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ChinaCache Reports Adjusted Fourth Quarter and Full Year 2016 Results

Announces Impairment to Property and Equipment and Intangible Assets

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.  

/EIN News/ -- 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 investments 1,106     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 tax 1,355     (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

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