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 August 2015

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  x            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):  ¨

 

 

 

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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.

 

Date: August 28, 2015

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Exhibit Index

Exhibit 99.1 — Press Release

Exhibit 99.1

21Vianet Group, Inc. Reports Second Quarter 2015

Unaudited Financial Results

2Q15 Net Revenues Up 31.7% YOY to RMB866.8 Million

2Q15 Adjusted EBITDA Up 13.2% YOY to RMB149.4 Million

Live Conference Call to be Held at 8:00 PM U.S. Eastern Time, August 26, 2015

BEIJING, August 26, 2015 (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 2015. The Company will hold a conference call at 8:00 p.m. Eastern Time on August 26, 2015. Dial-in details are provided at the end of the release.

Second Quarter 2015 Financial Highlights

 

•

Net revenues increased by 31.7% to RMB866.8 million (US$139.8 million) from RMB658.0 million in the comparative period in 2014.

 

•

Adjusted EBITDA1 increased by 13.2% to RMB149.4 million (US$24.1 million) from RMB132.0 million in the comparative period in 2014.

Mr. Josh Chen, Founder, Chairman and Chief Executive Officer of the Company, stated, “During the second quarter, we further executed on our strategy with steady growth in our core internet data center (“IDC”) and CDN businesses. For our IDC businesses, demand remains strong as we had another quarter of increasing cabinet sales. Following a seasonally soft first quarter, our CDN business also started to recover and is expected to further improve in the second half of 2015. However, this quarter also brought with it some challenges, including delays in new cabinet builds, continued headwinds in bandwidth prices and incremental costs due to organizational transitions, As we further optimize our operations, strengthen our organization and continue to invest in core growth opportunities, we are confident in our ability to address these challenges and re-accelerate our growth organically and profitably.”

Mr. Terry Wang, Chief Financial Officer of the Company, commented, “We finished another quarter of steady growth, with net revenues growing by 31.7% year over year and adjusted EBITDA growing by 13.2% year over year. We further improved our data center utilization rate to 67.5% from 65.0%, while maintaining our low hosting churn rate of 0.37%. In addition, our days-sales-outstanding (“DSO”) also further improved to 77 days in the second quarter of 2015. However, we also recognize that our operating results this quarter were softer than expected in a few areas, and we are actively working with our operations team to address these issues. As we fine-tune our cost structure and become more disciplined in our capital investment programs in a market that is increasingly sophisticated and value-driven, we believe we are well positioned to capitalize on our strategy as a leading internet infrastructure services provider.”

Second Quarter 2015 Financial Results

REVENUES: Net revenues for the second quarter of 2015 increased by 31.7% to RMB866.8 million (US$139.8 million) from RMB658.0 million in the comparative period in 2014.

 

 

1

Adjusted EBITDA is a non-GAAP financial measure, which is defined as EBITDA excluding share-based compensation expenses and changes in the fair value of contingent purchase consideration payable and EBITDA is defined as net profit (loss) from operations before income tax expense (benefit), foreign exchange gain, other expenses, other income, interest expense, interest income and depreciation and amortization.

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Net revenues from hosting and related services increased by 37.9% to RMB643.7 million (US$103.8 million) in the second quarter of 2015 from RMB466.9 million in the comparative period in 2014, primarily due to contributions from acquisitions, an increase in the total number of cabinets under management, as well as a year-over-year increase in demand for the Company’s cloud and CDN services, partially offset by the transition to a Value Added Tax (“VAT”) system. Net revenues from managed network services increased by 16.7% to RMB223.1 million (US$36.0 million) in the second quarter of 2015 from RMB191.1 million in the comparative period in 2014 primarily driven by the contributions from acquisitions, which was partially offset by industry-wide decline in bandwidth prices and the transition to a VAT system.

GROSS PROFIT: Gross profit for the second quarter of 2015 increased by 12.9% to RMB204.0 million (US$32.9 million) from RMB180.6 million in the comparative period in 2014. Gross margin for the second quarter of 2015 was 23.5%, compared with 27.4% in the comparative period in 2014. The decrease in gross margin was primarily due to continued softness in MNS business and higher spending in telecom and electricity costs.

Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, increased by 24.2% to RMB245.7 million (US$39.6 million) from RMB197.9 million in the comparative period in 2014. Adjusted gross margin was 28.3% in the second quarter of 2015, compared with 30.1% in the comparative period in 2014.

OPERATING EXPENSES: Total operating expenses increased to RMB293.6 million (US$47.4 million) from RMB156.7 million in the comparative period in 2014. Adjusted operating expenses, which exclude share-based compensation expenses and the changes in the fair value of contingent purchase consideration payable, increased to RMB209.5 million (US$33.8 million) from RMB132.9 million in the comparative period in 2014. As a percentage of net revenue, adjusted operating expenses were 24.2%, compared with 20.2% in the comparative period in 2014 and 24.3% in the first quarter of 2015.

Sales and marketing expenses increased by 32.7% to RMB78.0 million (US$12.6 million) from RMB58.8 million in the comparative period in 2014, primarily due to an increase in the number of the sales and service personnel in the Company’s overall business and acquisitions of businesses with higher sales and marketing expenses.

General and administrative expenses increased by 160.9% to RMB166.9 million (US$26.9 million) from RMB64.0 million in the comparative period in 2014, primarily due to increased headcount associated with the growth in the Company’s overall business, acquisitions with higher general and administrative expenses and incremental expenses due to organizational transitions.

Research and development expenses increased by 27.6% to RMB32.1 million (US$5.2 million) from RMB25.1 million in the comparative period in 2014, which reflected the Company’s efforts to further strengthen its research and development capabilities and expand its cloud computing and CDN service offerings.

Change in the fair value of contingent purchase consideration payable was a loss of RMB16.4 million (US$2.7 million) in the second quarter of 2015, compared with a loss of RMB8.8 million in the comparative period in 2014.

ADJUSTED EBITDA: Adjusted EBITDA for the second quarter of 2015 increased by 13.2% to RMB149.4 million (US$24.1 million) from RMB132.0 million in the comparative period in 2014. Adjusted EBITDA margin for the quarter was 17.2% compared with 20.1% in the comparative period in 2014 and 19.4% in the first quarter of 2015. Adjusted EBITDA in the second quarter of 2015 excludes share-based compensation expenses of RMB69.8 million (US$11.3 million) and changes in the fair value of contingent purchase consideration payable of RMB16.6 million (US$2.7 million).

NET PROFIT/LOSS: Net loss for the second quarter of 2015 was RMB141.8 million (US$22.9 million), compared with a net loss of RMB59.5 million in the comparative period in 2014.

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Adjusted net loss for the second quarter of 2015 was RMB16.0 million (US$2.6 million) compared with an adjusted net profit of RMB23.2 million in the comparative period in 2014. Adjusted net loss in the second quarter of 2015 excludes share-based compensation expenses of RMB69.8 million (US$11.3 million), amortization of intangible assets derived from acquisitions of RMB39.4 million (US$6.4 million), changes in the fair value of contingent purchase consideration payable of RMB16.6 million (US$2.7 million) in the aggregate. Adjusted net margin was negative 1.8%, compared with positive 3.5% in the comparative period in 2014 and positive 2.2% in the first quarter of 2015.

EARNING/LOSS PER SHARE: Diluted loss per ordinary share for the second quarter of 2015 was RMB0.28, which represents the equivalent of RMB1.68 (US$0.27) per American Depositary Share (“ADS”). Each ADS represents six ordinary shares. Adjusted diluted loss per share for the second quarter of 2015 was RMB0.02, which represents the equivalent of RMB0.12 (US$0.02) per ADS. Adjusted earnings per share is calculated using adjusted net profit as discussed above divided by the weighted average number of shares.

As of June 30, 2015, the Company had a total of 519.7 million ordinary shares outstanding, or the equivalent of 86.6 million ADSs.

BALANCE SHEET: As of June 30, 2015, the Company’s cash and cash equivalents and short-term investment were RMB2.91 billion (US$469.6 million).

Second Quarter 2015 Operational Highlights

 

•

Monthly Recurring Revenues (“MRR”) per cabinet was RMB9,872 in the second quarter of 2015, compared with RMB10,031 in the first quarter of 2015.

 

•

Total cabinets under management increased to 22,238 as of June 30, 2015 from 22,024 as of March 31, 2015, with 14,957 cabinets in the Company’s self-built data centers and 7,281 cabinets in its partnered data centers.

 

•

Utilization rate was 67.5% in the second quarter of 2015, compared with 65.0% in the first quarter of 2015.

 

•

Hosting churn rate, which is based on the Company’s core IDC business, was 0.37% in the second quarter of 2015, compared with 0.19% in the first quarter of 2015.

Recent Developments

On June 10, 2015 the Company announced that its Board of Directors received a non-binding proposal letter, from Mr. Josh Sheng Chen, Chairman of the Board and Chief Executive Officer of the Company, Kingsoft Corporation Limited and Tsinghua Unigroup International Co., Ltd., proposing a “going-private” transaction to acquire all of the outstanding ordinary shares of the Company not already owned by the buyer group.

On June 16, 2015 the Board of Directors formed a special committee of independent directors to review and evaluate the “going-private” proposal. In early July, the Company announced that the Board had retained Morgan Stanley Asia Limited as its financial advisor, K&L Gates LLP as its international and U.S. legal counsel and Conyers Dill & Pearman as its Cayman legal counsel in connection with its review and evaluation of the proposal.

On June 22, 2015, Mr. Shang-Wen Hsiao resigned from his role as Chief Financial Officer of the Company. He was succeeded by Mr. Terry Wang, who previously served as the Company’s independent director and Chair of the Audit Committee since April 2011. Mr. Hsiao was made an advisor to the Board of Directors effective July 1, 2015.

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Financial Outlook

For the third quarter of 2015, the Company expects net revenues to be in the range of RMB900 million to RMB940 million, representing approximately 18% year-over-year growth at the mid-point. Adjusted EBITDA is expected to be in the range of RMB146 million to RMB166 million, representing approximately 1% year-over-year growth at the mid-point. For the full year 2015, the Company now expects net revenues to be in the range of RMB3.58 billion to RMB3.68 billion (revised from prior guidance of RMB3.91 billion to RMB4.11 billion), representing approximately 26% growth over 2014 at the mid-point. Adjusted EBITDA for the full year 2015 is expected to be in the range of RMB620 million to RMB660 million (revised from prior guidance of RMB760 million to RMB860 million), representing approximately 15% growth over 2014 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 Wednesday, August 26, 2015 at 8:00 pm Eastern Time, or Thursday, August 27, 2015 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:		#96476886

The replay will be accessible through September 2, 2015 by dialing the following numbers:

 

United States Toll Free:		+1-855-452-5696
International:		+61-2-90034211
Conference ID:		#96476886

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.

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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 RMB6.2000 to US$1.00, the noon buying rate in effect on June 30, 2015 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, the outlook for the second quarter and full year of 2015 and 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.

Eric Chu, CFA

+1 908 707 2062

IR@21Vianet.com

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Qing Liu

+86 10 8456 2121

IR@21Vianet.com

ICR, Inc.

Charles Eveslage

+1 (646) 405-4922

IR@21Vianet.com

Source: 21Vianet Group, Inc.

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21VIANET GROUP, INC.

CONSOLIDATED BALANCE SHEETS

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

 

		As of				As of
		December 31, 2014				June 30, 2015
		RMB				RMB				US$
		(Audited)				(Unaudited)				(Unaudited)
Assets
Current assets:
Cash and cash equivalents			644,415				1,441,635				232,522
Restricted cash			161,649				100,606				16,227
Accounts and notes receivable, net			739,945				746,964				120,478
Short-term investments			911,242				1,469,620				237,035
Inventories			10,059				12,103				1,952
Prepaid expenses and other current assets			309,441				520,097				83,892
Deferred tax assets			35,002				35,354				5,702
Amount due from related parties			54,867				84,345				13,604
Total current assets			2,866,620				4,410,724				711,412
Non-current assets:
Property and equipment, net			3,036,707				3,505,606				565,420
Intangible assets, net			1,404,453				1,339,583				216,062
Land use right			66,175				65,430				10,553
Deferred tax assets			42,573				48,204				7,775
Goodwill			1,755,970				1,755,970				283,221
Long term investments			126,307				157,970				25,479
Restricted cash			121,415				122,156				19,703
Amount due from related parties			98,500				70,000				11,290
Other non-current assets			121,461				120,385				19,417
Total non-current assets			6,773,561				7,185,304				1,158,920
Total assets			9,640,181				11,596,028				1,870,332
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term bank borrowings			160,181				250,000				40,323
Accounts and notes payable			386,074				410,952				66,283
Accrued expenses and other payables			599,491				738,930				119,182
Deferred revenue			347,441				327,233				52,780
Advances from customers			97,679				133,260				21,494
Income taxes payable			35,013				44,074				7,109
Amounts due to related parties			326,804				406,433				65,554
Current portion of long-term bank borrowings			955,647				921,951				148,702
Current portion of capital lease obligations			71,939				73,915				11,922
Current portion of deferred government grant			6,150				6,382				1,029
Current portion of bonds payable			—				264,155				42,606
Deferred tax liabilities			2,696				3,198				516
Total current liabilities			2,989,115				3,580,483				577,500
Non-current liabilities:
Long-term bank borrowings			61,673				102,905				16,598
Deferred revenue			74,044				70,158				11,316
Amounts due to related parties			280,728				19,214				3,099
Unrecognized tax benefits			20,453				11,897				1,919
Deferred tax liabilities			310,340				296,196				47,774
Non-current portion of capital lease obligations			511,679				503,143				81,152
Non-current portion of deferred government grant			27,422				34,180				5,513
Bonds payable			2,264,064				2,000,000				322,581
Mandatorily redeemable noncontrolling interests			100,000				100,000				16,129
Total non-current liabilities			3,650,403				3,137,693				506,081
Redeemable noncontrolling interests			773,706				775,791				125,128
Shareholders’ equity
Treasury stock			(213,665	)			(213,665	)			(34,462	)
Ordinary shares			26				34				5
Additional paid-in capital			4,225,029				6,346,857				1,023,687
Accumulated other comprehensive income loss			(65,754	)			(64,981	)			(10,481	)
Statutory reserves			52,263				58,109				9,372
Accumulated deficit			(1,794,975	)			(2,042,693	)			(329,466	)
Total 21Vianet Group, Inc. shareholders’ equity			2,202,924				4,083,661				658,655
Non-controlling interest			24,033				18,400				2,968
Total shareholders’ equity			2,226,957				4,102,061				661,623
Total liabilities and shareholders’ equity			9,640,181				11,596,028				1,870,332

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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
		June 30, 2014				March 31, 2015				June 30, 2015								June 30, 2014				June 30, 2015
		RMB				RMB				RMB				US$				RMB				RMB				US$
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Net revenues
Hosting and related services			466,880				613,228				643,709				103,824				871,255				1,256,937				202,732
Managed network services			191,137				246,879				223,078				35,980				372,757				469,957				75,799
Total net revenues			658,017				860,107				866,787				139,804				1,244,012				1,726,894				278,531
Cost of revenues			(477,392	)			(629,762	)			(662,810	)			(106,905	)			(902,761	)			(1,292,572	)			(208,479	)
Gross profit			180,625				230,345				203,977				32,899				341,251				434,322				70,052
Operating expenses
Sales and marketing			(58,814	)			(90,400	)			(78,031	)			(12,586	)			(101,207	)			(168,431	)			(27,166	)
General and administrative			(63,956	)			(129,208	)			(166,885	)			(26,917	)			(243,350	)			(296,093	)			(47,757	)
Research and development			(25,130	)			(34,031	)			(32,059	)			(5,171	)			(50,335	)			(66,090	)			(10,660	)
Changes in the fair value of contingent purchase consideration payable			(8,807	)			(20,946	)			(16,643	)			(2,684	)			(42,735	)			(37,589	)			(6,063	)
Total operating expenses			(156,707	)			(274,585	)			(293,618	)			(47,358	)			(437,627	)			(568,203	)			(91,646	)
Other operating income			—				—				8,569				1,382				—				8,569				1,382
Operating profit (loss)			23,918				(44,240	)			(81,072	)			(13,077	)			(96,376	)			(125,312	)			(20,212	)
Interest income			13,575				13,830				20,449				3,298				34,815				34,279				5,529
Interest expense			(48,562	)			(71,867	)			(71,664	)			(11,559	)			(97,539	)			(143,531	)			(23,150	)
Loss on debt extinguishment			(41,581	)			—				—				—				(41,581	)			—				—
Income (loss) from equity method investment			136				11,295				123				20				(240	)			11,418				1,842
Other income			230				1,660				2,876				464				3,847				4,536				732
Other expense			(145	)			(951	)			(183	)			(30	)			(166	)			(1,134	)			(183	)
Foreign exchange (loss) gain			(6,576	)			10,167				(5,269	)			(850	)			(5,639	)			4,898				790
Loss before income taxes			(59,005	)			(80,106	)			(134,740	)			(21,734	)			(202,879	)			(214,846	)			(34,652	)
Income tax expense			(460	)			(8,563	)			(7,091	)			(1,144	)			(8,012	)			(15,654	)			(2,525	)
Consolidated net loss			(59,465	)			(88,669	)			(141,831	)			(22,878	)			(210,891	)			(230,500	)			(37,177	)
Net income attributable to non-controlling interest			(2,756	)			(8,058	)			(3,315	)			(535	)			(3,104	)			(11,373	)			(1,834	)
Net loss attributable to ordinary shareholders			(62,221	)			(96,727	)			(145,146	)			(23,413	)			(213,995	)			(241,873	)			(39,011	)
Loss per share
Basic			(0.16	)			(0.23	)			(0.28	)			(0.05	)			(0.53	)			(0.51	)			(0.08	)
Diluted			(0.16	)			(0.23	)			(0.28	)			(0.05	)			(0.53	)			(0.51	)			(0.08	)
Shares used in earnings per share computation
Basic*			400,894,924				432,372,059				489,847,525				489,847,525				400,392,899				461,268,566				461,268,566
Diluted*			400,894,924				432,372,059				489,847,525				489,847,525				400,392,899				461,268,566				461,268,566
Loss per ADS (6 ordinary shares equal to 1 ADS)
Basic			(0.96	)			(1.38	)			(1.68	)			(0.27	)			(3.18	)			(3.06	)			(0.49	)
Diluted			(0.96	)			(1.38	)			(1.68	)			(0.27	)			(3.18	)			(3.06	)			(0.49	)

 

*	Shares used earnings per share/ADS computation were computed under weighted average method.

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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
		June 30, 2014				March 31,2015				June 30, 2015								June 30, 2014				June 30, 2015
		RMB				RMB				RMB				US$				RMB				RMB				US$
Gross profit			180,625				230,345				203,977				32,899				341,251				434,322				70,052
Plus: share-based compensation expense			1,890				2,212				2,305				372				3,558				4,517				729
Plus: amortization of intangible assets derived from acquisitions			15,378				40,169				39,434				6,360				24,176				79,603				12,839
Adjusted gross profit			197,893				272,726				245,716				39,631				368,985				518,442				83,620
Adjusted gross margin			30.1	%			31.7	%			28.3	%			28.3	%			29.7	%			30.0	%			30.0	%
Operating expenses			(156,707	)			(274,585	)			(293,618	)			(47,358	)			(437,627	)			(568,203	)			(91,646	)
Plus: share-based compensation expense			15,033				44,244				67,496				10,886				152,080				111,740				18,023
Plus: changes in the fair value of contingent purchase consideration payable			8,807				20,946				16,643				2,684				42,735				37,589				6,063
Adjusted operating expenses			(132,867	)			(209,395	)			(209,479	)			(33,788	)			(242,812	)			(418,874	)			(67,560	)
Net loss			(59,465	)			(88,669	)			(141,831	)			(22,878	)			(210,891	)			(230,500	)			(37,177	)
Plus: share-based compensation expense			16,923				46,456				69,801				11,258				155,638				116,257				18,751
Plus: amortization of intangible assets derived from acquisitions			15,378				40,169				39,434				6,360				24,176				79,603				12,839
Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact			8,807				20,946				16,643				2,684				45,719				37,589				6,063
Plus: loss on debt extinguishment			41,581				—				—				—				41,581				—				—
Adjusted net profit			23,224				18,902				(15,953	)			(2,576	)			56,223				2,949				476
Adjusted net margin			3.5	%			2.2	%			-1.8	%			-1.8	%			4.5	%			0.2	%			0.2	%
Net loss			(59,465	)			(88,669	)			(141,831	)			(22,878	)			(210,891	)			(230,500	)			(37,177	)
Minus: Provision for income taxes			(460	)			(8,563	)			(7,091	)			(1,144	)			(8,012	)			(15,654	)			(2,525	)
Minus: Interest income			13,575				13,830				20,449				3,298				34,815				34,279				5,529
Minus: Interest expenses			(48,562	)			(71,867	)			(71,664	)			(11,559	)			(97,539	)			(143,531	)			(23,150	)
Minus: loss on debt extinguishment			(41,581	)			—				—				—				(41,581	)			—				—
Minus: Exchange gain/loss			(6,576	)			10,167				(5,269	)			(850	)			(5,639	)			4,898				790
Minus: Loss from equity method investment			136				11,295				123				20				(240	)			11,418				1,842
Minus: Other income			230				1,660				2,876				464				3,847				4,536				732
Minus: Other expenses			(145	)			(951	)			(183	)			(30	)			(166	)			(1,134	)			(183	)
Plus: depreciation			59,783				93,878				98,462				15,881				106,109				192,340				31,023
Plus: amortization			22,534				49,876				45,517				7,341				36,791				95,393				15,386
Plus: share-based compensation expense			16,923				46,456				69,801				11,258				155,638				116,257				18,751
Plus: changes in the fair value of contingent purchase consideration payable			8,807				20,946				16,643				2,684				42,735				37,589				6,063
Adjusted EBITDA			131,965				166,916				149,351				24,087				244,897				316,267				51,011
Adjusted EBITDA margin			20.1	%			19.4	%			17.2	%			17.2	%			19.7	%			18.3	%			18.3	%
Adjusted net profit (loss)			23,224				18,902				(15,953	)			(2,576	)			56,223				2,949				476
Less: Net income attributable to non-controlling interest			(2,756	)			(8,058	)			(3,315	)			(535	)			(3,104	)			(11,373	)			(1,834	)
Adjusted net profit (loss) attributable to the Company’s ordinary shareholders			20,468				10,844				(19,268	)			(3,111	)			53,119				(8,424	)			(1,358	)
Adjusted earnings (loss) per share
Basic			0.05				0.02				(0.02	)			(0.00	)			0.13				(0.00	)			(0.00	)
Diluted			0.05				0.02				(0.02	)			(0.00	)			0.13				(0.00	)			(0.00	)
Shares used in adjusted earnings per share computation:
Basic*			400,894,924				432,372,059				489,847,525				489,847,525				400,392,899				461,268,566				461,268,566
Diluted*			415,461,883				444,663,246				489,847,525				489,847,525				414,916,456				461,268,566				461,268,566
Earnings (loss) per ADS (6 ordinary shares equal to 1 ADS)
Basic			0.30				0.12				(0.12	)			(0.02	)			0.78				(0.00	)			(0.00	)
Diluted			0.30				0.12				(0.12	)			(0.02	)			0.78				(0.00	)			(0.00	)

 

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

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21VIANET GROUP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

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

 

		Three months ended
		March 31, 2015				June 30, 2015
		RMB				RMB				US$
		(Unaudited)				(Unaudited)				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss			(88,669	)			(141,831	)			(22,876	)
Adjustments to reconcile net profit to net cash generated from operating activities:
Foreign exchange (gain) loss			(10,167	)			5,269				850
Changes in the fair value of contingent purchase consideration payable			20,946				16,643				2,684
Depreciation of property and equipment			93,878				98,462				15,881
Amortization of intangible assets			47,709				44,086				7,111
Loss on disposal of property and equipment			131				30				5
Provision for doubtful accounts and other receivables			1,335				2,818				455
Share-based compensation expense			46,456				69,802				11,258
Deferred income taxes benefit			(12,132	)			(7,493	)			(1,209	)
Gain from equity method investment			(11,295	)			(123	)			(20	)
Changes in operating assets and liabilities
Restricted cash			14,739				(46,161	)			(7,445	)
Inventories			(631	)			(1,413	)			(228	)
Accounts and notes receivable			(9,264	)			213				34
Unrecognized tax expense			1,286				(9,842	)			(1,587	)
Prepaid expenses and other current assets			(76,713	)			(125,384	)			(20,223	)
Amounts due from related parties			(333	)			(667	)			(108	)
Accounts and notes payable			41,476				(16,598	)			(2,677	)
Accrued expenses and other payables			36,153				(17,548	)			(2,830	)
Deferred revenue			(9,378	)			(14,716	)			(2,374	)
Advances from customers			8,533				27,048				4,363
Income taxes payable			11,458				(2,397	)			(387	)
Amounts due to related parties			(1,308	)			(950	)			(153	)
Deferred government grants			7,600				(610	)			(98	)
Net cash generated from operating activities			111,810				(121,361	)			(19,574	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(305,648	)			(232,069	)			(37,430	)
Purchases of intangible assets			(16,335	)			(12,258	)			(1,977	)
Proceeds from disposal of property and equipment			116				137				22
Loans to third parties			(2,030	)			(3,760	)			(606	)
Payments for short-term investments			(733,104	)			(819,274	)			(132,141	)
Proceeds received from maturity of short-term investments			900,000				94,000				15,161
Payments for long-term investments			(20,245	)			—				—
Net cash used in investing activities			(177,246	)			(973,224	)			(156,972	)
CASH FLOWS FROM FINANCING ACTIVITIES
Restricted cash			8,714				83,751				13,508
Proceeds from exercise of stock options			1,802				2,687				433
Proceeds from shareholders			626,674				1,181,825				190,617
Proceeds from long-term bank borrowings			42,213				31,710				5,115
Proceeds from short-term bank borrowings			70,000				109,000				17,581
Repayments of short-term bank borrowings			(29,181	)			(60,000	)			(9,677	)
Repayments of long-term bank borrowings			(3,086	)			(63,310	)			(10,211	)
Payments for the purchase of noncontrolling interest, net of cash acquired -Ningbo Tech			(8,000	)			—				—
Payments for capital leases			(12,341	)			(24,023	)			(3,875	)
Net cash used in financing activities			696,795				1,261,640				203,490
Effect of foreign exchange rate changes on cash and short term investments			1,640				(2,835	)			(457	)
Net increase in cash and cash equivalents			632,999				164,220				26,487
Cash and cash equivalents at beginning of period			644,415				1,277,414				206,035
Cash and cash equivalents at end of period			1,277,414				1,441,635				232,522