ChinaCache Reports Adjusted Fourth Quarter and Full Year 2016 Results

Announces Impairment to Property and Equipment and Intangible Assets

BEIJING, Nov. 14, 2017 (GLOBE NEWSWIRE) -- ChinaCache International Holdings Ltd. ("ChinaCache" or the "Company") (Nasdaq:CCIH), a leading total solutions provider of Internet content and application delivery services in China, today reported adjusted audited financial results for the fourth quarter and full year 2016, which included a non-cash impairment charge of RMB399.1 million, resulting in an retroactive increase to operating expenses for both the fourth quarter and full year 2016.

Due to the downturn in the Company’s operating results, ChinaCache has impaired the net value of all its property and equipment and intangible assets as of December 31, 2016 based on the excess of the carrying amount of the asset group over its fair value. The Company determined the fair value of the asset group using the income approach based on the discounted expected cash flows associated with the asset group. The discounted cash flow for the asset group was based on three-year projections, which is consistent with the remained useful lives of the principal assets. Cash flow projections were based on past experience, actual results of operations and management best estimates about future developments, as well as certain market assumptions.

ChinaCache currently expects to generate total net revenues in the range of RMB0.84 billion to RMB0.87 billion for the full year of 2017, representing year-over-year decrease of approximately 20% to 17%.

This forecast reflects ChinaCache's current view, which is subject to change.

The following presents the Company's unaudited financial results for the fourth quarter 2016 and full year 2016 after giving effect to the aforementioned adjustment(s).


*Condensed Consolidated Balance Sheets*
(amounts in thousands)

			As of Dec 31	As of Dec 31		As of Dec 31
			2015	2016		2016
			RMB	RMB		US$
			(Audited)	(Unaudited)		(Unaudited)
ASSETS
Current assets
	Cash and cash equivalents		606,796	134,924		19,433
	Accounts receivable, net		243,431	190,587		27,450
	Prepaid expenses and other current assets		31,560	56,976		8,206
	Short term investments		26,169	-		-
	Deferred tax assets		17,923	-		-
	Amount due from a subsidiary held for sale		435	53,169		7,658
	Assets held for sale		1,060,543	1,270,483		182,988
		Total current assets	1,986,857	1,706,139		245,735

Non-current assets
	Property and equipment, net		499,946	-		-
	Intangible assets, net		10,898	-		-
	Long term investments		50,157	34,159		4,920
	Deferred tax assets		11,368	-		-
	Long term deposits and other non-current assets		59,390	36,525		5,261
		Total non-current assets	631,759	70,684		10,181

Total Assets			2,618,616	1,776,823		255,916

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
	Short-term loan		-	29,311		4,222
	Accounts payable		205,593	301,569		43,435
	Accrued employee benefits		44,690	46,233		6,659
	Accrued expenses and other payables		76,409	52,697		7,590
	Income tax payable		13,513	13,924		2,005
	Liabilities for uncertain tax positions		11,337	10,020		1,443
	Amounts due to related parties		18	18		3
	Current portion of long term loan		7,180	3,840		553
	Current portion of capital lease obligations		70,615	72,851		10,493
	Deferred government grant		16,360	13,000		1,872
	Amount due to a subsidiary held for sale		319,536	18,063		2,602
	Liabilities held for sale		1,014,449	1,302,658		187,622
		Total current liabilities	1,779,700	1,864,184		268,499

Non-current liabilities

	Long-term loan		4,340	-		-
	Non-current portion of capital lease obligations		104,450	43,951		6,330
	Deferred government grant		8,439	11,208		1,614
		Total non-current liabilities	117,229	55,159		7,944

Total Liabilities			1,896,929	1,919,343		276,443

Total Shareholders' equity			721,687	(142,520	)	(20,527	)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			2,618,616	1,776,823		255,916


*Condensed Consolidated Statements of Comprehensive Income*
(amounts in thousands, except for number of shares, per share and per ADS data)

		For the Three Months Ended								For the Twelve Months Ended
		Dec 31, 2015		Sep 30, 2016		Dec 31, 2016		Dec 31, 2016		Dec 31, 2015		Dec 31, 2016		Dec 31, 2016
		RMB		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Audited)		(Unaudited)		(Unaudited)

Net revenues		311,447		261,643		263,312		37,926		1,353,627		1,054,235		151,842
Cost of revenues		(267,339	)	(255,133	)	(275,927	)	(39,742	)	(1,041,412	)	(1,077,810	)	(155,237	)

Gross profit (loss)		44,108		6,510		(12,615	)	(1,816	)	312,215		(23,575	)	(3,395	)
	Other operating income (loss)	13,911		3,260		(28,895	)	(4,162	)	13,911		(19,044	)	(2,743	)
	Sales & marketing expenses	(30,145	)	(23,009	)	(22,467	)	(3,236	)	(115,621	)	(93,603	)	(13,482	)
	General & administrative expenses	(61,062	)	(62,202	)	(50,264	)	(7,240	)	(198,626	)	(265,017	)	(38,170	)
	Research & development expenses	(25,530	)	(24,037	)	(25,102	)	(3,615	)	(103,110	)	(104,018	)	(14,982	)
	Transaction tax on assets transfer	(5,394	)	-		-		-		(27,733	)	-		-
	Impairment of long lived assets	-		-		(399,094	)	(57,482	)	-		(399,094	)	(57,482	)
	Impairment of long term investments	-		-		(18,240	)	(2,627	)	-		(18,240	)	(2,627	)

Operating loss		(64,112	)	(99,478	)	(556,677	)	(80,178	)	(118,964	)	(922,591	)	(132,881	)
	Interest income	1,940		1,627		261		38		4,618		4,669		672
	Interest expense	(2,473	)	(2,932	)	(2,091	)	(301	)	(13,158	)	(11,647	)	(1,678	)
	Other income (expense)	141		5,171		(263	)	(38	)	2,991		5,336		769
	Foreign exchange gain, net	4,845		915		8,015		1,154		13,164		14,209		2,047

Loss before income taxes		(59,659	)	(94,697	)	(550,755	)	(79,325	)	(111,349	)	(910,024	)	(131,071	)
	Income tax benefit (expense)	22,861		384		(21,805	)	(3,141	)	22,614		(4,229	)	(609	)

	Net loss	(36,798	)	(94,313	)	(572,560	)	(82,466	)	(88,735	)	(914,253	)	(131,680	)

Net loss attributable to the noncontrolling interest		(44	)	(152	)	(463	)	(67	)	(44	)	(776	)	(112	)

Net loss attributable to the Company's shareholders		(36,754	)	(94,161	)	(572,097	)	(82,399	)	(88,691	)	(913,477	)	(131,568	)

Foreign currency translation		249		(196	)	(286	)	(41	)	264		(293	)	(42	)
Unrealized holding gain on available-for-sale investments		1,106		36		-		-		1,853		659		95
Reclassification adjustments for gains included in net income		-		(3,741	)	-		-		-		(3,552	)	(512	)

Total other comprehensive income (loss), net of tax		1,355		(3,901	)	(286	)	(41	)	2,117		(3,186	)	(459	)

Comprehensive loss		(35,443	)	(98,214	)	(572,846	)	(82,507	)	(86,618	)	(917,439	)	(132,139	)

Comprehensive loss attributable to the noncontrolling interest		(44	)	(152	)	(463	)	(67	)	(44	)	(776	)	(112	)

Comprehensive loss attributable to the Company's shareholders		(35,399	)	(98,062	)	(572,383	)	(82,440	)	(86,574	)	(916,663	)	(132,027	)


Loss per ordinary share:
	Basic	(0.09	)	(0.23	)	(1.36	)	(0.20	)	(0.22	)	(2.24	)	(0.32	)
	Diluted	(0.09	)	(0.23	)	(1.36	)	(0.20	)	(0.22	)	(2.24	)	(0.32	)

*Loss per ADS:**
	Basic	(1.45	)	(3.68	)	(21.76	)	(3.20	)	(3.49	)	(35.84	)	(5.12	)
	Diluted	(1.45	)	(3.68	)	(21.76	)	(3.20	)	(3.49	)	(35.84	)	(5.12	)

Weighted average number of ordinary shares used in earnings per share computation:
	Basic	404,344,939		412,253,323		421,522,374		421,522,374		407,149,509		408,189,722		408,189,722
	Diluted	404,344,939		412,253,323		421,522,374		421,522,374		407,149,509		408,189,722		408,189,722

*	Note1: 1 ADS = 16 shares


*Supplementary Metrics - Reconciliations of Non-GAAP to GAAP Financial Measures*
(amounts in thousands, except for percentages, number of shares, per share and per ADS data)
(Unaudited)

	For the Three Months Ended											For the Twelve Months Ended
	Dec 31, 2015				Sep 30, 2016			Dec 31, 2016		Dec 31, 2016		Dec 31, 2015		Dec 31, 2016		Dec 31, 2016
	RMB				RMB			RMB		US$		RMB		RMB		US$
Adjusted EBITDA — defined as EBITDA before share-based compensation expense, foreign exchange gain, transaction tax on assets transfer, impairment of long lived assets and impairment of long term investments

Net loss		(36,798	)		(94,313	)		(572,560	)	(82,466	)	(88,735	)	(914,253	)	(131,680	)
Depreciation		40,872			38,653			38,090		5,486		153,313		155,225		22,357
Amortization		1,151			1,102			1,253		180		4,298		3,869		557
Interest expense		2,473			2,932			2,091		301		13,158		11,647		1,678
Interest income		(1,940	)		(1,627	)		(261	)	(38	)	(4,618	)	(4,669	)	(672	)
Income tax (benefit) expense		(22,861	)		(384	)		21,805		3,141		(22,614	)	4,229		609
Share-based compensation		18,259			8,601			2,685		387		48,606		85,025		12,246
Foreign exchange gain		(4,845	)		(915	)		(8,015	)	(1,154	)	(13,164	)	(14,209	)	(2,047	)
Penalties on uncertain tax positions		2,206			-			658		95		2,206		658		95
Transaction tax on assets transfer		5,394			-			-		-		27,733		-		-
Impairment of long lived assets		-			-			399,094		57,482		-		399,094		57,482
Impairment of long term investments		-			-			18,240		2,627		-		18,240		2,627
Adjusted EBITDA		3,911			(45,951	)		(96,920	)	(13,959	)	120,183		(255,144	)	(36,748	)
Margin%		1.3	%		(17.6	%)		(36.8	%)	(36.8	%)	8.9	%	(24.2	%)	(24.2	%)


Adjusted net loss — defined as net loss before share-based compensation, foreign exchange gain (loss), penalties on uncertain tax positions, transaction tax on assets transfer, impairment of long lived assets and impairment of long term investments

Net loss		(36,798	)		(94,313	)		(572,560	)	(82,466	)	(88,735	)	(914,253	)	(131,680	)
Share-based compensation		18,259			8,601			2,685		387		48,606		85,025		12,246
Foreign exchange gain		(4,845	)		(915	)		(8,015	)	(1,154	)	(13,164	)	(14,209	)	(2,047	)
Penalties on uncertain tax positions		2,206			-			658		95		2,206		658		95
Transaction tax on assets transfer		5,394			-			-		-		27,733		-		-
Impairment of long lived assets		-			-			399,094		57,482		-		399,094		57,482
Impairment of long term investments		-			-			18,240		2,627		-		18,240		2,627
Adjusted net loss		(15,784	)		(86,627	)		(159,898	)	(23,029	)	(23,354	)	(425,445	)	(61,277	)
Margin%		(5.1	%)		(33.1	%)		(60.7	%)	(60.7	%)	(1.7	%)	(40.4	%)	(40.4	%)
Loss per ordinary share:
Basic		(0.04	)		(0.21	)		(0.38	)	(0.05	)	(0.13	)	(1.04	)	(0.15	)
Diluted		(0.04	)		(0.21	)		(0.38	)	(0.05	)	(0.13	)	(1.04	)	(0.15	)
Loss per ADS:
Basic		(0.64	)		(3.36	)		(6.08	)	(0.80	)	(2.01	)	(16.64	)	(2.40	)
Diluted		(0.64	)		(3.36	)		(6.08	)	(0.80	)	(2.01	)	(16.64	)	(2.40	)


Non-GAAP gross profit (loss) — defined as gross profit (loss) before share-based compensation expense

Gross profit (loss)		44,108		6,510			(12,615		)	(1,816	)	312,215		(23,575	)	(3,395	)
Plus: Share-based compensation		945		378			623			90		3,670		5,961		859
Non-GAAP gross profit (loss)		45,053		6,888			(11,992		)	(1,726	)	315,885		(17,614	)	(2,536	)
Margin%		14.5	%	2.6		%	(4.6		%)	(4.6	%)	23.3	%	(1.7	%)	(1.7	%)


Non-GAAP operating expense — defined as operating expense before share-based compensation expense

Sales & marketing expenses		30,145		23,009			22,467			3,236		115,621		93,603		13,482
Minus: Share-based compensation		(693	)	131			(7		)	(1	)	(2,882	)	(2,753	)	(397	)
Non-GAAP sales & marketing expenses		29,452		23,140			22,460			3,235		112,739		90,850		13,085
% of net revenues		9.5	%	8.8		%	8.5		%	8.5	%	8.3	%	8.6	%	8.6	%

General & administrative expenses		61,062		62,202			50,264			7,240		198,626		265,017		38,170
Minus: Share-based compensation		(15,876	)	(8,092		)	(1,854		)	(267	)	(38,796	)	(72,483	)	(10,440	)
Non-GAAP general & administrative expenses		45,186		54,110			48,410			6,973		159,830		192,534		27,730
% of net revenues		14.5	%	20.7		%	18.4		%	18.4	%	11.8	%	18.3	%	18.3	%

Research & development expenses		25,530		24,037			25,102			3,615		103,110		104,018		14,982
Minus: Share-based compensation		(745	)	(262		)	(201		)	(29	)	(3,258	)	(3,828	)	(550	)
Non-GAAP research & development expenses		24,785		23,775			24,901			3,586		99,852		100,190		14,432
% of net revenues		8.0	%	9.1		%	9.5		%	9.5	%	7.4	%	9.5	%	9.5	%


Non-GAAP operating loss — defined as GAAP operating loss before share-based compensation expense, transaction tax on assets transfer, impairment of long lived assets and impairment of long term investments

Operating loss		(64,112	)	(99,478		)	(556,677		)	(80,178	)	(118,964	)	(922,591	)	(132,881	)
Share-based compensation		18,259		8,601			2,685			387		48,606		85,025		12,246
Transaction tax on assets transfer		5,394		-			-			-		27,733		-		-
Impairment of long lived assets		-		-			399,094			57,482		-		399,094		57,482
Impairment of long term investments		-		-			18,240			2,627		-		18,240		2,627
Non-GAAP operating loss		(40,459	)	(90,877		)	(136,658		)	(19,682	)	(42,625	)	(420,232	)	(60,526	)
Margin%		(13.0	%)	(34.7		%)	(51.9		%)	(51.9	%)	(3.1	%)	(39.9	%)	(39.9	%)

About ChinaCache International Holdings Ltd.

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

Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the revenue guidance and quotations from management in this announcement, as well as ChinaCache's strategic and operational plans, contain forward-looking statements. ChinaCache may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and ChinaCache undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries please contact:

Investor Relations Department
ChinaCache International Holdings
Tel: +86 10 6408 5306
Email: ir@chinacache.com

Mr. Ross Warner
The Piacente Group | Investor Relations
Tel: +86 10 5730-6200
Email: chinacache@tpg-ir.com

Ms. Brandi Piacente
The Piacente Group | Investor Relations
Tel: +1 212-481-2050
Email: chinacache@tpg-ir.com

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ChinaCache Reports Adjusted Fourth Quarter and Full Year 2016 Results

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