August 16, 2016

21Vianet Group, Inc. Reports Second Quarter 2016 Unaudited Financial Results

2016-08-16 16:05:00.0

BEIJING, Aug. 16, 2016 (GLOBE NEWSWIRE) -- 21Vianet Group, Inc. (Nasdaq:VNET) ("21Vianet" or the "Company"), a leading carrier-neutral internet data center services provider in China, today announced its unaudited financial results for the second quarter of 2016. The Company will hold a conference call at 8:00 p.m. Eastern Time on August 16, 2016. Dial-in details are provided at the end of the release.

Second Quarter 2016 Financial Highlights

  • Net revenues increased to RMB910.8 million (US$137.1 million) from RMB866.8 million in the comparative period in 2015

Mr. Steve Zhang, Chief Executive Officer of the Company, stated, "Despite headwinds in certain market segments, we are pleased to report that core business areas, including IDC, Cloud and VPN gained solid growth momentum in the second quarter. Following a slow start during the first quarter this year, new cabinet additions in our self-built data centers were back on track and utilization continued to trend up and we expect the momentum in our core IDC segment to continue.  Additionally, we are experiencing solid growth in our cloud business, driven by both steady growth from our existing Microsoft cloud business, as well as contributions from IBM cloud business. However, challenges in our managed network services ("MNS") segment remain, which we are proactively and aggressively addressing. As we continue to focus on our key growth areas and optimizing our revenue mix, we believe that we are well positioned to capture the tremendous growth potential in China and maintain our position as a leading internet infrastructure service provider in China."

Mr. Terry Wang, Chief Financial Officer of the Company, commented, "We see positive signs in terms of new business opportunities and cost control initiatives, even as pricing pressure continued to limit our top line growth in the managed network services. Our total revenues in the second quarter of 2016 increased to RMB910.8 million (US$137.1 million), primarily driven by improving year-over-year growth in the hosting related business, including IDC, Cloud and VPN services. Overall number of cabinets reached 24,098 during the quarter and those in our self-built data centers accounted for 69% of total. Utilization rate further improved to 76.2%, from 74.6% in the first quarter and 67.5% a year ago as cabinet billing growth remained strong. Further, we are pleased with our operations team's progress on cost control front, which is yet to be fully reflected in our quarterly financial results and should yield positive results in the coming quarters. With our core hosting business steadily growing, new business opportunities opening up and cost-control effort progressing, we remain confident to reignite margin growth going forward."

Second Quarter 2016 Financial Results

REVENUES: Net revenues for the second quarter of 2016 increased by 5.1% to RMB910.8 million (US$137.1 million) from RMB866.8 million in the comparative period in 2015, primarily driven by a year-over-year increase in IDC, Cloud and VPN revenues, partially offset by the decline in MNS revenues.

Net revenues from hosting and related services increased by 19.3% to RMB767.9 million (US$115.5 million) in the second quarter of 2016 from RMB643.7 million in the comparative period in 2015, primarily due to the year-over-year increase in total number of billable cabinets and improved utilization rate, partially offset by lower MRR, or monthly recurring revenue, per cabinet. Net revenues from MNS were RMB142.9 million (US$21.5 million) in the second quarter of 2016, compared with RMB223.1 million in the comparative period in 2015. The decrease is primarily due to the continued industry-wide decline in bandwidth prices and lower revenue contribution from Aipu, which is undergoing a business optimization process.

GROSS PROFIT: Gross profit for the second quarter of 2016 was RMB172.9 million (US$26.0 million), compared with RMB204.0 million in the comparative period in 2015. Gross margin for the second quarter of 2016 was 19.0%, compared with 23.5% in the comparative period in 2015. The decrease in gross margin was primarily due to continued weakness in the MNS business.

Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, was RMB200.8 million (US$30.2 million) in the second quarter of 2016, compared with RMB245.7 million in the comparative period in 2015. Adjusted gross margin was 22.0% in the second quarter of 2016, compared with 28.3% in the comparative period in 2015.

OPERATING EXPENSES: Total operating expenses increased to RMB300.5 million (US$45.2 million) in the second quarter of 2016 from RMB293.6 million in the comparative period in 2015. Adjusted operating expenses, which exclude share-based compensation expenses and changes in the fair value of contingent purchase consideration payable, increased to RMB313.4 million (US$47.2 million) from RMB209.5 million in the comparative period in 2015. As a percentage of net revenues, adjusted operating expenses were 34.4%, compared with 24.2% in the comparative period in 2015 and 25.5% in the first quarter of 2016.

Sales and marketing expenses increased by 7.0% to RMB83.5 million (US$12.6 million) in the second quarter of 2016 from RMB78.0 million in the comparative period in 2015.

General and administrative expenses increased by 19.5% to RMB199.4 million (US$30.0 million) in the second quarter of 2016 from RMB166.9 million in the comparative period in 2015, primarily due to an one-time bad debt provision and higher depreciation expense.

Research and development expenses increased by 2.9% to RMB33.0 million (US$5.0 million) in the second quarter of 2016 from RMB32.1 million in the comparative period in 2015.

Changes in the fair value of contingent purchase consideration payable was a gain of RMB15.3 million (US$2.3 million) in the second quarter of 2016, compared with a loss of RMB16.6 million in the comparative period in 2015.

ADJUSTED EBITDA: Adjusted EBITDA for the second quarter of 2016 was RMB15.5 million (US$2.3 million), compared with RMB149.4 million in the comparative period in 2015. The decrease in adjusted EBITDA was primarily due to a combination of lower gross profit and an aggregate one-time expense of RMB69.9 million (US$10.5 million), which included a change of bonus policy and accrual of bad debt provision. Adjusted EBITDA margin for the second quarter of 2016 was 1.7% compared with 17.2% in the comparative period in 2015 and 12.6% in the first quarter of 2016. Adjusted EBITDA for the second quarter of 2016 excludes a reversal of share-based compensation expenses of RMB8.7 million (US$1.3 million) and changes in the fair value of contingent purchase consideration payable which was a gain of RMB15.3 million (US$2.3 million).

Under the terms and conditions governing the Company's 6.875% Bonds due 2017 (the "Bonds"), the Company is required to maintain a ratio of Adjusted EBITDA to Consolidated Interest Expense of 2.75:1 or higher for the six month period ended June 30, 2016.  As a result of the decrease in Adjusted EBITDA, the Company will not be able to meet this requirement.  However, as mentioned above, the decrease in Adjusted EBITDA was primarily attributable to non-recurring factors and one-time expenses, the effect of which the Company believes to be temporary.  Notwithstanding the above, the Company intends to amend the offer to purchase announced on August 1, 2016 to include a consent solicitation for a waiver from the requirement to meet certain financial ratios under the Bonds for the period ended June 30, 2016.  The Company intends to fund the repurchase of the Bonds and consent fee, if any, with cash on hand and it currently has sufficient cash to repurchase or redeem the outstanding Bonds.  Details of the amended offer to purchase and consent solicitation will be announced at a later date.

NET PROFIT/LOSS: Net loss for the second quarter of 2016 was RMB123.8 million (US$18.6 million), compared with a net loss of RMB141.8 million in the comparative period in 2015.

Adjusted net loss for the second quarter of 2016 was RMB108.9 million (US$16.4 million) compared with an adjusted net loss of RMB16.0 million in the comparative period in 2015. Adjusted net loss in the second quarter of 2016 excludes a reversal of share-based compensation expenses of RMB8.7 million (US$1.3 million), amortization of intangible assets derived from acquisitions of RMB39.0 million (US$5.9 million), changes in the fair value of contingent purchase consideration payable which was a gain of RMB15.3 million (US$2.3 million) in aggregate. Adjusted net margin in the second quarter of 2016 was negative 12.0%, compared with negative 1.8% in the comparative period in 2015 and negative 8.6% in the first quarter of 2016.

LOSS PER SHARE: Diluted loss per ordinary share for the second quarter of 2016 was RMB0.22, which represents the equivalent of RMB1.32 (US$0.20) per American Depositary Share ("ADS"). Each ADS represents six ordinary shares. Adjusted diluted loss per share for the second quarter of 2016 was RMB0.19, which represents the equivalent of RMB1.14 (US$0.17) per ADS. Adjusted loss per share is calculated using adjusted net loss as discussed above divided by the weighted average number of shares.

As of June 30, 2016, the Company had a total of 683.1 million ordinary shares outstanding, or equivalent of 113.9 million ADSs.

BALANCE SHEET: As of June 30, 2016, the Company's cash and cash equivalents and short-term investment were RMB3.57 billion (US$537.2 million).

Second Quarter 2016 Operational Highlights

  • Monthly Recurring Revenues ("MRR") per cabinet was RMB8,793 in the second quarter of 2016, compared with RMB9,115 in the first quarter of 2016.
  • Total cabinets under management increased to 24,098 as of June 30, 2016 from 23,825 as of March 31, 2016, with 16,637 cabinets in the Company's self-built data centers and 7,461 cabinets in its partnered data centers.
  • Utilization rate was 76.2% in the second quarter of 2016, compared with 74.6% in the first quarter of 2016.
  • Hosting churn rate, which is based on the Company's core IDC business, was 1.06% in the second quarter of 2016, compared with 0.41% in the first quarter of 2016.

Recent Developments

On June 16, 2016, the Company announced new addition to the board, with Ms. Wei Yuan appointed as a director of the Company.

On June 30, 2016, the Company received a letter from Mr. Josh Sheng Chen ("Mr. Chen"), Chairman of the Board, Kingsoft Corporation Limited ("Kingsoft") and Tsinghua Unigroup International Co., Ltd. ("Unigroup", together with Mr. Chen and Kingsoft, the "Buyer Group"), stating that the Buyer Group would withdraw the non-binding going private proposal (the "Proposal") dated June 10, 2015, with immediate effect. On the same day, the Company announced a US$200 million share repurchase program which would be valid for the next 12 months from the date of announcement.

On July 6, 2016, the Company announced that 21Vianet and Kingsoft, a leading internet based software developer, distributor and service provider, have extended the strategic cooperation on data center cabinets leasing. The renewed agreement extends the term of the strategic cooperation on data center cabinets leasing by three years until January 2021.

Financial Outlook

For the third quarter of 2016, the Company expects net revenues to be in the range of RMB900 million to RMB940 million, representing approximately 0.4% year-over-year decline at the mid-point. Adjusted EBITDA is expected to be in the range of RMB40 million to RMB60 million, representing approximately 59% year-over-year decline at the mid-point.

For the full year 2016, the Company now expects net revenues to be in the range of RMB3.62 billion to RMB3.66 billion, representing approximately 0.2% growth over 2015 at the mid-point. Adjusted EBITDA for the full year 2016 is expected to be in the range of RMB240 million to RMB260 million, representing approximately 54% decline over 2015 at the mid-point. These forecasts reflect the Company's current and preliminary view, which may be subject to change.

Conference Call

The Company will hold a conference call on Tuesday, August 16, 2016 at 8:00 pm U.S. Eastern Time, or Wednesday, August 17, 2016 at 8:00 am Beijing Time to discuss the financial results.

Participants may access the call by dialing the following numbers:

United States:   +1-845-675-0438
International Toll Free:   +1-855-500-8701
China Domestic:   400-1200654
Hong Kong:   +852-3018-6776
Conference ID:   58092112

The replay will be accessible through August 24, 2016, by dialing the following numbers: 

United States Toll Free:   +1-855-452-5696
International:   +61-2-9003-4211
Conference ID:   58092112

A live and archived webcast of the conference call will be available through the Company's investor relation website at http://ir.21vianet.com.

Non-GAAP Disclosure

In evaluating its business, 21Vianet considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC as supplemental measure to review and assess its operating performance: adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net profit, adjusted net margin, adjusted EBITDA, adjusted EBITDA margin, adjusted basic earnings per share, adjusted diluted earnings per share, adjusted basic earnings per ADS and adjusted diluted earnings per ADS. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.

The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company's calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.646 to US$1.00, the noon buying rate in effect on June 30, 2016 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

Statement Regarding Unaudited Condensed Financial Information

The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information.

About 21Vianet

21Vianet Group, Inc. is a leading carrier-neutral Internet data center services provider in China. 21Vianet provides hosting and related services, managed network services, cloud services, content delivery network services, last-mile wired broadband services and business VPN services, improving the reliability, security and speed of its customers' Internet infrastructure. Customers may locate their servers and networking equipment in 21Vianet's data centers and connect to China's Internet backbone through 21Vianet's extensive fiber optic network. In addition, 21Vianet's proprietary smart routing technology enables customers' data to be delivered across the Internet in a faster and more reliable manner. 21Vianet operates in more than 30 cities throughout China, servicing a diversified and loyal base of more than 2,000 hosting enterprise customers that span numerous industries ranging from Internet companies to government entities and blue-chip enterprises to small- to mid-sized enterprises

Safe Harbor Statement

This announcement contains forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, quotations from management in this announcement as well as 21Vianet's strategic and operational plans contain forward-looking statements. 21Vianet may also make written or oral forward-looking statements in its reports filed with, 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. Statements that are not historical facts, including statements about 21Vianet's beliefs and expectations, are forward-looking statements. 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 statement, including but not limited to the following: 21Vianet's goals and strategies; 21Vianet's expansion plans; the expected growth of the data center services market; expectations regarding demand for, and market acceptance of, 21Vianet's services; 21Vianet's expectations regarding keeping and strengthening its relationships with customers; 21Vianet's plans to invest in research and development to enhance its solution and service offerings; and general economic and business conditions in the regions where 21Vianet provides solutions and services. Further information regarding these and other risks is included in 21Vianet's reports filed with, or furnished to, the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and 21Vianet undertakes no duty to update such information, except as required under applicable law.

 
21VIANET GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
     
  As of As of
  December 31, 2015 June 30, 2016
  RMB  RMB US$
  (Audited)  (Unaudited) (Unaudited)
Assets      
Current assets:      
Cash and cash equivalents   1,685,054     3,555,069     534,927  
Restricted cash   195,230     196,775     29,608  
Accounts and notes receivable, net   694,108     747,298     112,445  
Short-term investments   104,897     14,810     2,228  
Inventories   13,539     8,262     1,243  
Prepaid expenses and other current assets   642,553     818,449     123,152  
Deferred tax assets   31,113     38,926     5,857  
Amount due from related parties   105,137     153,727     23,131  
Total current assets   3,471,631     5,533,316     832,591  
Non-current assets:                  
Property and equipment, net   3,653,071     3,860,863     580,939  
Intangible assets, net   1,274,166     1,196,642     180,057  
Land use right, net   64,682     76,584     11,523  
Deferred tax assets   46,900     56,640     8,523  
Goodwill   1,755,970     1,755,970     264,219  
Long term investments   198,907     268,482     40,398  
Restricted cash   128,515     32,050     4,823  
Amount due from related parties   70,000     -     -  
Other non-current assets   183,868     216,820     32,625  
Total non-current assets   7,376,079     7,464,051     1,123,107  
Total assets   10,847,710     12,997,367     1,955,698  
Liabilities and Shareholders' Equity                  
Current liabilities:                  
Short-term bank borrowings   276,000     229,000     34,457  
Accounts and notes payable   482,622     572,317     86,116  
Accrued expenses and other payables   637,957     652,126     98,127  
Deferred revenue   342,105     341,290     51,353  
Advances from customers   185,800     161,636     24,321  
Income taxes payable   49,959     23,169     3,486  
Amounts due to related parties   397,588     198,109     29,809  
Current portion of long-term bank borrowings   38,803     39,020     5,871  
Current portion of capital lease obligations   140,488     208,438     31,363  
Current portion of deferred government grant   6,332     5,926     892  
Current portion of bonds payable   263,365     1,988,777     299,249  
Total current liabilities   2,821,019     4,419,808     665,044  
Non-current liabilities:                  
Long-term bank borrowings   103,421     197,321     29,691  
Deferred revenue   68,535     71,423     10,747  
Amounts due to related parties   27,384     -     -  
Unrecognized tax benefits   14,492     21,988     3,309  
Deferred tax liabilities   293,212     284,407     42,794  
Non-current portion of capital lease obligations   579,070     574,247     86,406  
Non-current portion of deferred government grant   31,288     28,702     4,319  
Bonds payable   1,984,685     -     -  
Mandatorily redeemable noncontrolling interests   100,000     -     -  
Total non-current liabilities   3,202,087     1,178,088     177,266  
                   
Redeemable noncontrolling interests   790,229     787,364     118,474  
                   
Shareholders' equity                  
Treasury stock   (193,142 )   (162,428 )   (24,440 )
Ordinary shares   34     45     7  
Additional paid-in capital   6,403,117     9,161,557     1,378,528  
Accumulated other comprehensive loss   (24,236 )   2,944     443  
Statutory reserves   63,174     63,174     9,506  
Accumulated deficit   (2,233,985)     (2,473,760)     (372,226)  
Total 21Vianet Group, Inc. shareholders' equity   4,014,962     6,591,532     991,818  
Noncontrolling interest   19,413     20,575     3,096  
Total shareholders' equity   4,034,375     6,612,107     994,914  
Total liabilities, redeemable noncontrolling interests and shareholders' equity   10,847,710     12,997,367     1,955,698  
                   

 

21VIANET GROUP, INC.        
CONSOLIDATED STATEMENTS OF OPERATIONS        
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data)        
                 
    Three months ended       Six months ended  
    June 30, 2015     March 31,2016     June 30, 2016       June 30, 2015     June 30, 2016  
    RMB     RMB     RMB     US$       RMB     RMB     US$  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)       (Unaudited)     (Unaudited)     (Unaudited)  
Net revenues                                            
Hosting and related services   643,709     706,126     767,930     115,549       1,256,937     1,474,056     221,799  
Managed network services   223,078     156,146     142,919     21,505       469,957     299,065     45,000  
Total net revenues   866,787     862,272     910,849     137,054       1,726,894     1,773,121     266,799  
Cost of revenues   (662,810)     (693,292)     (737,946)     (111,038)       (1,292,572)     (1,431,238)     (215,357)  
Gross profit   203,977     168,980     172,903     26,016       434,322     341,883     51,442  
Operating expenses                                            
Sales and marketing   (78,031 )   (77,315 )   (83,455 )   (12,557 )     (168,431 )   (160,770 )   (24,191 )
General and administrative   (166,885 )   (133,801 )   (199,368 )   (29,999 )     (296,093 )   (333,169 )   (50,132 )
Research and development   (32,059 )   (41,857 )   (32,976 )   (4,962 )     (66,090 )   (74,833 )   (11,260 )
Changes in the fair value of contingent purchase consideration payable   (16,643)     (1,481)     15,306     2,303       (37,589)     13,825     2,080  
Total operating expenses   (293,618)     (254,454)     (300,493)     (45,215)       (568,203)     (554,947)     (83,503)  
Other operating income   8,569     -     -     -       8,569     -     -  
Operating loss   (81,072 )   (85,474 )   (127,590 )   (19,199 )     (125,312 )   (213,064 )   (32,061 )
Interest income   20,449     8,882     3,641     548       34,279     12,523     1,884  
Interest expense   (71,664 )   (55,692 )   (52,755 )   (7,938 )     (143,531 )   (108,447 )   (16,318 )
Gain from equity method investment   123     1,201     19,374     2,915       11,418     20,575     3,096  
Other income   2,876     1,106     3,367     507       4,536     4,473     673  
Other expense   (183 )   (1,104 )   (12,510 )   (1,882 )     (1,134 )   (13,614 )   (2,048 )
Foreign exchange (loss) gain   (5,269)     (5,243)     24,224     3,645       4,898     18,981     2,856  
Loss before income taxes   (134,740 )   (136,324 )   (142,249 )   (21,404 )     (214,846 )   (278,573 )   (41,918 )
Income tax (expense) benefit   (7,091)     (14,994)     18,400     2,769       (15,654)     3,406     512  
Net loss   (141,831)     (151,318)     (123,849)     (18,635)       (230,500)     (275,167)     (41,406)  
Net (income) loss attributable to noncontrolling interest   (3,315)     8,518     26,874     4,044       (11,373)     35,392     5,325  
Net loss attributable to ordinary shareholders   (145,146 )   (142,800 )   (96,975 )   (14,591 )     (241,873 )   (239,775 )   (36,081 )
                                             
                                             
                                             
Loss per share                                            
Basic   (0.28 )   (0.28 )   (0.22 )   (0.03 )     (0.51 )   (0.50 )   (0.08 )
Diluted   (0.28 )   (0.28 )   (0.22 )   (0.03 )     (0.51 )   (0.50 )   (0.08 )
Shares used in loss per share computation                                            
Basic*   489,847,525     525,041,586     578,617,002     578,617,002       461,268,566     551,875,790     551,875,790  
Diluted*   489,847,525     525,041,586     578,617,002     578,617,002       461,268,566     551,875,790     551,875,790  
                                             
Loss per ADS (6 ordinary shares equal to 1 ADS)                                            
Basic   (1.68 )   (1.68 )   (1.32 )   (0.20 )     (3.06 )   (3.00 )   (0.45 )
Diluted   (1.68 )   (1.68 )   (1.32 )   (0.20 )     (3.06 )   (3.00 )   (0.45 )
                                             
* Shares used in loss per share/ADS computation were computed under weighted average method.

 

21VIANET GROUP, INC.        
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS        
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data)        
                 
    Three months ended       Six months ended  
    June 30, 2015     March 31,2016     June 30, 2016       June 30, 2015     June 30, 2016  
    RMB     RMB     RMB     US$       RMB     RMB     US$  
Gross profit   203,977     168,980     172,903     26,016       434,322     341,883     51,442  
Plus: share-based compensation expense   2,305     3,925     (11,073 )   (1,666 )     4,517     (7,148 )   (1,076 )
Plus: amortization of intangible assets derived from acquisitions   39,434     38,197     38,967     5,863       79,603     77,164     11,611  
                                             
Adjusted gross profit   245,716     211,102     200,797     30,213       518,442     411,899     61,977  
Adjusted gross margin   28.3 %   24.5 %   22.0 %   22.0 %     30.0 %   23.2 %   23.2 %
Operating expenses   (293,618 )   (254,454 )   (300,493 )   (45,215 )     (568,203 )   (554,947 )   (83,503 )
Plus: share-based compensation expense   67,496     33,468     2,355     354       111,740     35,823     5,390  
Plus: changes in the fair value of contingent purchase consideration payable   16,643     1,481     (15,306)     (2,303)       37,589     (13,825)     (2,080)  
Adjusted operating expenses   (209,479 )   (219,505 )   (313,444 )   (47,164 )     (418,874 )   (532,949 )   (80,193 )
Net loss   (141,831)     (151,318)     (123,849)     (18,635)       (230,500)     (275,167)     (41,406)  
Plus: share-based compensation expense   69,801     37,393     (8,718 )   (1,312 )     116,257     28,675     4,315  
Plus: amortization of intangible assets derived from acquisitions   39,434     38,197     38,967     5,863       79,603     77,164     11,611  
                                             
Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact   16,643     1,976     (15,306)     (2,303)       37,589     (13,330)     (2,006)  
Adjusted net (loss) profit   (15,953 )   (73,752 )   (108,906 )   (16,387 )     2,949     (182,658 )   (27,486 )
Adjusted net margin   -1.8 %   -8.6 %   -12.0 %   -12.0 %     0.2 %   -10.3 %   -10.3 %
Net loss     (141,831 )   (151,318 )   (123,849 )   (18,635 )     (230,500 )   (275,167 )   (41,406 )
Minus: Provision for income taxes   (7,091 )   (14,994 )   18,400     2,769       (15,654 )   3,406     512  
Minus: Interest income   20,449     8,882     3,641     548       34,279     12,523     1,884  
Minus: Interest expenses   (71,664 )   (55,692 )   (52,755 )   (7,938 )     (143,531 )   (108,447 )   (16,318 )
Minus: Exchange (loss) gain   (5,269 )   (5,243 )   24,224     3,645       4,898     18,981     2,856  
Minus: Gain from equity method investment   123     1,201     19,374     2,915       11,418     20,575     3,096  
Minus: Other income   2,876     1,106     3,367     507       4,536     4,473     673  
Minus: Other expenses   (183 )   (1,104 )   (12,510 )   (1,882 )     (1,134 )   (13,614 )   (2,048 )
Plus: depreciation   98,462     108,940     118,195     17,785       192,340     227,135     34,177  
Plus: amortization   45,517     46,222     48,892     7,357       95,393     95,114     14,312  
Plus: share-based compensation expense   69,801     37,393     (8,718 )   (1,312 )     116,257     28,675     4,315  
Plus: changes in the fair value of contingent purchase consideration payable   16,643     1,481     (15,306)     (2,303)       37,589     (13,825)     (2,080)  
Adjusted EBITDA   149,351     108,562     15,473     2,328       316,267     124,035     18,663  
Adjusted EBITDA margin   17.2 %   12.6 %   1.7 %   1.7 %     18.3 %   7.0 %   7.0 %
                                             
                                             
                                             
Adjusted net (loss) profit   (15,953 )   (73,752 )   (108,906 )   (16,387 )     2,949     (182,658 )   (27,486 )
Less: Net (profit) loss attributable to noncontrolling interest   (3,315 )   8,518     26,874     4,044       (11,373 )   35,392     5,325  
Adjusted net loss attributable to the Company's ordinary shareholders   (19,268 )   (65,234 )   (82,032 )   (12,343 )     (8,424 )   (147,266 )   (22,161 )
                 
Adjusted loss per share                
Basic   (0.02 )   (0.14 )   (0.19 )   (0.03 )     (0.00 )   (0.33 )   (0.05 )
Diluted   (0.02 )   (0.14 )   (0.19 )   (0.03 )     (0.00 )   (0.33 )   (0.05 )
Shares used in adjusted loss per share computation:                
Basic*   489,847,525     525,041,586     578,617,002     578,617,002       461,268,566     551,875,790     551,875,790  
Diluted*   489,847,525     525,041,586     578,617,002     578,617,002       461,268,566     551,875,790     551,875,790  
                 
Adjusted loss per ADS (6 ordinary shares equal to 1 ADS)                
Basic   (0.12 )   (0.84 )   (1.14 )   (0.17 )     (0.00 )   (1.98 )   (0.30 )
Diluted   (0.12 )   (0.84 )   (1.14 )   (0.17 )     (0.00 )   (1.98 )   (0.30 )
                 
* Shares used in adjusted loss/ADS per share computation were computed under weighted average method.

 

21VIANET GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
           
      Three months ended  
    March 31, 2016     June 30, 2016  
    RMB     RMB     US$  
    (Unaudited)     (Unaudited)     (Unaudited)  
 CASH FLOWS FROM OPERATING ACTIVITIES                  
Net loss   (151,318 )   (123,849 )   (18,635 )
 Adjustments to reconcile net loss to net cash generated from
  operating activities:
                 
Foreign exchange loss (gain)   5,243     (24,224 )   (3,645 )
Changes in the fair value of contingent purchase consideration
  payable
  1,481     (15,306 )   (2,303 )
Depreciation of property and equipment   108,940     118,195     17,785  
Amortization of intangible assets   45,760     47,661     7,171  
Provision for doubtful accounts and other receivables   26     44,741     6,732  
Share-based compensation expense   37,393     (8,718 )   (1,312 )
Deferred income taxes benefit   (896 )   (25,462 )   (3,831 )
Gain from equity method investment   (1,201 )   (19,374 )   (2,915 )
 Changes in operating assets and liabilities                  
Restricted cash   17,463     72,707     10,940  
Inventories   1,913     3,364     506  
Accounts and notes receivable   (68,477 )   8,634     1,299  
Unrecognized tax expense   915     6,581     990  
Prepaid expenses and other current assets   (105,642 )   (65,502 )   (9,856 )
Amounts due from related parties   16,226     (17,986 )   (2,706 )
Accounts and notes payable   64,183     25,512     3,839  
Accrued expenses and other payables   (3,812 )   54,268     8,166  
Deferred revenue   (895 )   2,968     447  
Advances from customers   8,476     (32,640 )   (4,911 )
Income taxes payable   8,427     (35,217 )   (5,299 )
Amounts due to related parties   (1,080 )   (233 )   (35 )
Deferred government grants   (1,611)     (1,381)     (208)  
 Net cash (used in) generated from operating activities   (18,486)     14,739     2,219  
 CASH FLOWS FROM INVESTING ACTIVITIES                  
Purchases of property and equipment   (140,963 )   (156,703 )   (23,579 )
Purchases of intangible assets   (4,988 )   (15,410 )   (2,319 )
Prepayment for future asset acquisition   -     (24,381 )   (3,669 )
Receipt of loans from third parties   3,279     -     -  
Payments for short-term investments   (11,280 )   (933 )   (140 )
Proceeds received from maturity of short-term investments   102,300     -     -  
Payments for long-term investments   -     (49,000)     (7,373)  
 Net cash used in investing activities   (51,652)     (246,427)     (37,080)  
 CASH FLOWS FROM FINANCING ACTIVITIES                  
Proceeds from shareholders   -     2,548,695     383,499  
Proceeds from exercise of stock options   1,956     1,491     224  
Proceeds from long-term bank borrowings   51,500     58,850     8,855  
Proceeds from short-term bank borrowings   65,000     53,000     7,975  
Repayments of short-term bank borrowings   (100,000 )   (65,000 )   (9,780 )
Repayments of long-term bank borrowings   (2,944 )   (13,289 )   (2,000 )
Repayments of 2016 Bonds   (264,250 )   -     -  
Consideration paid to selling shareholders   (2,475 )   -     -  
Prepayment for shares repurchase plan   -     (39,787 )   (5,987 )
Payments for capital leases   (34,594 )   (39,105 )   (5,884 )
Repayments for Mandatorily redeemable noncontrolling interests   (100,000)     -     -  
 Net cash (used in) generated from financing activities   (385,807)     2,504,855     376,902  
 Effect of foreign exchange rate changes on cash and short
  term investments
  (5,294 )   58,087     8,740  
 Net (decrease) increase in cash and cash equivalents   (461,239 )   2,331,254     350,781  
 Cash and cash equivalents at beginning of period   1,685,054     1,223,815     184,146  
 Cash and cash equivalents at end of period   1,223,815     3,555,069     534,927  
                   
Investor Relations Contacts:

21Vianet Group, Inc.
Eric Chu, CFA
+1 908 707 2062
IR@21Vianet.com

Qing Liu
+86 10 8456 2121
IR@21Vianet.com

ICR, Inc.
Violet Gu
+1 (646) 405-4922
IR@21Vianet.com

 

 

 

 

 

 


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