updated 3/7/2011 5:17:28 PM ET 2011-03-07T22:17:28

BEIJING, March 7, 2011 (GLOBE NEWSWIRE) -- ChinaCache International Holdings Ltd. ("ChinaCache" or the "Company") (Nasdaq:CCIH), the leading provider of Internet content and application delivery services in China, today announced its unaudited interim condensed consolidated financial results for the quarter ended December 31, 2010.

Highlights for Fourth Quarter 2010

  • Net revenues increased by 74.4% to RMB124.0 million (US$18.8 million) in the fourth quarter 2010 from the corresponding period in 2009
  • Net income in the fourth quarter 2010 was RMB6.2 million (US$0.9 million), compared to a net loss of RMB13.9 million in the corresponding period in 2009
  • Adjusted net income (Non-GAAP), which excluded share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets, was RMB17.5 million (US$2.7 million) in the fourth quarter 2010, compared to an adjusted net loss of RMB10.4 million in the corresponding period in 2009
  • Operating profit in the fourth quarter 2010 was RMB6.9 million (US$1.0 million), compared to operating loss of RMB2.2 million in the corresponding period in 2009
  • Non-GAAP operating profit, which excluded share-based compensation expenses and post acquisition settlement consideration, was RMB10.2 million (US$1.5 million) in the fourth quarter of 2010, compared to RMB1.3 million in the corresponding period in 2009
  • Adjusted EBITDA (Non-GAAP) was RMB30.6 million (US$4.6 million), a 68.7% increase from the corresponding period in 2009

Highlights for Fiscal Year 2010

  • Net revenues in 2010 increased 48.1% from 2009 to RMB403.4 million (US$61.1 million)
  • Net loss in 2010 was RMB55.7 million (US$8.4 million), compared to a net loss of RMB39.2 million in 2009
  • Adjusted net income (Non-GAAP) was RMB61.0 million (US$9.2 million) in 2010, compared to a loss of RMB16.1 million in 2009
  • Operating loss in 2010 was RMB61.3 million (US$9.3 million), compared to operating loss of RMB12.7 million in 2009
  • Non-GAAP operating profit was RMB48.7 million (US$7.4 million) in 2010, a significant increase from RMB1.7 million in 2009
  • Adjusted EBITDA (Non-GAAP) in 2010 was RMB114.1 million (US$17.3 million), a 61.4% increase from 2009
  • The number of active customers as at December 31, 2010 totaled 504, compared to 281 as at December 31, 2009

"We were pleased to achieve profitability in the fourth quarter as we recorded another period of revenue growth," said Mr. Song Wang, co-founder, chairman and chief executive officer of ChinaCache. "Our mobile Internet, media and entertainment, and enterprise and e-commerce verticals performed strongly as customers took advantage of our services to enhance end user experience. In particular, we were pleased to add contracts with new provincial subsidiaries of China Mobile and we saw exceptionally strong growth in the Internet video space. We also entered into a number of exciting content and application delivery service contracts with leading provincial television stations to improve the reliability of TV programs delivered across the Internet."

Mr. Wang continued, "Looking to the year ahead, we are optimistic that the rapid growth of content delivered over the Internet will continue to drive strong demand for ChinaCache's CDN solutions."  

"During the quarter we saw continued improvement in adjusted net income even as we increased investment in our bandwidth, collocation and storage facilities to meet growing customer demand," added Mr. Robert Yong Sha, chief financial officer of ChinaCache. "2010 witnessed the healthy development of ChinaCache's business, as we expanded our industry leadership and improved profitability. In 2011, we look forward to building out our customer base further while managing for profitable growth."

Financial Results for the Fourth Quarter 2010

Net revenues for the fourth quarter 2010 were RMB124.0 million (US$18.8 million), representing a 74.4% increase from the corresponding period in 2009.

Cost of revenues for the quarter increased by 58.9% year-over-year to RMB84.0 million (US$12.7 million), primarily due to the purchase of more bandwidth, collocation and storage facilities and the increases in share-based compensation expenses. Cost of revenues as a percentage of net revenues was 67.8%, compared to 74.4% in the corresponding period in 2009. Non-GAAP cost of revenues as a percentage of net revenues, which excluded share-based compensation expenses, was 67.4%, compared to 73.3% in the corresponding period in 2009.

Sales and marketing expenses for the quarter decreased by 38.1% from the previous quarter to RMB17.4 million (US$2.6 million) and grew 85.5% year-over-year. Non-GAAP sales and marketing expenses, which excluded share-based compensation expenses, were RMB16.2 million (US$ 2.5 million), a 98.2% increase from the corresponding period in 2009.

General and administrative expenses for the quarter decreased by 54.7% over the previous quarter to RMB8.9 million (US$1.3 million) and increased by 24.7% year-over-year. Non-GAAP general and administrative expenses, which excluded the effects of share-based compensation expenses, were RMB8.0 million (US$1.2 million), a 29.3% increase from the corresponding period in 2009.

Research and development expenses for the quarter decreased by 43.3% over the previous quarter to RMB6.6 million (US$1.0 million) and increased by 72.0% year-over-year. Non-GAAP research and development expenses, which excluded the effects of share-based compensation expenses, were RMB6.1 million (US$0.9 million), an 83.5% increase from the corresponding period in 2009.

Total share-based compensation expenses, which were allocated to related costs of revenues and operating expense line items, were RMB3.2 million (US$0.5 million) in the fourth quarter of 2010, compared to RMB47.5 million in the previous quarter and RMB3.5 million in the corresponding period in 2009.

Operating profit was RMB6.9 million (US$1.0 million) in the fourth quarter of 2010, compared to an operating loss of RMB34.7 million in the previous quarter and an operating loss of RMB2.2 million in the corresponding period in 2009. Non-GAAP operating profit, which excluded the effects of share-based compensation expenses and post acquisition settlement consideration, was RMB10.2 million (US$1.5 million), a significant increase from the corresponding period in 2009. Non-GAAP operating margin for the quarter was 8.2%, compared to 1.9% in the corresponding period in 2009.

Income tax benefit was RMB3.7 million (US$0.6 million) in the fourth quarter of 2010, compared to income tax expense of RMB0.5 million in the corresponding period in 2009. The effective tax rate for the fourth quarter of 2010 was negative 146.8% compared to 3.9% for the corresponding period in 2009.

Net income was RMB6.2 million (US$0.9 million) in the fourth quarter of 2010, compared to net loss of RMB13.9 million in the corresponding period in 2009. Basic and diluted earnings per ADS for the fourth quarter of 2010 amounted to RMB0.26 (US$0.04) and RMB0.24 (US$0.04), respectively.  

Adjusted net income (Non-GAAP), which is defined as net income before share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets, was RMB17.5 million (US$2.7 million), compared to an adjusted net loss of RMB10.4 million in the corresponding period in 2009. Non-GAAP basic and diluted earnings per ADS for the fourth quarter of 2010 amounted to RMB0.73 (US$0.11) and RMB0.69 (US$0.10), respectively.

Adjusted EBITDA (Non-GAAP), which is defined as EBITDA plus share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets, was RMB30.6 million (US$4.6 million), representing a 12.8% decrease from third quarter 2010, or a 68.7% increase from the corresponding period in 2009.

As of December 31, 2010, the Company had cash and cash equivalents of RMB592.7 million (US$89.8 million). The capital expenditures for the fourth quarter of 2010 were RMB57.6 million (US$8.7 million).

Financial Results for the Fiscal Year 2010

Net revenues in 2010 were RMB403.4 million (US$61.1 million), representing a 48.1% increase from 2009.

Cost of revenues in 2010 increased by 35.7% year-over-year to RMB279.7 million (US$42.4 million), primarily due to the purchase of more bandwidth, collocation and storage facilities and increased share-based compensation expenses. Cost of revenues as a percentage of net revenues was 69.3% compared to 75.7% in 2009. Non-GAAP cost of revenues as a percentage of net revenues, which excluded the effects of share-based compensation expenses, was 66.5% in 2010, compared to 74.8% in 2009.

Sales and marketing expenses in 2010 were RMB73.1 million (US$11.1 million), representing an increase of 98.8% from the previous year, mainly due to the increase in personnel related expenses and marketing expenses. Non-GAAP sales and marketing expenses, which excluded share-based compensation expenses, were RMB46.0 million (US$7.0 million), a 46.4% increase from the previous year.

General and administrative expenses in 2010 were RMB45.3 million (US$6.9 million), representing an increase of 77.9% from the previous year. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, were RMB 23.6 million (US$3.6 million) in 2010, a 10.9% increase from the previous year.

Research and development expenses in 2010 were RMB28.7 million (US$4.3 million), representing an increase of 72.4% from the previous year. Non-GAAP research and development expenses, which excluded the effects of share-based compensation expenses, were RMB16.7 million (US$2.5 million), a 17.1% increase from the previous year.

Total share-based compensation expenses in 2010, which were allocated to related costs of revenues and operating expense line items, were RMB72.2 million (US$10.9 million), compared to RMB14.4 million in the previous year, as a result of a significant increase in the fair value of share options.

Operating loss in 2010 was RMB61.3 million (US$9.3 million), as compared to a loss of RMB12.7 million in 2009. Non-GAAP operating profit, which excluded share-based compensation expenses and post acquisition settlement consideration, was RMB48.7 million (US$7.4 million), compared to RMB1.7 million in 2009.

Income tax benefit in 2010 was RMB11.4 million (US$1.7 million), compared to income tax expense of RMB2.0 million in the previous year. The effective tax rate in 2010 was negative 16.9% compared to 5.5% in 2009.

Net loss in 2010 was RMB55.7 million (US$8.4 million), compared to net loss of RMB39.2 million in 2009. Basic and diluted loss per ADS for 2010 were RMB9.24 (US$1.40) and RMB9.24 (US$1.40), respectively.

Adjusted net income (Non-GAAP), which is defined as net income before share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets, was RMB61.0 million (US$9.2 million) in 2010, compared to an adjusted net loss of RMB16.1 million in 2009. Non-GAAP basic earnings per ADS for 2010 amounted to RMB6.11 (US$0.93).

Adjusted EBITDA (Non-GAAP), which is defined as EBITDA plus share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets, was RMB114.1 million (US$17.3 million) in 2010, representing a 61.4% increase from the previous year.

Outlook for First Quarter 2011

ChinaCache currently expects to generate total net revenues in an amount ranging from RMB128.0 million (US$19.3 million) to RMB133.0 million (US$20.2 million) for the first quarter of 2011, representing a 68.6% to 75.2% year-over-year increase from the corresponding period of 2010. This forecast reflects ChinaCache's current and preliminary view, which is subject to change.

Conference Call Information

The Company has scheduled a corresponding conference call and live webcast to discuss the results at 8:30 PM Eastern Standard Time (EST) on March 7, 2011, which corresponds to 9:30 AM Beijing time on March 8, 2011.

The dial-in details for the live conference call are as follows:

  • U.S. Toll Free Number: +1 (866) 242-1388
  • International dial-in number: +61 (2) 8823-6760
  • Conference ID: 4458-8923

A live and archived webcast of the conference call will be available on the Investors section of ChinaCache's website at www.ChinaCache.com .

A replay of the conference call will also be available until March 14, 2011 by dialing:

  • International dial-in number: +61 (2) 8235-5000
  • Conference ID: 4458-8923

About ChinaCache International Holdings Ltd.

ChinaCache International Holdings Ltd. (Nasdaq:CCIH) is the leading provider of Internet content and application delivery services in China. As a carrier-neutral service provider, ChinaCache's network in China is interconnected with networks operated by all telecom carriers, major non-carriers and local Internet service providers. With more than a decade of experience in developing solutions tailored to China's complex internet infrastructure, ChinaCache is a partner of choice for businesses, government agencies and other enterprises to enhance the reliability and scalability of online services and applications and improve end-user experience. For more information on ChinaCache, please visit www.chinacache.com .

Statement Regarding Unaudited 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 completed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited financial information.

*Use of Non-GAAP Financial Measures

In evaluating its business, ChinaCache 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: non-GAAP cost of revenues, non-GAAP gross profit, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP research and development expenses, non-GAAP operating profit, non-GAAP adjusted net income, non-GAAP EBITDA and non-GAAP adjusted EBITDA. 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.

To present non-GAAP cost of revenues, non-GAAP gross profit, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses and non-GAAP research and development expenses, the Company excludes share-based compensation expenses.

To present non-GAAP operating profit, the Company excludes share-based compensation expenses and post acquisition settlement consideration.

The Company defines adjusted net income as net income (loss) before share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration and impairment of goodwill and acquired intangible assets.

The Company uses EBITDA to assist in reconciliation to adjusted EBITDA. The Company defines EBITDA as net income (loss) before interest expense, interest income, income tax expense, depreciation and amortization. The Company defines adjusted EBITDA as EBITDA plus share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets and other expenses that the Company does not consider reflective of its ongoing operations. The Company believes that the use of adjusted EBITDA facilitates investors' use of operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in items such as capital structures (affecting relative interest expense and share-based compensation expense), the book amortization of intangibles (affecting relative amortization expense), the age and book value of facilities and equipment (affecting relative depreciation expense) and other non-cash expenses. The Company also presents adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of the financial performance of companies in its industry.

Those non-GAAP financial measures are not defined under U.S. GAAP and are not measures presented in accordance with U.S. GAAP. Those non-GAAP financial measures have limitations as analytical tools, and when assessing the Company's operating performance, investors should not consider them in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:

  • Adjusted net income, EBITDA and Adjusted EBITDA do not reflect the Company's cash expenditures or future requirements for capital expenditures or contractual commitments;
  • they do not reflect changes in, or cash requirements for, the Company's working capital needs;
  • they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debt;
  • they do not reflect income taxes or the cash requirements for any tax payments;
  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted net income, EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
  • while share-based compensation is a component of cost of revenues and operating expenses, the impact on the Company's financial statements compared to other companies can vary significantly due to such factors as assumed life of the options and assumed volatility of the Company's ordinary shares; and
  • other companies may calculate Adjusted net income, EBITDA and Adjusted EBITDA differently than the Company does, limiting their usefulness as comparative measures.

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollar are based on the effective exchange rate of 6.6000 as of December 31, 2010.

FINANCIAL TABLES

  • Unaudited Condensed Consolidated Balance Sheets
  • Unaudited Condensed Consolidated Statements of Operations
  • Supplementary Financial Data
  • Supplementary Operating Metrics
  • Reconciliations of Non-GAAP to GAAP Financial Measures
Condensed Consolidated Balance Sheets
(amounts in thousands)
       
  As of Dec 31, As of Dec 31,
   2009*   2010 
  RMB RMB  US$ 
       
    (Unaudited) (Unaudited)
ASSETS       
Current assets      
Cash and cash equivalents   64,702  592,706 89,804
Accounts receivable, net   54,520  107,690 16,317
Prepaid expenses and other current assets   5,368  12,512 1,896
Deferred tax assets   --  4,319 654
Amount due from related parties   100,530  59,002 8,940
Total current assets  225,120 776,229 117,611
       
Non-current assets       
Property & equipment, net   151,009 170,451 25,826
Acquired intangible assets, net  3,330 555 84
Goodwill  16,989 16,989 2,574
Long-term deposits  1,179 2,872 435
Deferred tax assets   -- 2,368 359
Total non-current assets  172,507 193,235 29,278
       
       
TOTAL ASSETS  397,627 969,464 146,889
       
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY       
Current liabilities       
Short-term bank borrowings  10,000  --  --
Accounts payable  16,936  54,188 8,210
Accrued employee benefits  23,675  24,581 3,724
Accrued expenses and other payables  36,102  70,885 10,741
Income tax payable  16,048  30,851 4,674
Liabilities for uncertain tax positions  22,587  25,096 3,803
Deferred tax liabilities  694  134 20
Dividend payable  130  130 20
Amounts due to related parties  79,690  66,468 10,071
Share-base compensation liability  17,515  --  --
Current portion of capital lease obligations  6,700  7,456 1,130
Current portion of long-term bank borrowings  1,276  --  --
Total current liabilities  231,353 279,789 42,393
       
Non-current liabilities       
Deferred tax liabilities  16,822 5 1
Non-current portion of capital lease obligations  576 4,428 671
Amounts due to related parties   -- 6,403 970
Total non-current liabilities  17,398 10,836 1,642
       
Total liabilities  248,751 290,625 44,035
       
Total mezzanine equity  488,126  --  --
Total shareholders' (deficit) equity  (339,250) 678,839 102,854
       
TOTAL LIABILITIES, MEZZANINE EQUITY &

SHAREHOLDERS' (DEFICIT) EQUITY 
397,627 969,464 146,889
       
* Amounts for the year ended December 31, 2009 were derived from the December 31, 2009 audited consolidated financial statements.
 
 
Condensed Consolidated Statements of Operations
(amounts in thousands, except for number of shares, per share and per ADS data)
     
 

For the Three Months Ended

 
For the Twelve Months Ended
  Dec 31, 2009 Sep 30, 2010 Dec 31, 2010 Dec 31, 2010 Dec 31, 2009 * Dec 31,

2010
 
  RMB RMB RMB US$ RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)   (Unaudited) (Unaudited)
               
Net revenues 71,114 109,065 123,988 18,786 272,370 403,395 61,120
Cost of revenues (52,885) (77,250) (84,023) (12,731) (206,181) (279,749) (42,386)
               
Gross profit  18,229 31,815 39,965 6,055 66,189 123,646 18,734
Sales and marketing expenses (9,368) (28,090) (17,381) (2,633) (36,775) (73,125) (11,080)
General and administrative expenses (7,154) (19,698) (8,922) (1,352) (25,469) (45,311) (6,865)
Research and development expenses (3,862) (11,717) (6,641) (1,006) (16,639) (28,692) (4,347)
Post-acquisition settlement consideration  -- (7,034) (113) (17)  -- (37,858) (5,736)
               
Operating income/(loss) (2,155) (34,724) 6,908 1,047 (12,694) (61,340) (9,294)
Impairment of acquired intangible assets and goodwill  --  --  --  -- (6,920)  --  --
Interest income 33 93 325  49 110 513 78
Interest expense (11,664) (1,072) (1,363) (207) (16,187) (4,413) (669)
Other expenses 240 180  3,307  501 (772) 3,102 470
Foreign exchange (loss)/gain, net 172 1,914 (6,676) (1,012) (661) (4,963) (752)
               
Income/(loss) before income tax (13,374) (33,609) 2,501 378 (37,124) (67,101) (10,167)
Income tax benefit/(expense) (521) (4,109)  3,671 556 (2,043) 11,354 1,720
               
Net income/(loss) (13,895) (37,718) 6,172 934 (39,167) (55,747) (8,447)
               
Accretion of redeemable convertible preferred shares to redemption value (11,004) (16,430)  --  -- (36,427) (47,058) (7,130)
Effect of foreign exchange rate movement of redeemable convertible preferred shares 44 7,783  --  -- 350 10,585  1,604
               
Net income/(loss) attributable to ordinary shareholders (24,855) (46,365) 6,172 934 (75,244) (92,220) (13,973)
               
Earnings/(loss) per ordinary share:              
Basic (0.26) (0.55) 0.02 0.002 (0.78) (0.58) (0.09)
Diluted (0.26) (0.55) 0.02 0.002 (0.78) (0.58) (0.09)
               
Earnings/(loss) per ADS:              
Basic (4.12) (8.78) 0.26 0.04 (12.43) (9.24) (1.40)
Diluted (4.12) (8.78) 0.24 0.04 (12.43) (9.24) (1.40)
               
Weighted average number of ordinary shares used in earnings/(loss) per share computation:
Basic 96,639,265 84,475,892 385,843,484 385,843,484 96,844,453 159,611,374 159,611,374
Diluted 96,639,265 84,475,892 406,746,533 406,746,533 96,844,453 159,611,374 159,611,374
               
Pro forma earnings/(loss) per ordinary share (unaudited):          
Basic (0.05) (0.13)  n/a   n/a  (0.13)  n/a   n/a 
Diluted (0.05) (0.13)  n/a   n/a  (0.13)  n/a   n/a 
               
Pro forma earnings/(loss) per ADS (unaudited):            
Basic (0.74) (2.08)  n/a   n/a  (2.07)  n/a   n/a 
Diluted (0.74) (2.08)  n/a   n/a  (2.07)  n/a   n/a 
               
Weighted average number of ordinary shares used in pro forma earnings/(loss) per share computation (unaudited):
Basic 302,204,690 290,041,317  n/a   n/a  302,409,878  n/a   n/a 
Diluted 302,204,690 290,041,317  n/a   n/a  302,409,878  n/a   n/a 
               
* Amounts for the year ended December 31, 2009 were derived from the December 31, 2009 audited consolidated financial statements.
 
Supplementary Financial Data
(amounts in thousands, except for percentages)
 
     
 

For the Three Months Ended

 
For the Twelve Months Ended
  Dec 31, 2009 Sept 30, 2010 Dec 31, 2010 Dec 31, 2010 Dec 31, 2009 * Dec 31,

2010
  RMB RMB RMB US$ RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)   (Unaudited) (Unaudited)
               
Cost of revenues breakdown              
Bandwidth, co-location and storage fees  29,997  48,104  62,756  9,508  116,024  185,755  28,145
Depreciation of network equipment and amortization of acquired intangible assets  16,048  14,322  15,170  2,299  67,097  57,834  8,763
Payroll and other compensation costs of network operations personnel  3,910  11,438  3,117  472  14,007  25,764  3,903
Other cost of revenues  2,930  3,386  2,980  452  9,053  10,396  1,575
Total cost of revenues  52,885  77,250  84,023  12,731  206,181  279,749  42,386
               
Allocation of share-based compensation expenses              
Cost of revenues  757  7,192  510  77  2,489  11,353  1,720
Sales and marketing expenses  1,215  18,026  1,219  185  5,352  27,122  4,110
General and administrative expenses  962  14,282  916  139  4,185  21,703  3,288
Research and development expenses  537  7,977  539  82  2,365  11,984  1,816
Total costs and operating expenses  3,471  47,477  3,184  483  14,391  72,162  10,934
               
Depreciation and amortization expenses              
Cost of revenues  16,048  14,810  15,170  2,299  67,179  58,725  8,898
Sales and marketing expenses  53  208  197  30  204  772  117
General and administrative expenses  237  175  299  45  1,082  853  129
Research and development expenses  46  44  60  9  175  186  28
Total depreciation and amortization expenses  16,384  15,237  15,726  2,383  68,640  60,536  9,172
               
Capital expenditures, related to additions of property and equipment  652  5,556  57,636  8,733  2,000  77,344  11,719
As a percentage of net revenues 0.9% 5.1% 46.5% 46.5% 3.3% 19.2% 19.2%
* Amounts for the year ended December 31, 2009 were derived from the December 31, 2009 audited consolidated financial statements.
 
Supplementary Operating Metrics
(Unaudited)
                     
       
  For the Three Months Ended

For the Three Months Ended

 
For the Twelve Months Ended *
  Mar 31, 2009 Jun 30, 2009 Sep 30, 2009 Dec 31, 2009 Mar 31, 2010 Jun 30, 2010 Sep 30, 2010 Dec 31, 2010 Dec 31, 2010 Dec 31, 2009
                     
Revenues breakdown by industry verticals                    
                     
Internet and software 39% 45% 43% 40% 30% 26% 23% 20% 22% 42%
Mobile internet 12% 11% 12% 14% 16% 15% 18% 21% 20% 12%
Media and entertainment 22% 21% 21% 21% 24% 29% 29% 30% 29% 21%
Enterprises and e-commerce 24% 20% 21% 21% 25% 26% 27% 25% 25% 22%
Government agencies 3% 3% 3% 4% 5% 4% 3% 4% 4% 3%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
                     
Revenue contributed by Top 5 customers as a percentage of net revenues 32% 36% 39% 36% 35% 32% 33% 37% 34% 35%
                     
Number of active customers at period end 207 217 252 281 319 418 454 504 504 281
                     
Number of employees at period end 216 198 212 221 245 289 319 345 345 221
                     
* On a cumulative basis as of December 31
 
Supplementary Metrics - Reconciliations of Non-GAAP to GAAP Financial Measures
(amounts in thousand RMB, except for percentages, number of shares, per share and per ADS data)
(Unaudited)
     
 

For the Three Months Ended

 
For the Twelve Months Ended
  Dec 31, 2009 Dec 31, 2010 Dec 31, 2009 Dec 31, 2010
  RMB RMB RMB RMB
         
Adjusted EBITDA – defined as EBITDA before share-based compensation expense, foreign exchange loss or gain, penalty on uncertain tax positions, post acquisition settlement consideration and impairment of goodwill and acquired intangible assets        
         
Net loss/(income) (13,895) 6,172 (39,167) (55,747)
Depreciation 13,895 15,033 56,961 57,761
Amortization 2,489 693 11,679 2,775
Interest expense 11,664 1,363 16,187 4,413
Interest income (33) (325) (110) (513)
Income tax expense 521 (3,671) 2,043 (11,354)
Share-based compensation 3,471 3,184 14,391 72,162
Foreign exchange loss/(gain) (172) 6,676 661 4,963
Penalties on uncertain tax positions 213 1,389 1,086 1,745
Post acquisition settlement consideration  -- 113  -- 37,858
         
Impairment of goodwill and acquired intangible assets  --  --  6,920  --
Adjusted EBITDA 18,153 30,627 70,651 114,063
Margin% 25.5% 24.7% 25.9% 28.3%
QoQ growth (decline)   -12.8%   n/a
YoY growth   68.7%   61.4%
         
Adjusted net income – defined as net income before share-based compensation expense, foreign exchange loss or gain, penalty on uncertain tax positions, post acquisition settlement consideration and impairment of goodwill and acquired intangible assets
         
Net loss/(income) (13,895) 6,172 (39,167) (55,747)
Share-based compensation 3,471 3,184 14,391 72,162
Foreign exchange loss/(gain) (172) 6,676 661 4,963
Penalties on uncertain tax positions 213 1,389 1,086 1,745
Post acquisition settlement consideration  -- 113  -- 37,858
         
Impairment of goodwill and acquired intangible assets  --  -- 6,920  --
Adjusted net income/(loss) (10,383) 17,534 (16,109) 60,981
Margin% -14.6% 14.1% -5.9% 15.1%
QoQ growth   18.4%   n/a
YoY growth   n/a   n/a
         
Cash gross profit – defined as gross profit before share-based compensation expense, depreciation and amortization expenses
         
Gross profit 18,229 39,965 66,189 123,646
Plus: depreciation and amortization 16,048 15,170 67,179 58,725
Plus: Share-based compensation 757 510 2,489 11,353
Non-GAAP gross profit 35,034 55,645 135,857 193,724
Margin% 49.3% 44.9% 49.9% 48.0%
QoQ growth   3.4%   n/a
YoY growth   58.8%   42.6%
         
Non-GAAP cost of revenues – defined as cost of revenues before share-based compensation expense        
         
Cost of revenues 52,885 84,023 206,181 279,749
Minus: Share-based compensation (757) (510) (2,489) (11,353)
Non-GAAP cost of revenues 52,128 83,513 203,692 268,396
% of net revenues 73.3% 67.4% 74.8% 66.5%
QoQ growth   19.2%   n/a
YoY growth   60.2%   31.8%
         
Non-GAAP operating expenses – defined as operating expenses before share-based compensation expense
         
Sales & marketing expenses 9,368 17,381 36,775 73,125
Minus: Share-based compensation (1,215) (1,219) (5,352) (27,122)
Non-GAAP sales & marketing expenses 8,153 16,162 31,423 46,003
% of net revenues 11.5% 13.0% 11.5% 11.4%
QoQ growth   60.6%   n/a
YoY growth   98.2%   46.4%
         
General & administrative expenses 7,154 8,922 25,469 45,311
Minus: Share-based compensation (962) (916) (4,185) (21,703)
Non-GAAP general & administrative expenses 6,192 8,006 21,284 23,608
% of net revenues 8.7% 6.5% 7.8% 5.9%
QoQ growth   47.8%   n/a
YoY growth   29.3%   10.9%
         
Research & development expenses 3,862 6,641 16,639 28,692
Minus: Share-based compensation (537) (539) (2,365) (11,984)
Non-GAAP research & development expenses 3,325 6,102 14,274 16,708
% of net revenues 4.7% 4.9% 5.2% 4.1%
QoQ growth   63.2%   n/a
YoY growth   83.5%   17.1%
         
Non-GAAP operating profit – defined as GAAP operating profit/(loss) before share-based compensation expense and post acquisition settlement consideration
         
Operating profit/(loss) (2,155) 6,908 (12,694) (61,340)
Plus: Share-based compensation 3,471 3,184 14,391 72,162
Plus: Post acquisition settlement consideration  -- 113  -- 37,858
Non-GAAP operating profit 1,316 10,205 1,697 48,680
Margin% 1.9% 8.2% 0.6% 12.1%
QoQ growth (decline)   -48.4%   n/a
YoY growth   675.4%   2768.8%
         
Non-GAAP basic and diluted earnings per share and basic and diluted earnings per ADS is calculated based upon adjusted net income divided by weighted average number of ordinary shares
         
Adjusted net (loss) / income (10,383) 17,534 (16,109) 60,981
Weighted average number of ordinary shares used in (loss)/earnings per share computation:        
Basic  96,639,265 385,843,484  96,844,453 159,611,374
Diluted  96,639,265 406,746,533  96,844,453  n/a 
(Loss)/earnings per ordinary share:        
Basic (0.11) 0.05 (0.17) 0.38
Diluted (0.11) 0.04 (0.17)  n/a 
(Loss)/earnings per ADS:        
Basic (1.72) 0.73 (2.67) 6.11
Diluted (1.72) 0.69 (2.67)  n/a 
CONTACT: For investor and media inquiries please contact:

         Mr. Wei AN
         Vice President of Corporate Communications
         ChinaCache International Holdings Ltd.
         Tel: +86 (10) 6437-3399
         Email: wei.an@chinacache.com
         
         Ms. Yue YU
         Brunswick Group LLP
         Tel: +86 (10) 6566-2256
         Email: chinacache@brunswickgroup.com
         
         Ms. Cindy ZHENG
         Brunswick Group LLP
         Tel: +1 (212) 333-3810
         Email: chinacache@brunswickgroup.com

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