21Vianet Group, Inc.
21Vianet Group, Inc. (Form: 6-K, Received: 03/20/2018 12:31:10)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2018

Commission File Number: 001-35126

 

 

21Vianet Group, Inc.

 

 

M5, 1 Jiuxianqiao East Road,

Chaoyang District

Beijing 100016

The People’s Republic of China

(86 10) 8456 2121

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

21Vianet Group, Inc.
By :  

/s/ Sharon Xiao Liu

Name :   Sharon Xiao Liu
Title :   Chief Financial Officer

Date: March 20, 2018


Exhibit Index

Exhibit 99.1 — Press Release

Exhibit 99.1

21Vianet Group, Inc. Reports Unaudited Fourth Quarter

and Full Year 2017 Financial Results

Adjusted EBITDA up 228.9% YoY to RMB171.0 million

Adjusted EBITDA margin expanded to 22.3% from 5.8% in prior year period

BEIJING, March 13, 2018 (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 fourth quarter and full year ended December 31, 2017. The Company will hold a conference call at 8:00 pm on Monday, March 12, 2018 U.S. Eastern Time to discuss the financial results. Dial-in details are provided at the end of this release.

Fourth Quarter 2017 Financial Highlights

 

    Net revenues for hosting and related services increased by 8.9% year over year to RMB765.8  million (US$117.7 million).

 

    Gross profit increased by 9.2% year over year to RMB200.2 million (US$30.8 million). Gross margin expanded to 26.1% from 20.4% in the same period in 2016.

 

    Adjusted EBITDA increased by 228.9% year over year to RMB171.0 million (US$26.3 million). Adjusted EBITDA margin expanded to 22.3% from 5.8% in the same period of 2016.

Mr.  Steve Zhang, Co-Chief Executive Officer of the Company, stated, “2017 was an exciting and milestone year for 21Vianet. We completed the restructuring of the Company by optimizing and then ultimately divesting our loss-generating managed network services (MNS) business, which allows us to fully focus our resources on our core hosting and related services business. During the past quarter, we further expanded our client base, including new relationships with Meitu, Douyu, and 99Bill, while many of our large clients, such as Xiaomi, Momo, Huawei and Lianjia, continued to expand their capacity at our IDC centers. As China’s internet companies migrate from public cloud to the hybrid cloud, their demand for customized cloud solutions rose continuously throughout 2017. To satisfy our customers’ specific requirements, we have proactively expanded our service offerings with more customized solutions. We are confident that our carrier- and cloud-neutral solutions coupled with customization will enable us to capitalize on rising demand and solidify our leadership position in this blooming Chinese market.”

Ms. Sharon Liu, Chief Financial Officer of the Company, commented, “We are pleased to once again deliver better-than-expected financial and operating results in the fourth quarter. Our revenue from the core hosting and related services business increased by 8.9% to RMB765.8 million and our Adjusted EBIDTA increased by 228.9% to RMB171.0  million, both of which exceeded the upper end of our guidance. Furthermore, in December of last year, we successfully completed the divestiture of the remaining equity stake in Sichuan Aipu Network Co. Ltd (“Aipu”), as well as the elimination of the Aipu put option. As we move toward a leaner business model with an improved cost structure, we expect our financial and operating metrics to show continued improvement going forward.”

Fourth Quarter 2017 Financial Results

REVENUES: Total net revenues were RMB765.8 million (US$117.7 million) in the fourth quarter of 2017, compared to RMB900.6  million in the same period in 2016. The decrease in net revenues was due to the discontinuation of the Company’s MNS business following the completion of the divestiture in the third quarter of 2017.

Net revenues for hosting and related services, which represent 100% of the company’s total net revenues in the fourth quarter of 2017, increased by 8.9% year over year to RMB765.8  million (US$117.7 million) in 1the fourth quarter of 2017 from RMB703.2 million in the same period in 2016. The increase was primarily due to the growth in revenues from the Company’s business lines of hosting and related services.


GROSS PROFIT : Gross profit increased by 9.2% to RMB200.2 million (US$30.8 million) in the fourth quarter of 2017 from RMB183.4 million in the same period in 2016. Gross margin increased to 26.1% in the fourth quarter of 2017 from 20.4% in the same period in 2016. The increase was primarily due to the divestiture of the MNS business and execution of the Company’s cost control strategies.

Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, was RMB211.1  million (US$32.4 million) in the fourth quarter of 2017, compared to RMB222.6  million in the same period in 2016. Adjusted gross margin expanded to 27.6% in the fourth quarter of 2017 from 24.7% in the same period in 2016.

OPERATING EXPENSES: Total operating expenses were RMB192.4 million (US$29.6 million) in the fourth quarter of 2017, compared to RMB690.4 million in the same period in 2016. The decrease in operating expenses was primarily due to the divestiture of the MNS business and the execution of the Company’s cost control strategies.

Adjusted operating expenses, which exclude impairment of long-lived assets, impairment of goodwill, share-based compensation expenses and changes in the fair value of contingent purchase consideration payable, decreased by 44.1% to RMB173.2  million (US$26.6 million) in the fourth quarter of 2017 from RMB309.8  million in the same period in 2016. As a percentage of net revenues, adjusted operating expenses decreased to 22.6% in the fourth quarter of 2017 from 34.4% in the same period in 2016.

Sales and marketing expenses decreased by 53.6% to RMB42.7  million (US$6.6 million) in the fourth quarter of 2017 from RMB92.0  million in the same period in 2016. The decrease was primarily due to the divesture of our MNS business

General and administrative expenses decreased by 38.2% to RMB115.4  million (US$17.7 million) in the fourth quarter of 2017 from RMB186.7  million in the same period in 2016. The decrease was primarily due to the divesture of our MNS business and a reduction in headcount.

Research and development expenses were RMB29.3  million (US$4.5 million) in the fourth quarter of 2017, compared to RMB38.4  million in the same period in 2016. The decrease was primarily due to the divesture of our MNS business.

Changes in the fair value of contingent purchase consideration payable was a loss of RMB3.8  million (US$0.6 million) in the fourth quarter of 2017, compared to a gain of RMB67.2  million in the same period in 2016.

ADJUSTED EBITDA: Adjusted EBITDA for the fourth quarter of 2017 increased by 228.9% to RMB171.0 million (US$26.3 million), from RMB52.0  million in the same period in 2016. Adjusted EBITDA margin expanded to 22.3% in the fourth quarter of 2017 from 5.8% in the same period in 2016. Adjusted EBITDA for the fourth quarter of 2017 excludes disposal gain of subsidiaries of RMB677.1  million (US$104.1 million), share-based compensation expense of RMB15.4  million (US$2.4 million), and changes in the fair value of contingent purchase consideration payable which was a loss of RMB3.8  million (US$0.6million).

NET PROFIT/LOSS: Net profit was RMB797.6 million (US$122.6 million) in the fourth quarter of 2017, compared to a net loss of RMB485.2  million in the same period in 2016. The increase in net profit was primarily due to a one-off gain from the disposal of subsidiaries of RMB677.1  million (US$104.1 million).

Adjusted net profit for the fourth quarter of 2017 was RMB51.6  million (US$7.9 million), as compared with an adjusted net loss of RMB70.6  million in the same period in 2016. Adjusted net profit in the fourth quarter of 2017 excludes share-based compensation expense of RMB15.4  million (US$2.4 million), amortization of intangible assets derived from acquisitions of RMB10.8  million (US$1.7 million), changes in the fair value of contingent purchase consideration payable and related deferred tax impact of RMB3.8 million (US$ 0.6 million), disposal gain of subsidiaries of RMB677.1  million (US$104.1 million), impairment of long-term investment of RMB0.1  million (US$21 thousand), tax impact for the reconciliation adjustments of RMB4.6  million (US$0.7 million),and tax impact for the disposal of long-term investment of RMB94.2  million (US$14.5 million). Adjusted net margin was positive 6.7% in the fourth quarter of 2017, as compared to negative 7.8% in the same period in 2016.


PROFIT PER SHARE: Diluted profit per share was RMB1.18 (US$0.18) in the fourth quarter of 2017, which represents the equivalent of RMB7.08 (US$1.09) per American Depositary Share (“ADS”). Each ADS represents six ordinary shares.

Adjusted diluted profit per share was RMB0.08 (US$0.01) in the fourth quarter of 2017, which represents the equivalent of RMB0.48 (US$0.06) per ADS. Adjusted diluted profit per share is calculated using adjusted net profit divided by the weighted average number of shares.

As of December  31, 2017, the Company had a total of 675.5  million diluted ordinary shares outstanding, or the equivalent of 112.6 million ADS.

As of December  31, 2017, the Company’s cash and cash equivalents and short-term investment were RMB2,498.5  million (US$384.0 million).

Net cash generated from operating activities was RMB106.3 million (US$16.3 million) in the fourth quarter of 2017.

Full Year 2017 Financial Performance

For the full year of 2017, net revenues for hosting and related services increased to RMB2.98  billion (US$457.3 million) from RMB2.67  billion in the prior year. Adjusted EBITDA for the full year was RMB514.9  million (US$79.1 million), as compared with RMB243.9  million in the prior year. Adjusted EBITDA margin was 15.2%, as compared with 6.7% in the prior year. Adjusted EBITDA for the full year excludes share-based compensation expenses of RMB47.1  million (US$7.2 million), changes in the fair value of contingent purchase consideration payable which was a loss of RMB0.9  million (US$0.1 million), impairment of long-lived assets of RMB401.8  million (US$61.8 million), and impairment of goodwill of RMB766.4  million (US$117.8 million). Adjusted net loss for the full year was RMB190.8  million (US$29.3 million), as compared with RMB359.1  million in the prior year. Adjusted net loss in the full year excludes share-based compensation expense of RMB47.1 million (US$7.2 million), amortization of intangible assets derived from acquisitions of RMB104.3 million (US$16.0 million), changes in the fair value of contingent purchase consideration payable and related deferred tax impact of RMB0.9 million (US$0.1 million), impairment of long-lived assets of RMB401.8  million (US$61.8 million), impairment of goodwill of RMB766.4  million (US$117.8 million), disposal gain of subsidiaries of RMB497.0  million (US$76.4 million), impairment of long-term investment of RMB20.3  million (US$3.1 million), tax impact for the reconciliation adjustments of RMB22.8  million (US$3.5million), and tax impact for the disposal of long-term investment of RMB94.2  million (US$14.5million). Adjusted diluted loss per share for the full year of 2017 was RMB0.28 (US$0.04), which represents the equivalent of RMB1.68 (US$0.24) per ADS.

Fourth Quarter 2017 Operational Highlights

 

    Monthly Recurring Revenues for the Company’s hosting and related services business per cabinet was RMB 7,766 in the fourth quarter of 2017, compared to RMB 7,878 in the fourth quarter of 2016 and RMB 7,817 in the third quarter of 2017.

 

    Total cabinets under management increased to 29,080 as of December 31, 2017 from 27,424 as of September  30, 2017, with 23,823 cabinets in the Company’s self-built data centers and 5,257 cabinets in its partnered data centers.

 

    Utilization rate was 75.7 % in the fourth quarter of 2017, compared to 73.8  % in the third quarter of 2017.

 

    Hosting churn rate, which is based on the Company’s core IDC business, was 0.18% in the fourth quarter of 2017, compared to 0.97% in the third quarter of 2017.


Recent Developments

On December 20, 2017, the Company announced completion of its divestiture of all remaining equity interest in Aipu and elimination of related put options.

On January 9, 2018, the Company announced that Mr.  Terry Wang has resigned due to personal reasons and Ms.  Sharon Xiao Liu assumed the position of Chief Financial Officer following his departure.

On February  5, 2018, the Company announced the addition of Mr.  Alvin Wang to its leadership team as co-CEO to strengthen its cooperation with its shareholders and to foster strategic partnerships with various external parties.

Financial Outlook

The following forecast reflects the Company’s current and preliminary view on the market and its operational conditions, which is subject to change.

For the first quarter of 2018, the Company expects net revenues to be in the range of RMB770  million to RMB790  million. Adjusted EBITDA is expected to be in the range of RMB178  million to RMB190  million.

For the full year of 2018, the Company now expects net revenues to be in the range of RMB3.25  billion to RMB3.35  billion. Adjusted EBITDA for the full year 2018 is expected to be in the range of RMB750  million to RMB830  million.

Conference Call

The Company will hold a conference call at 8:00 pm on Monday, March  12, 2018 U.S. Eastern Time, or 8:00 am on Tuesday, March  13, 2018 Beijing Time to discuss the financial results.

 

Participants may access the call by dialing the following numbers:
United States Toll Free:   +1-855-500-8701
International:   +65-6713-5440
China Domestic:   400-120-0654
Hong Kong:   +852-3018-6776
Conference ID:   1299086

The replay will be accessible through March  19, 2018 by dialing the following numbers:

United States Toll Free:   +1-855-452-5696
International:   +61-2-9003-4211
Conference ID:   1299086

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 RMB6.5063 to US$1.00, the noon buying rate in effect on December 31, 2017 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, cloud 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. 21Vianet operates in more than 30 cities throughout China, servicing a diversified and loyal base of more than 4,000 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.


Investor Relations Contacts:

21Vianet Group, Inc.

Calvin Jiang

+86 10 8456 2121

IR@21Vianet.com

ICR, Inc.

Jack Wang

+1 (646) 405-4922

IR@21Vianet.com


21VIANET GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))

 

     As of     As of  
     December 31, 2016     December 31, 2017  
     RMB     RMB     US$  
     (Audited)     (Unaudited)     (Unaudited)  

Assets

      

Current assets:

      

Cash and cash equivalents

     1,297,418       1,949,631       299,653  

Restricted cash

     1,963,561       242,494       37,271  

Accounts and notes receivable, net

     655,459       455,811       70,057  

Short-term investments

     277,946       548,890       84,363  

Inventories

     4,431       710       109  

Prepaid expenses and other current assets

     777,131       933,750       143,514  

Amount due from related parties

     182,615       114,256       17,561  
  

 

 

   

 

 

   

 

 

 

Total current assets

     5,158,561       4,245,542       652,528  

Non-current assets:

      

Property and equipment, net

     3,781,613       3,319,424       510,186  

Intangible assets, net

     977,341       401,115       61,650  

Land use rights, net

     167,646       163,671       25,156  

Deferred tax assets

     100,676       172,818       26,562  

Goodwill

     1,755,970       989,530       152,088  

Long term investments

     298,871       510,926       78,528  

Restricted cash

     33,544       3,344       514  

Amount due from related parties

     —         20,210       3,106  

Other non-current assets

     147,302       81,581       12,539  
  

 

 

   

 

 

   

 

 

 

Total non-current assets

     7,262,963       5,662,619       870,329  
  

 

 

   

 

 

   

 

 

 

Total assets

     12,421,524       9,908,161       1,522,857  
  

 

 

   

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

      

Current liabilities:

      

Short-term bank borrowings

     1,683,676       50,000       7,685  

Accounts and notes payable

     529,569       252,892       38,869  

Accrued expenses and other payables

     787,916       657,133       100,999  

Deferred revenue

     320,023       55,753       8,569  

Advances from customers

     201,397       403,244       61,977  

Income taxes payable

     21,899       13,309       2,046  

Amounts due to related parties

     121,928       55,675       8,557  

Current portion of long-term bank borrowings

     39,303       70,289       10,803  

Current portion of capital lease obligations

     243,723       201,315       30,942  

Current portion of deferred government grant

     5,107       4,574       703  

Current portion of bonds payable

     419,316       11,139       1,712  
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     4,373,857       1,775,323       272,862  

Non-current liabilities:

      

Long-term bank borrowings

     268,221       187,638       28,839  

Deferred revenue

     62,531       —         —    

Unrecognized tax benefits

     28,689       16,511       2,538  

Deferred tax liabilities

     274,700       190,873       29,337  

Non-current portion of capital lease obligations

     536,623       600,882       92,354  

Non-current portion of deferred government grant

     25,886       17,861       2,745  

Bonds payable

     —         1,918,069       294,802  
  

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     1,196,650       2,931,834       450,615  

Redeemable noncontrolling interests

     700,000       —         —    

Shareholders’ equity

      

Treasury stock

     (204,557     (337,683     (51,901

Ordinary shares

     45       46       7  

Additional paid-in capital

     9,015,846       8,980,407       1,380,263  

Accumulated other comprehensive gain

     118,290       (2,673     (411

Statutory reserves

     64,622       38,736       5,954  

Accumulated deficit

     (2,869,031     (3,629,300     (557,813
  

 

 

   

 

 

   

 

 

 

Total 21Vianet Group, Inc. shareholders’ equity

     6,125,215       5,049,533       776,099  

Noncontrolling interest

     25,802       151,471       23,281  
  

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     6,151,017       5,201,004       799,380  
  

 

 

   

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interests and shareholders’ equity

     12,421,524       9,908,161       1,522,857  
  

 

 

   

 

 

   

 

 

 


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     Twelve months ended  
    December 31,
2016
    September 30,
2017
   

December 31,

2017

    December 31,
2016
   

December 31,

2017

 
    RMB     RMB     RMB     US$     RMB     RMB     US$  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Net revenues

             

Hosting and related services

    703,171       759,255       765,814       117,703       2,668,655       2,975,178       457,276  

Managed network services

    197,476       126,780       —         —         973,119       417,527       64,173  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

    900,647       886,035       765,814       117,703       3,641,774       3,392,705       521,449  

Cost of revenues

    (717,276     (696,234     (565,645     (86,938     (2,929,638     (2,634,295     (404,884
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    183,371       189,801       200,169       30,765       712,136       758,410       116,565  

Operating expenses

             

Sales and marketing

    (92,018     (77,268     (42,702     (6,563     (352,926     (256,682     (39,451

Research and development

    (38,425     (38,308     (29,340     (4,509     (149,337     (149,143     (22,923

General and administrative

    (186,744     (129,683     (115,351     (17,729     (639,648     (519,950     (79,915

Bad debt provision

    (47,450     (4,366     (1,147     (176     (117,564     (37,427     (5,752

Changes in the fair value of contingent purchase consideration payable

    67,197       (1,002     (3,834     (589     93,307       (937     (144

Impairment of long-lived assets

    (392,947     (401,808     —         —         (392,947     (401,808     (61,757

Impairment of goodwill

    —         (766,440     —         —         —         (766,440     (117,800
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    (690,387     (1,418,875     (192,374     (29,566     (1,559,115     (2,132,387     (327,742

Other operating income

    —         5,439       —         —         6,783       5,439       836  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) profit

    (507,016     (1,223,635     7,795       1,199       (840,196     (1,368,538     (210,341

Interest income

    4,839       6,664       10,821       1,663       21,078       32,925       5,060  

Interest expense

    (40,652     (57,417     (50,836     (7,813     (198,589     (185,313     (28,482

Impairment of long-term investment

    —         (20,397     139       21       —         (20,258     (3,114

Disposal (loss) gain of subsidiaries

    —         (180,048     677,084       104,066       —         497,036       76,393  

Other income

    555       7,220       3,260       501       28,922       16,764       2,577  

Other expense

    (1,825     (12,630     (232     (36     (16,449     (17,060     (2,622

Foreign exchange gain (loss)

    28,849       (5,628     4,328       665       56,341       (17,153     (2,636

Loss on debt extinguishment

    —         —         —         —         (29,841     —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) profit before income taxes and gain from equity method investments

    (515,250     (1,485,871     652,359       100,266       (978,734     (1,061,597     (163,165

Income tax benefit/(expense)

    17,818       (19,794     127,478       19,593       11,160       90,170       13,859  

Gain from equity method investments

    12,225       26,546       17,732       2,725       35,652       53,783       8,266  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) profit

    (485,207     (1,479,119     797,569       122,584       (931,922     (917,644     (141,040

Net loss attributable to noncontrolling interest

    225,353       104,354       1,073       165       298,324       144,914       22,273  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) profit attributable to ordinary shareholders

    (259,854     (1,374,765     798,642       122,749       (633,598     (772,730     (118,767
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) profit per share

             

Basic

    (0.69     (2.20     1.19       0.18       (1.37     (1.36     (0.21

Diluted

    (0.69     (2.20     1.18       0.18       (1.37     (1.36     (0.21

Shares used in (loss) profit per share computation

             

Basic*

    681,210,352       670,701,497       671,279,121       671,279,121       617,169,833       672,836,226       672,836,226  

Diluted*

    681,210,352       670,701,497       675,505,879       675,505,879       617,169,833       672,836,226       672,836,226  

(Loss) profit per ADS (6 ordinary shares equal to 1 ADS)

             

Basic

    (4.14     (13.20     7.14       1.10       (8.22     (8.16     (1.26

Diluted

    (4.14     (13.20     7.08       1.09       (8.22     (8.16     (1.26

 

* Shares used in (loss) profit 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     Twelve months ended  
   

December 31,

2016

   

September 30,

2017

   

December 31,

2017

   

December 31,

2016

   

December 31,

2017

 
    RMB     RMB     RMB     US$     RMB     RMB     US$  

Gross profit

    183,371       189,801       200,169       30,765       712,136       758,410       116,565  

Plus: share-based compensation expense

    1,865       (181     84       13       (4,110     (277     (43

Plus: amortization of intangible assets derived from acquisitions

    37,369       30,848       10,797       1,659       151,037       104,275       16,027  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted gross profit

    222,605       220,468       211,050       32,437       859,063       862,408       132,549  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted gross margin

    24.7     24.9     27.6     27.6     23.6     25.4     25.4

Operating expenses

    (690,387     (1,413,436     (192,374     (29,566     (1,552,332     (2,126,948     (326,906

Plus: share-based compensation expense

    54,808       15,981       15,317       2,354       122,839       47,406       7,286  

Plus: changes in the fair value of contingent purchase consideration payable

    (67,197     1,002       3,834       589       (93,307     937       144  

Plus: impairment of long-lived assets

    392,947       401,808       —         —         392,947       401,808       61,757  

Plus: Goodwill impairment

    —         766,440       —         —         —         766,440       117,800  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating expenses

    (309,829     (228,205     (173,223     (26,623     (1,129,853     (910,357     (139,919
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) profit

    (485,207     (1,479,119     797,569       122,584       (931,922     (917,644     (141,040

Plus: share-based compensation expense

    56,673       15,800       15,401       2,367       118,729       47,129       7,244  

Plus: amortization of intangible assets derived from acquisitions

    37,369       30,848       10,797       1,659       151,037       104,275       16,027  

Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact

    (67,874     1,002       3,834       589       (93,489     937       144  

Plus: loss on debt extinguishment

    —         —         —         —         29,841       —         —    

Plus: impairment of long-lived assets

    392,947       401,808       —         —         392,947       401,808       61,757  

Plus: Goodwill impairment

    —         766,440       —         —         —         766,440       117,800  

Plus: Disposal loss (gain) of subsidiaries

    —         180,048       (677,084     (104,066     —         (497,036     (76,393

Plus: Impairment of long-term investment

    —         20,397       (139     (21     —         20,258       3,114  

Plus: tax impact for the reconciliation adjustments

    (4,489     (6,004     (4,546     (699     (26,257     (22,764     (3,499

Plus: tax impact for the disposal of long-term investment

    —         —         (94,195     (14,478     —         (94,195     (14,478
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net (loss) profit

    (70,581     (68,780     51,637       7,935       (359,114     (190,792     (29,324
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net margin

    -7.8     -7.8     6.7     6.7     -9.9     -5.6     -5.6

Net (loss) profit

    (485,207     (1,479,119     797,569       122,584       (931,922     (917,644     (141,040

Minus: Provision for income taxes

    17,818       (19,794     127,478       19,593       11,160       90,170       13,859  

Minus: Interest income

    4,839       6,664       10,821       1,663       21,078       32,925       5,060  

Minus: Interest expenses

    (40,652     (57,417     (50,836     (7,813     (198,589     (185,313     (28,482

Minus: Loss on debt extinguishment

    —         —         —         —         (29,841     —         —    

Minus: Exchange gain (loss)

    28,849       (5,628     4,328       665       56,341       (17,153     (2,636

Minus: Gain from equity method investment

    12,225       26,546       17,732       2,725       35,652       53,783       8,266  

Minus: Other income

    555       7,220       3,260       501       28,922       16,764       2,577  

Minus: Other expenses

    (1,825     (12,630     (232     (36     (16,449     (17,060     (2,622

Minus: Impairment of long-term investment

    —         (20,397     139       21       —         (20,258     (3,114

Minus: Disposal (loss) gain of subsidiaries

    —         (180,048     677,084       104,066       —         497,036       76,393  

Plus: depreciation

    130,486       132,240       120,228       18,479       480,105       519,654       79,869  

Plus: amortization

    46,092       41,352       23,738       3,648       185,658       147,448       22,662  

Plus: share-based compensation expense

    56,673       15,800       15,401       2,367       118,729       47,129       7,244  

Plus: changes in the fair value of contingent purchase consideration payable

    (67,197     1,002       3,834       589       (93,307     937       144  

Plus: impairment of long-lived assets

    392,947       401,808       —         —         392,947       401,808       61,757  

Plus: Goodwill impairment

    —         766,440       —         —         —         766,440       117,800  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

    51,985       135,007       170,996       26,282       243,936       514,878       79,135  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

    5.8     15.2     22.3     22.3     6.7     15.2     15.2

Adjusted net (loss) profit

    (70,581     (68,780     51,637       7,935       (359,114     (190,792     (29,324

Less: Net loss attributable to noncontrolling interest

    225,353       104,354       1,073       165       298,324       144,914       22,273  

Adjusted net profit (loss) attributable to the Company’s ordinary shareholders

    154,772       35,574       52,710       8,100       (60,790     (45,878     (7,051

Adjusted (loss) profit per share

             

Basic

    (0.08     (0.10     0.08       0.01       (0.44     (0.28     (0.04

Diluted

    (0.08     (0.10     0.08       0.01       (0.44     (0.28     (0.04

Shares used in adjusted (loss) profit per share computation:

             

Basic*

    681,210,352       670,701,497       671,279,121       671,279,121       617,169,833       672,836,226       672,836,226  

Diluted*

    681,210,352       670,701,497       675,505,879       675,505,879       617,169,833       672,836,226       672,836,226  

Adjusted (loss) profit per ADS (6 ordinary shares equal to 1 ADS)

             

Basic

    (0.48     (0.60     0.48       0.06       (2.64     (1.68     (0.24

Diluted

    (0.48     (0.60     0.48       0.06       (2.64     (1.68     (0.24

 

* Shares used in adjusted loss/ADS per share computation were computed under weighted average method.


21VIANET GROUP, INC.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS (SEGMENT REPORTING)

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)

 

     Three months ended      Year ended  
    

December 31,

2016

   

September 30,

2017

   

December 31,

2017

    

December 31,

2016

   

December 31,

2017

 
     RMB     RMB     RMB      US$      RMB     RMB     US$  

Hosting and related services

                

Operating profit

     (8,077     47,927       7,795        1,199        44,101       156,632       24,073  

Plus: depreciation and amortization

     96,935       111,510       143,966        22,127        345,190       465,976       71,619  

Plus: share-based compensation expense

     41,807       15,326       15,401        2,367        86,955       47,244       7,261  

Plus: changes in the fair value of contingent purchase consideration payable

     (1,022     1,002       3,834        589        (19,394     937       144  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     129,643       175,765       170,996        26,281        456,852       670,789       103,097  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Managed network services

                

Operating profit

     (498,939     (1,271,562     —          —          (884,297     (1,525,170     (234,414

Plus: depreciation and amortization

     79,643       62,082       —          —          320,573       201,126       30,913  

Plus: share-based compensation expense

     14,866       474       —          —          31,774       (115     (18

Plus: changes in the fair value of contingent purchase consideration payable

     (66,176     —         —          —          (73,913     —         —    

Plus: impairment of long-lived assets

     392,947       401,808       —          —          392,947       401,808       61,757  

Plus: Goodwill impairment

     —         766,440       —          —          —         766,440       117,800  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     (77,658     (40,758     —          —          (212,916     (155,911     (23,963
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating profit

     (507,016     (1,223,635     7,795        1,199        (840,196     (1,368,538     (210,341

Plus: depreciation and amortization

     176,578       173,592       143,966        22,127        665,763       667,102       102,532  

Plus: share-based compensation expense

     56,673       15,800       15,401        2,367        118,729       47,129       7,243  

Plus: changes in the fair value of contingent purchase consideration payable

     (67,197     1,002       3,834        589        (93,307     937       144  

Plus: impairment of long-lived assets

                

Plus: Goodwill impairment

                

Adjusted EBITDA

     51,985       135,007       170,996        26,281        243,937       514,878       79,134  


21VIANET GROUP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))

 

    Three months ended  
    September 30, 2017     December 31, 2017  
    RMB     RMB     US$  
    (Unaudited)     (Unaudited)     (Unaudited)  

CASH FLOWS FROM OPERATING ACTIVITIES

     

Net (loss) profit

    (1,479,119     797,569       122,584  

Adjustments to reconcile net (loss) profit to net cash generated from operating activities:

     

Foreign exchange loss (gain)

    5,628       (4,328     (665

Changes in the fair value of contingent purchase consideration payable

    1,002       3,834       589  

Gain on disposal of property and equipment

    (2,837     (743     (114

Loss from disposal of intangible assets

    295       —         —    

Depreciation of property and equipment

    132,240       120,228       18,479  

Amortization of intangible assets

    41,352       23,738       3,648  

Provision for doubtful accounts and other receivables

    8,990       (3,255     (500

Impairment of long-lived assets

    401,808       —         —    

Impairment of goodwill

    766,440       —         —    

Impairment of long-term investment

    20,398       (139     (21

Loss (gain) from disposal of subsidiaries

    180,048       (677,084     (104,066

Share-based compensation expense

    15,720       13,643       2,097  

Deferred income taxes expense (benefits)

    5,887       (126,095     (19,380

Gain from equity method investment

    (26,546     (17,732     (2,725

Dividend received from cost method investment

    (396     —         —    

Changes in operating assets and liabilities

        —    

Restricted cash

    2,075       (54,648     (8,399

Inventories

    (658     (599     (92

Accounts and notes receivable

    36,562       32,070       4,929  

Unrecognized tax benefits (expense)

    951       (7,963     (1,224

Prepaid expenses and other current assets

    (119,384     (23,457     (3,605

Amounts due from related parties

    13,280       1,854       285  

Accounts and notes payable

    26,379       (38,841     (5,970

Accrued expenses and other payables

    120,015       98,005       15,063  

Deferred revenue

    (11,598     8,674       1,333  

Advances from customers

    77,225       (23,683     (3,641

Income taxes payable

    7,087       (6,836     (1,051

Amounts due to related parties

    (13,419     (2,690     (413

Deferred government grants

    (786     (5,179     (796
 

 

 

   

 

 

   

 

 

 

Net cash generated from operating activities

    208,639       106,343       16,345  
 

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

     

Purchases of property and equipment

    (77,872     (80,336     (12,347

Purchases of intangible assets

    (43     (4,062     (624

Proceeds from disposal of property and equipment

    5,719       —         —    

Disposal of subsidiaries net of cash

    (64,580     —         —    

Payments for short-term investments

    (337,137     (211,752     (32,546

Dividend received from cost method investment

    396       —         —    

Payments for long-term investments

    (61,898     (64,014     (9,839

Restricted cash

    —         (3,344     (514
 

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

    (535,415     (363,508     (55,870
 

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

        —    

Restricted cash

    37,920       1,677,270       257,792  

Proceeds from exercise of stock options

    171       187       29  

Proceeds from loan from a third party

    —         100,000       15,370  

Proceeds from long-term bank borrowings

    11,740       —         —    

Proceeds from issuance of 2020 bonds

    1,316,974       619,180       95,166  

Payment of issurance cost of 2020 bonds

    (3,278     (6,457     (992

Repayments of short-term bank borrowings

    (40,676     (1,520,000     (233,620

Repayments of long-term bank borrowings

    (11,843     (67,871     (10,432

Repayment of loan from a third party

    (100,000     —         —    

Prepayment for shares repurchase plan

    (3,866     60       9  

Payments for shares repurchase plan

    (50,054     —         —    

Rental prepayments and deposits for sales and leaseback transactions

    (39,513     (59,486     (9,143

Payments for capital leases

    (39,280     (67,239     (10,334

Contribution from noncontrolling interest in a subsidary

    62,357       49,314       7,579  
 

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

    1,140,652       724,958       111,424  
 

 

 

   

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash and short term investments

    (86,759     (3,098     (476

Net increase in cash and cash equivalents

    727,117       464,695       71,423  

Cash and cash equivalents at beginning of period

    757,819       1,484,936       228,230  
 

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

    1,484,936       1,949,631       299,653