,780,875 363,780,875
 
 
 
Supplementary Financial Data
(amounts in thousands, except for percentages)
               
               
  For the Three Months Ended For the Twelve Months Ended
  Dec 31, 2011 Sept 30, 2012 Dec 31, 2012 Dec 31, 2012 Dec 31, 2011 Dec 31, 2012 Dec 31, 2012
  RMB RMB RMB US$ RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
               
Cost of revenues breakdown:              
Bandwidth, co-location and storage fees 102,052 118,374 137,313 22,040 341,844 468,783 75,245
Depreciation of network equipment and amortization of acquired intangible assets 16,002 11,963 10,880 1,746 63,854 51,911 8,332
Payroll and other compensation costs of network operations personnel 5,668 6,745 7,673 1,232 17,837 25,427 4,081
Other cost of revenues 2,653 3,847 1,506 242 9,201 13,339 2,142
Total cost of revenues 126,375 140,929 157,372 25,260 432,736 559,460 89,800
               
Allocation of share-based compensation expenses:              
Cost of revenues 1,129  698  545 87  4,047 2,896 465
Sales and marketing expenses 2,698  1,669  1,300 209  9,669 6,917 1,110
General and administrative expenses 1,267  777  605 97  8,968 3,219 517
Research and development expenses 1,192  737  574 92  4,272 3,056 491
Total share-based compensation expenses 6,286 3,881 3,024 485 26,956 16,088 2,583
               
Depreciation and amortization expenses:              
Cost of revenues 16,002 11,963  10,880 1,746  63,854 51,911 8,332
Sales and marketing expenses 228 312  262 42  855 712 114
General and administrative expenses  475 282  414 66  1,073 1,171 188
Research and development expenses  598  1,674  2,464 395  2,099 6,096 978
Total depreciation and amortization expenses 17,303 14,231 14,020 2,249 67,881 59,890 9,612
               
Capital expenditures, related to additions of property and equipment 17,661 31,316 15,977 2,564 56,661 88,741 14,244
As a percentage of net revenues 9.8% 15.0% 7.1% 7.1% 9.2% 10.9% 10.9%
 
 
 
Supplementary Operating Metrics
(Unaudited)
                       
                               
  For the Three Months Ended For the Twelve Months ended
  Mar 31, 2010 Jun 30, 2010 Sept 30, 2010 Dec 31, 2010 Mar 31, 2011 Jun 30, 2011 Sept 30, 2011 Dec 31, 2011 Mar 31, 2012 Jun 30, 2012 Sept 30, 2012 Dec 31, 2012 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012
                               
Revenues breakdown by industry verticals                              
                               
Internet and software 30% 26% 23% 20% 21% 23% 20% 20% 20% 20% 20% 21% 22% 22% 20%
Mobile internet 16% 15% 18% 21% 19% 16% 17% 17% 17% 18% 18% 17% 20% 17% 18%
Media and entertainment 24% 29% 29% 30% 31% 31% 33% 33% 32% 30% 29% 30% 29% 31% 30%
Enterprises and e-commerce 25% 26% 27% 25% 26% 27% 26% 26% 27% 28% 29% 29% 25% 26% 28%
Government agencies 5% 4% 3% 4% 3% 3% 4% 4% 4% 4% 4% 3% 4% 4% 4%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
                               
Revenue contributed by Top 5 customers as a percentage of net revenues 35% 32% 33% 37% 37% 33% 32% 32% 24% 29% 22% 27% 34% 32% 26%
                               
Number of active customers 319 418 454 504 569 617 683 775 895 1,013 1,138 1,265 504 775 1,265
                               
Number of employees at period end 245 289 319 345 408 442 506 557 690 751 758 900 345 557 900
 
 
 
Supplementary Metrics - Reconciliations of Non-GAAP to GAAP Financial Measures
(amounts in thousands of RMB, 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, 2011 Sept 30, 2012 Dec 31, 2012 Dec 31, 2011 Dec 31, 2012
  RMB RMB RMB RMB RMB
           
Adjusted EBITDA – defined as EBITDA before share-based compensation expense, foreign exchange loss or gain, and post acquisition settlement consideration           
           
Net (loss)/income  (11,401)  2,862  (26,671)  (11,514)  (16,991)
Depreciation  17,265  14,231  14,020  67,345  59,890
Amortization  38  --   --   536  -- 
Interest expense  460  209  575  1,254  1,340
Interest income  (619)  (243)  (309)  (2,233)  (1,844)
Income tax expense/(benefit)  5,734  1,187  (266)  11,145  6,293
Share-based compensation  6,286  3,881  3,024  26,956  16,088
Foreign exchange loss  826  1,423  994  4,411  1,481
Penalties on uncertain tax positions  767  --   2,775  1,076  2,797
Post-acquisition settlement consideration  --   --   --   7,158  -- 
Adjusted EBITDA  19,356  23,550  (5,858)  106,134  69,054
Margin% 10.8% 11.3% (2.6%) 17.2% 8.5%
QoQ growth (37.7%) (3.3%) (124.9%) n/a  n/a 
YoY growth (31.8%) (24.2%) (130.3%) (0.3%) (34.9%)
           
Adjusted net income – defined as net income before share-based compensation expense, foreign exchange loss or gain, penalty on uncertain tax positions, and post acquisition settlement consideration           
           
Net (loss)/income  (11,401)  2,862  (26,671)  (11,514)  (16,991)
Share-based compensation  6,286  3,881  3,024  26,956  16,088
Foreign exchange loss  826  1,423  994  4,411  1,481
Penalties on uncertain tax positions  767  --   2,775  1,076  2,797
Post-acquisition settlement consideration  --   --   --   7,158  -- 
Adjusted net (loss)/income  (3,522)  8,166  (19,878)  28,087  3,375
Margin% (2.0%) 3.9% (8.8%) 4.5% 0.4%
QoQ growth (132.1%) 32.3% (343.4%) n/a  n/a 
YoY growth (121.3%) (25.5%) (464.5%) (53.5%) (88.0%)
           
  For the Three Months Ended For the Twelve Months Ended
  Dec 31, 2011 Sep 30, 2012 Dec 31, 2012 Dec 31, 2011 Dec 31, 2012
Non-GAAP gross profit – defined as gross profit before share-based compensation expense and depreciation and amortization          
           
Gross profit 53,235 68,273 67,647 185,686 254,272
Plus: depreciation and amortization  16,002  11,963  10,880  63,854  51,911
Plus: Share-based compensation  1,129  698  545  4,047  2,896
Non-GAAP gross profit  70,366  80,934  79,072  253,587  309,079
Margin% 39.2% 38.7% 35.1% 41.0% 38.0%
QoQ growth 5.9% 4.7% (2.3%) n/a n/a
YoY growth 31.8% 21.8% 12.4% 36.3% 21.9%
           
           
Non-GAAP operating expenses – defined as operating expenses before share-based compensation expense          
           
Sales & marketing expenses  22,249  21,567  27,376  72,040  87,597
Minus: Share-based compensation  (2,698)  (1,669)  (1,300)  (9,669)  (6,917)
Non-GAAP sales & marketing expenses  19,551  19,898  26,076  62,371  80,680
% of net revenues 10.9% 9.5% 11.6% 10.1% 9.9%
QoQ growth 22.9% 15.8% 31.0% n/a n/a
YoY growth 21.0% 25.1% 33.4% 35.6% 29.4%
           
General & administrative expenses  17,353  22,250  43,225  57,308  106,115
Minus: Share-based compensation  (1,267)  (777)  (605)  (8,968)  (3,219)
Non-GAAP general & administrative expenses  16,086  21,473  42,620  48,340  102,896
% of net revenues 9.0% 10.3% 18.9% 7.8% 12.6%
QoQ growth 36.9% (6.8%) 98.5% n/a n/a
YoY growth 101.2% 82.8% 165.0% 107.2% 112.9%
           
Research & development expenses  13,392  18,575  20,856  40,952  68,523
Minus: Share-based compensation  (1,192)  (737)  (574)  (4,272)  (3,056)
Non-GAAP research & development expenses  12,200  17,838  20,282  36,680  65,467
% of net revenues 6.8% 8.5% 9.0% 5.9% 8.0%
QoQ growth 27.3% 23.6% 13.7% n/a n/a
YoY growth 99.9% 86.1% 66.2% 119.5% 78.5%
           
Non-GAAP operating profit/(loss) – defined as GAAP operating profit/(loss) before share-based compensation expense and post acquisition settlement consideration          
           
Operating profit/(loss)  241  5,881  (23,810)  8,228  (7,963)
Plus: Share-based compensation  6,286  3,881  3,024  26,956  16,088
Plus: Post acquisition settlement consideration  --   --   --   7,158  -- 
Non-GAAP operating profit/(loss)  6,527  9,762  (20,786)  42,342  8,125
Margin% 3.6% 4.7% (9.2%) 6.8% 1.0%
QoQ growth (48.8%) 22.8% (312.9%) n/a  n/a 
YoY growth (24.6%) (23.5%) (418.4%) (5.7%) (80.8%)
           
           
Non-GAAP basic and diluted earnings per share and basic and diluted earnings per ADS is calculated based upon adjusted net income divided by weighted average number of ordinary shares          
           
Adjusted net (loss)/income  (3,522)  8,166  (19,878)  28,087  3,375
Weighted average number of ordinary shares used in earnings per share computation:          
Basic 370,512,795  364,104,587  363,282,183 381,984,517 363,780,875
Diluted 370,512,795  370,237,748  363,282,183 401,795,348 370,014,807
(Loss)/earnings per ordinary share:          
Basic (0.01) 0.02 (0.05) 0.07 0.01
Diluted (0.01) 0.02 (0.05) 0.07 0.01
(Loss)/earnings per ADS:          
Basic (0.15) 0.36 (0.88) 1.18 0.15
Diluted (0.15) 0.35 (0.88) 1.12 0.15
CONTACT: For investor and media inquiries please contact:
         
         Ms. Yujie Li
         Investor Relations
         ChinaCache International Holdings
         Tel: +86 (10) 6408 5305
         Email: ir@chinacache.com
         
         Mr. Lee Roth
         The Piacente Group | Investor Relations
         Tel: +1 212-481 2050
         Email: chinacache@tpg-ir.com

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